Uncovering Guardianship Abuse

by Anthony Palmieri, JD, CFE, CIG, CIGI, CIGA, CGI, CIA, CCSA

"No one is more hated than he who speaks the truth." – Plato

"Silver Collar Crimes" are financially motivated crimes intentionally perpetrated against elder persons with diminished cognition, using the court system or legal documents. Silver Collar Crimes are a subsection of elder exploitation and include court-adjudicated guardianships, official land records, powers of attorney, wills, and trusts. Substantiated allegations of fraud in guardianships with the notion of court-oversight deteriorates the public’s trust. Collusion and organized schemes in guardianships are arguably the most egregious of Silver Collar Crimes. Persons under guardianship are often the most silent and innocent victims, but sometimes there are ancillary or family victims as well. A smaller division of so-called victims have abhorrently unclean hands or exhibit symptoms of being mentally unhealthy themselves, some whose conduct precipitated their loved one’s guardianship. Schemes occasionally involve unreasonably separating incapacitated persons from family; misusing psychotropic drugs, “off-label” usage of medications, or using over-the-counter anticholinergic medications that exacerbate dementia-like symptoms; or neglecting conditions such as urinary tract infections, depression, hypothyroidism, and diabetes. Aside from children, elderly incapacitated persons are society’s most vulnerable and exploited citizens. Greed, entitlement, rationalization, complacency, overreliance, disinterest, naivety, and negligence are contributing factors to guardianship fraud.

The Palm Beach County Clerk of the Circuit Court and Comptroller, Division of Inspector General (“IG”) Guardianship Integrity Assurance Team, comprised of highly credentialed professional auditors and investigators, are tasked with rooting out fraud, material errors, and misconduct. The IG team applies generally accepted auditing standards to give assurance that the court can rely on the guardian’s reports. In conjunction with IG accreditation standards, the investigators also utilize a robust investigative framework when the guardian’s reports are materially unreliable, or when validating or discrediting complaints against a guardian. The IG targets anyone willing to prey upon society’s most vulnerable, silent, and innocent persons. The IG has jurisdiction of the approximate 2,800 to 3,200 open guardianship proceedings in Palm Beach County and all alleged misconduct involving the 550 state-registered professional guardians in Florida.

Interjecting independence

The Florida Constitution sets forth the Clerk of Court as an arm of the judiciary, but the elected Clerk is organizationally separate from the judges and court administration.

This independent relationship ensures the public can trust judicial processes such as jury pool selections, evidence handling, and guardianship monitoring. A hallmark of professional auditing and investigating is independence from personal, organizational, and external impairments. Florida’s Clerks have the duty of independently auditing, and, if warranted, investigating the annual guardianship reports filed by court-appointed guardians and advising the court of audit findings. In order for the court to exercise oversight, the guardian’s reports must be reliable to start. This unique combination of jurisprudence, mandatory annual reporting, required auditing, and an independent auditor without impairments from stakeholders including decision-makers, is scarcely found at the national level.

Florida’s aging demographics may help explain the infrequency of these statutory best practices elsewhere. Florida has the largest percentage of residents over 65 years of age in the United States.

Florida is projecting more than 6.6 million senior residents by 2040. Even prior to the first Baby Boomer turning 65 years of age in 2011, Palm Beach County had the largest number of 85 and older persons in Florida, and had 99,849 persons who were 80 or older, nearly the same population as the city of West Palm Beach. At the same time, Florida was tied with two other larger population states at the time, California and New York, for the most centenarians.

Perpetrators of guardianship fraud include guardians, both professional and non-professional, attorneys, family members, caregivers, and others in close contact to incapacitated persons. Alleged fraud by professionals vastly overshadows other parties in television and print media, which gives decision-makers and the general public a distorted view of problems. Additionally, professional guardians are ineffective at publicly defending their conduct because of perceived confidentiality constraints.

Fraud is a human condition

Fraud is not only confined to guardianship professionals. The prominent theory about a person’s decision to commit organizational fraud is the Fraud Triangle. The Fraud Triangle, which can be used to understand guardianship fraud, includes

1. pressure; 
2. opportunity; and
3. rationalization.

All persons within their individualized realized levels of pressure, opportunity, and rationalization will commit fraud.

Under the Fraud Triangle, all persons, regardless of industry, with the right concoction of pressure, opportunity, and rationalization will commit guardianship fraud.

A decade ago, the Palm Beach County Clerk’s IG launched a hotline and hired professional auditors with extensive investigative experience and legal backgrounds to tackle guardianship fraud. The hotline was among the first hotlines in the nation dedicated to guardianship and specializing in investigating guardianship fraud allegations. Since October 2011, more than 1,200 tips were lodged to the hotline, including numerous complaints about a nefarious state-registered and court-appointed professional guardian by the name of Lynrod Douglas.

Apex predator

As she was dialing the last few digits of the hotline’s phoneword, “F-R-A-U-D”,

April Wilson prepared to speak; she listened and followed the prompts prior to talking to an investigator.

“You’ve reached the Guardianship Integrity Assurance Hotline in the Clerk’s Division of Inspector General. To speak to an investigator and file a report now, please press 2.”

“Hello, Clerk’s Inspector General, how can I help you?”

After hearing her cue to speak, April Wilson unloaded the complaint:

“…Lynrod Douglas is my estranged husband’s guardian. Our marital relationship is over. We are separated but have a joint bank account together. Lynrod closed the account. I own half of the $55,000 in the account and Lynrod won’t give me my half…”

Red flags

The IG investigators examine every word of each complaint lodged with the hotline. At first blush, the investigators internally rejected several statutes, court rules, and administrative rules that, if not pursued further, would have casually explained the guardian’s actions. However, one of the core principles of performing independent audits and investigations is diligence. Diligence means making a good faith effort to perform investigative services to the best of the investigators ability, to analyze  complaints critically, and to exercise professional skepticism.

Diligence means leaving no stone unturned. When performing complaint intake, investigators are especially attuned to “red flags.” According to fraud research, a red flag is a set of circumstances that are unusual in nature or vary from normal activities. It is a signal that something is out of the ordinary and may need to be investigated further.  Red flags do not indicate guilt or innocence.

The following are real-life examples of “red flags” identified by the IG during other investigations:

• A non-professional guardian, who was an attorney, rekindled an old high school romance with the daughter of an elderly mother. The daughter was the mother’s caregiver. The mother was a multi-millionaire and the guardian managed the mother’s trust. In the same case, there were two other adult children with financial difficulties, and significant family discord. The guardian charged over $96,000 for administrative tasks in 10-months without objection from the daughter. The daughter was reimbursed by the guardian for voluminous and questionable expenditures totaling over $220,000; for example, steak dinners and apple martinis for two to “maintain the mother’s lifestyle and relationship with her daughter.” However, according to medical records, the mother had severe end-stages-of-life dementia, and a feeding tube was inserted into her stomach for nutrition. The daughter perjured herself by making intentionally false statements that she repaired her mother’s sliding glass door. The investigation found the daughter purchased a $1,065 watermelon tourmaline crystal cabinet specimen, a $3,250 Egyptian sarcophagus, a $1,400 wrinkle-removing laser, $600 for Kentucky bluegrass seed, along with hundreds of thousands of dollars of other frivolous spending.
• A professional guardian, who was an attorney, frequently submitted unavailability notices to the court for hearings and trials in her civil and probate cases when going on vacation and traveling out of the state. The guardian shared details about her travel to places like the Mitchell Corn Palace and the Badlands National Park in South Dakota on social media. The guardian submitted numerous fee petitions for overlapping periods of time and services, and for services that could not possibly have been performed while on vacation and out of the state to North Dakota. The guardian sold the elderly person’s property at a fraction of the fair market value (FMV). The real estate agent, who unbeknownst to the court was the guardian’s son, inadvertently expressed happiness about a cancellation of a contract for the FMV of the elderly person’s house even though he would have been paid an uncustomary 8-percent commission on a higher selling price. The son’s business partners purchased the discounted house, and flipped it for a hefty profit.
• A non-professional guardian, who was the daughter of an elder person, did not disclose that her father owned a large plot of farm land. The daughter quit-claimed the land to herself without a court order. The daughter disbursed large sums of cash to herself as reimbursements for expenses to maintain the property. The daughter perjured herself by making intentionally false statements that she purchased a tractor, fencing materials, a generator, and a storage shed through an on-line marketplace. The daughter actually siphoned and skimmed money from the father’s bank account after receiving negligent legal advice from her attorney.

There were several red flags that surfaced from April Wilson’s report, but the alleged subject of the complaint was not unfamiliar to investigators. Lynrod Douglas had been on the IG’s radar from nearly the moment he registered as a professional guardian with the state. Soon after his first court appointment, the IG received an anonymous tip that Douglas was “trolling” residential settings for his clients and, in hindsight, potential victims.

According to the complaint, Douglas was offering “kickbacks” to front desk and administrative staff to find residents with moderate to severe cognitive declines and no involved family.

A kickback is a payment made to someone who facilitated a transaction with an illicit purpose and is similar to a commission but without the victim’s knowledge. A kickback is not necessarily a criminal violation but can be criminal as well. Nine days later, another blip appeared on the monitoring radar. This hotline complaint came directly from another incapacitated person. Bob Peter, the incapacitated person, walked into the courthouse and to a customer service window to report that Douglas “assaulted” him. The complaint was forwarded to the IG, and a memorandum was immediately docketed into the court record with an administrative recommendation for the court to schedule a hearing with Bob and the guardian. At the status conference, Bob and Douglas conceded to the judge that the episode was just a “misunderstanding” and both parties committed to working better with each other. Later, the Clerk’s operational auditors, who perform administrative audits and reviews on the thousands of guardianship reports filed in Palm Beach County every year, called the IG to complain about Douglas regarding yet another proceeding:

“I’m unsure if Lynrod Douglas is capable to fulfill his duties as a guardian since it seems he’s unable to file an accounting that I can audit and recommend approval to the court.”

Another complaint was filed about Douglas placing an elderly person into a six-bed assisted living facility (ALF) with allegations of deplorable nutritional offerings, restricting visitations, and other allegations. After an unannounced visit to the ALF, IG investigators and the Long-Term Care Ombudsman found nothing alarming, and the IG unsubstantiated the allegations. 

During the course of the investigation, the ALF owners were arrested for elder abuse (physically restraining another elderly resident to a bed) , and it was revealed that a Certified Nursing Assistant notified Douglas about the owners being “verbally abusive” to residents.

Being on the radar transitioned to being in the center of the bullseye, once IG investigators assessed confidential court records, performed an interview with April Wilson, and after the IG subpoenaed third-party records. Bank records revealed that Douglas transacted a teller withdrawal totaling $55,197, and the withdrawal slip was signed by Douglas as “Guardian for the Ward.” Douglas did not disclose any portions of the joint bank account to the court, nor did he list the funds on the initial verified inventory.

Money, money, money

Tracing the money from the source to the final disposition is a fundamental investigative technique. When IG investigators followed the money, they discovered that April Wilson’s money and her husband’s money was placed into a series of personal and business bank accounts owned or managed by Douglas. In other words, Douglas was playing a shell-game with the money, and laundering the ill-gotten funds.

Then, another hotline complaint was received alleging that Douglas took the proceeds from an overpayment for room and board at an ALF after another resident unexpectedly died.

When challenged by a family member, Douglas produced a balanced amended accounting report and a bank statement purporting to show a refund totaling $3,746 was deposited into the bank account. The IG performed an extensive forensic examination on the submitted bank statement and determined the statement was altered and forged. Creating, altering and forging documents is the most prevalent method of asset concealment when perpetrators commit white collar fraud.

The IG subpoenaed the bank statements in question from the original source and confirmed that the filed statement was indeed fictitious and Douglas committed perjury in an official proceeding. The bank statement also confirmed that assets were missing and Douglas committed grand theft.

At this point, the IG investigation, in conjunction with law enforcement detectives, identified a large sum of bank certificates of deposit missing from an initial inventory. The team also discovered more created and altered documents, pointing to illicit disbursements in even more guardianship proceedings. As a part of our accreditation, ethical, and moral standards, the IG will refer allegations of criminal activity to law enforcement when a reasonable suspicion is established. Once Douglas’ modus operandi was identified, other fraudulent conduct quickly surfaced. Douglas was ultimately adjudicated guilty for fifteen counts of exploitation of an elderly person, grand theft, money laundering, and perjury for misappropriating approximately $420,000 from five elderly persons. He used illicit proceeds to pay off a mortgage, buy a property, pay off credit cards, and buy a Mercedes-Benz.

Prior to his arrest, Douglas was reportedly trying to exit the guardianship business because of increasing statewide investigations and oversight; he was planning to open one or more six-bed ALFs instead. On September 29, 2021, the sentencing hearing for Lynrod Douglas was continued since he contracted COVID-19 in jail, was quarantined, hospitalized twice, and remained in the medical unit of the jail. At this point, it is unclear if his sentence will include additional jail time, as a “ward” himself in the Florida Prison System, restitution to victims, community service, and a complete bar from being anyone’s guardian or fiduciary into perpetuity. The IG’s work to better protect incapacitated persons continues regardless.

Optimism for the future

There were several forward-thinking recommendations adopted at the 4^th National Guardianship Summit by voting experts, advocates, and stakeholder delegates of the National Guardianship Network

that will better protect incapacitated people and help prevent fraud. The recommendation with the biggest ripple effect was abolishing plenary guardianships in favor of allowing people to retain the maximum of rights, and if guardianship is necessary, the guardianship orders should be narrowly tailored. The 4^th summit ever so subtly cantilevered the overarching framework of the 2^nd national summit, better known as Wingspan. The majority of delegates at Wingspan, 20 years previously, embraced a controversial viewpoint that the fundamental nature, goals, and methods of guardianship should be adversarial and litigious in nature. The majority argued that guardianship should be hotly contested until the ultimate level of review (or assets) are exhausted. The minority view was that guardianship served a therapeutic and less expensive role; and facilitated benevolent provisions and services for incapacitated persons. The 4^th summit nudged the focus of guardianship away from being guardian-attorney centered and more toward leveling the playing field for incapacitated persons and being person-centered. The legal red herrings “due process” for guardians and attorneys using the incapacitated person’s assets for their defense, non-substantive “ex-parte communications” to assist the court administer proceedings, and excessive concern about “privacy” rights, which tipped the scales in favor of the guardians, attorneys, and more litigation, are slowly transitioning toward being more focused on dignity, respect, restoration, rehabilitation, and autonomy. The inflated price of protection seemingly is not passing the public’s integrity test for the system.

From a fraud perspective, the 4^th National Guardianship Summit embraced the guiding star for professional auditing and investigating by recommending that an independent statewide entity be tapped with investigating guardian misconduct. Additionally, voting delegates nearly unanimously recommended that states emphasize education and training for all involved in guardianships, which is especially important for guardianship auditors, investigators, reviewers, and monitors. The 4^th summit recommended ongoing collection of data, uniform statewide forms, technology to validate reports, flagging potential problems, and continued legal representation at a minimal expense to the incapacitated. If codified into state statute, provisions exemplified by the Palm Beach County Clerk’s Guardianship Integrity Assurance Team and the related 4^th National Guardianship Summit recommendations will continue to fight Silver Collar Crimes occurring in guardianship for the next decade.

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Uncovering Guardianship Abuse