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| Former clients and advocates attend a fitness review for former guardian Tom McDuffie, at left, and his private guardianship nonprofit, Cache Integrity Services, at the Nesbett Courthouse on Wednesday, Feb. 14, 2024. (Bill Roth / ADN) |
A judge on Wednesday declined to order a forensic accountant to investigate a private guardian’s mishandling of finances that left the funds of more than 100 Alaskans entangled in a single account.
At a public hearing in Anchorage that drew several of Tom McDuffie’s former private guardianship and conservatorship clients, along with attorneys and other guardians, Anchorage Superior Court Judge Eric Aarseth said he would decline several requests to appoint an impartial investigator to oversee an inquiry of alleged wrongdoing by McDuffie. Instead, the judge said he would leave the investigation to be conducted by the public agency that had encouraged McDuffie to become a guardian.
Two court visitors appointed to investigate McDuffie’s actions filed a report late last month that included a call for “a comprehensive forensic accounting review,” after McDuffie used a single account for all of the clients served by his private agency, Cache Integrity Services, making it difficult or impossible for the money to be divided accurately among McDuffie’s former clients.
The court visitors wrote in their report that “it appears to be reasonable for Mr. McDuffie and Cache Integrity Services to bear all the cost” of hiring a forensic accountant.
But the judge said that filings to the court had not adequately explained how the accountant would be identified and paid.
“Someone needs to give me some names and they need to give me qualifications and they need to give me a fee schedule,” Aarseth said during the hearing, which lasted less than an hour.
“I have a lot of big ideas of what should happen, but no concrete plans in terms of how that would happen,” Aarseth said.
Instead, Aarseth said he would leave the investigation of McDuffie’s tangled accounting system to the Office of Public Advocacy, or OPA — a state agency housed in the Department of Administration — to oversee an investigation of McDuffie’s actions. Aarseth said he had little leeway to do otherwise because state law explicitly names the public guardian, which is a section of OPA, as the agency responsible for investigating private guardians.
Aarseth’s decision left many advocates for McDuffie’s former clients incensed. Several said that OPA had played a key role in encouraging McDuffie to become a private guardian, despite early indications that McDuffie was unable to meet their needs, as OPA contended with a years-long staffing shortage.
“Why is the fox guarding the henhouse?” said Susan Pacillo, who said she became a guardian for one of McDuffie’s former clients because he had neglected the individual’s needs.
“They’re the ones that made the mess. Now they’re the ones who are going to clean it up?” asked Pacillo.
McDuffie — who attended the hearing but never spoke — had also asked the court not to appoint OPA to the role, citing their involvement in his early effort to set up his guardianship services.
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| Anchorage Superior Court Judge Eric Aarseth held a fitness review for guardian Tom McDuffie and his private guardianship nonprofit, Cache Integrity Services, in a public hearing at the Nesbett Courthouse on Wednesday, Feb. 14, 2024. (Bill Roth / ADN) |
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| Former guardian Tom McDuffie looks back at the gallery after the public fitness review hearing for his private guardianship nonprofit, Cache Integrity Services, adjourned on Wednesday, Feb. 14, 2024, in the Nesbett Courthouse. (Bill Roth / ADN) |
The judge said that even if OPA had made errors, it did not preclude the public agency from unsnarling wrongdoing.
“If an error was made in recommending Cache Integrity as a guardian or conservator, that error does not disqualify the public guardian from serving the role that the Legislature intended,” Aarseth said.
Aarseth said it would be up to the administration of Gov. Mike Dunleavy to choose a different public agency or official to conduct an investigation if there were any concerns with OPA leading the charge.
“If the executive branch wants to submit someone new or different, or a different agency to step in, they can make the application to me and I’ll make the determination of whether someone would be more appropriate, but I haven’t had any volunteers yet,” said Aarseth.
OPA is headed by James Stinson, who was appointed to the position in 2019, after Dunleavy was first elected. Stinson donated $1,000 to Dunleavy’s campaign in 2018, and more than $700 in 2021. Stinson’s compensation went up more than 20% between 2022 and 2023, from nearly $163,000 to more than $198,000.
Beth Goldstein, OPA’s deputy director who supported McDuffie’s foray into private guardianship, represented OPA at the hearing Wednesday. She did not appear in person.
Caitlin Shortell, an Anchorage attorney who recently filed two lawsuits against McDuffie on behalf of his former clients, said she had asked the court to order McDuffie to maintain liability insurance, but Aarseth had not responded to that request in court.
Shortell said she was concerned on behalf of her clients that because a forensic accountant had not been appointed, and McDuffie had not been ordered to maintain insurance for his business, that McDuffie’s former clients may not be able to recover their funds, which in some cases amount to hundreds of thousands of dollars.
Shortell had also requested an independent special master be appointed to administer claims related to financial and personal injury damages.
The court visitors’ report cataloged all the ways that McDuffie and Cache Integrity Services had mishandled their obligations, including by mismanaging funds, allowing clients to lose critical benefits such as Medicaid and Social Security payments, charging excessive fees, mismanaging the properties of clients, and failing to provide health care for clients.
The court visitor report had included a call for a criminal investigation, saying “such an investigation is necessary to ensure accountability and to protect the interests of those who have been affected.”
Aarseth said it would be inappropriate for him to recommend a criminal investigation of McDuffie, but added that other individuals — including court employees, attorneys and other guardians familiar with McDuffie’s actions — could turn to law enforcement.
“The court is not making any referral to law enforcement, not because the court can’t see that maybe there is a possibility for that to happen, but I don’t want to step outside of that role of being a judicial office,” Aarseth said during Wednesday’s hearing — the first time the court has held a public hearing since Aarseth was appointed in October to investigate McDuffie.
Court proceedings related to guardianship are routinely held behind closed doors to protect the rights of vulnerable Alaskans in need of a guardian or conservator — adults deemed by the courts to be unable to make decisions on their finances, housing, health care and other important issues, often due to mental disabilities or dementia. Aarseth said he had decided to open Wednesday’s hearing to the public because of “public concern” over McDuffie’s actions.
Aarseth concluded the brief hearing by saying that if members of the public “don’t like the results,” then “they can call the Legislature and ask them to change the law.”
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| Anchorage Superior Court Judge Eric Aarseth held a fitness review for guardian Tom McDuffie and his private guardianship nonprofit, Cache Integrity Services, in a public hearing at the Nesbett Courthouse on Wednesday, Feb. 14, 2024. (Bill Roth / ADN) |
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| A daughter and guardian holds her mother's hand, a former client, during the fitness review for former guardian Tom McDuffie and his private guardianship nonprofit, Cache Integrity Services, in the Nesbett Courthouse on Wednesday, Feb. 14, 2024. (Bill Roth / ADN) |
Last month, the Senate Judiciary Committee held a single hearing on public guardians, in which committee members questioned Stinson. But the hearing concluded with no clear further steps, and lawmakers have yet to propose any legislation this year that would address Alaska’s laws pertaining to guardians and conservators.
Aarseth said that the case would proceed with OPA investigating McDuffie’s actions, but the original question at the heart of the case — whether McDuffie is fit to serve as guardian — was moot, because McDuffie had surrendered his license in November.
Still, McDuffie continued to have access to the accounts of Cache Integrity Services and retained the ability to serve as representative payee — a service he began providing before becoming a guardian that involves collecting Social Security checks for recipients unable to do so themselves.
Aarseth said the court case would not pertain to McDuffie’s work as a representative payee, but last week, the judge granted an order that had been requested by OPA to notify McDuffie’s unhoused clients that he would no longer process Social Security payments for them.
A poster states that McDuffie or his employee, Kathleen Blomburg, “will no longer be receiving” Social Security funds and instructs people to call the Social Security Administration office in Seattle “if you have not received any information about your money.”
The judge ordered the information to be submitted “to the known homeless shelters, food pantries and other facilities meeting transient unhoused individuals in Anchorage and the Mat-Su Valley.”
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Judge rejects call for independent investigation of state-endorsed private guardian who neglected dozens of clients
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