Showing posts with label vulnerable clients. Show all posts
Showing posts with label vulnerable clients. Show all posts

Monday, September 16, 2024

3 Yrs. Prison For Stealing $500K From Law Firm Acct.: Nassau DA

Between 2014-2021, Michelle Byrd stole from bank accounts that benefited people with special needs, prosecutors said.

by Jerry Barmash

A Hempstead woman has been sentenced to up to three years in prison for stealing money from a law firm bank accounts, prosecutors said. (Shutterstock)

MINEOLA, NY — A Hempstead woman was sentenced on Friday to one to three years in prison for stealing more than $500,000 from a law firm that was the trustee for bank accounts that benefited people with special needs, prosecutors said.

Michelle Byrd, 55, pleaded guilty on April 29, to one count of second-degree grand larceny and second-degree criminal possession of a forged instrument.

Byrd paid restitution to the law firm for $106,287.02 and judgment orders were issued for the benefit of the law firm of $395,266.41 and $25,000 for the law firm’s insurance company, Nassau County District Attorney Anne Donnelly said.

“Michelle Byrd had a duty as a case manager for seven trusts to protect the firm’s vulnerable clients and manage their finances appropriately and carefully to ensure that their needs were met," Donnelly said. "Instead, this defendant acted only in her own self-interest, stealing hundreds of thousands of dollars from elderly and special needs clients to finance her lifestyle. Her despicable and unconscionable theft forced a wheelchair-bound stroke victim to sell his home because of the financial losses he suffered."

Donnelly said that Byrd worked for a Nassau County-based law firm that manages trusts for special needs clients. An attorney at the firm served as a trustee on trust accounts that supported seven clients and was the authorized signatory permitted to make disbursements and manage the beneficiaries’ bank accounts and transactions. Byrd, a salaried employee, served as a case manager, and was in frequent contact with trust beneficiaries regarding their financial needs, Donnelly said.

From April 2014 to April 2021, Byrd wrote hundreds of checks to herself from seven trust accounts, causing a total loss of approximately $526,553. Byrd forged the signature of the trustee on checks and forged bank statements to conceal the theft, Donnelly said.

"Byrd violated her ethical obligations and the trust of the clients she was supposed to serve and will now forfeit her funds and freedom to pay for her crimes," Donnelly said.

Full Article & Source:
3 Yrs. Prison For Stealing $500K From Law Firm Acct.: Nassau DA

Monday, December 13, 2021

‘The situation is dangerous.’ Parents sound alarm over troubled in-home care provider

Andrew Simmons, right, blows bubbles with his father Bo last spring. Andrew, who's profoundly autistic and mostly non-verbal, lives in a supported living home in Snohomish County operated by Aacres WA, a troubled state contractor. Bo Simmons says conditions in the home over the past year have deteriorated to the point of being dangerous for Andrew and his housemates.

By Austin Jenkins 

In February of this year, Leigh Anne Francisco’s severely autistic 21-year-old son Angus moved into a home for people with developmental disabilities operated by Aacres WA, LLC in Snohomish County.

Almost immediately, Francisco grew concerned about conditions in the home.

First, she noticed mysterious bruises on her son, including a large dark purple one on his inner thigh.

Then Angus and his housemate were left unsupervised one night because the overnight staff member never showed up.

There were other issues too.

Francisco said Angus was overfed and rarely taken out for a walk or to kick a soccer ball into the net she had set up for him in the backyard. He quickly gained 30 pounds.

When she visited, Francisco said she often found Angus’ hygiene had been neglected. The condition of the house also dismayed her — food and garbage on the floor, shampoo and toothpaste spilled in the bathroom. To make matters worse, Francisco said the staff was often “lounging around and on their phones.”

There were also medication errors. By September of this year, Francisco was frantic and trying to get Angus moved out of Aacres’ care.

“This is not what I had imagined for my son!” Francisco wrote in an email summarizing her concerns.

Francisco is one of two parents who, independently of each other, contacted the public radio Northwest News Network in September regarding concerns about Aacres in Snohomish County. The second was Bo Simmons whose 23-year-old son Andrew is also profoundly autistic and lives with three other Aacres clients in a home in Lynnwood.

In his message to the Northwest News Network, Simmons said Aacres was “very much not living up to expectations as a residential care provider for the state.”

“We’re talking about a serious burn which was never communicated to us, repeated times where there is a single staff member for four residents, never taking our son out into the community,” Simmons wrote.

In recent weeks, the parents’ pleas for oversight and accountability have reached state regulators who say they’re now investigating the company’s Snohomish County operations.

The complaints are just the latest against Aacres, a long-troubled care provider that currently has contracts with Washington’s Developmental Disabilities Administration (DDA) to provide in-home support to developmentally disabled clients in Clark, Pierce, Thurston, as well as Snohomish Counties.

Canceled contracts

In 2019, DSHS cancelled three contracts it had with Aacres WA to provide care for vulnerable clients in Spokane County. DDA said it took the action “based on serious non-compliance with the law and regulations.”

One of the contracts was terminated following the death of a client who was given household cleaning vinegar in lieu of colonoscopy prep medication. A former Aacres caregiver was subsequently charged with third-degree assault, and reckless endangerment in connection with the death. Her trial is scheduled for January.

In a statement at the time, the then-assistant secretary of DDA, Evelyn Perez, said: “We have lost confidence in Aacres Spokane. Not being in compliance with regulations and ensuring the health and safety of our clients is unacceptable.”

Previously, Aacres had also operated in King County. But in November 2018, Aacres announced it was pulling out of King County because of a lack of affordable housing and challenges related to recruiting and retaining staff. The move came after the state had put the company’s King County operation on 90-day provisional status for failing to correct serious deficiencies that "jeopardized clients' health, safety and welfare."

Nevertheless, DDA allowed Aacres to continue serving vulnerable clients elsewhere in Washington under separate contracts with the state.

Records show that during the 2019 to 2021 biennial budget, Washington’s Department of Social and Health Services (DSHS) paid Aacres more than $92 million making it the agency’s seventh largest contractor. So far this budget cycle, which started July 1, state payments to Aacres total $16.3 million.

As of the end of 2020, Aacres served approximately 220 clients across the four counties, according to DDA.

Founded in 1974, Aacres is one of several human services companies operated by Spokane-based Embassy Management, LLC. According to the website for Bregal Partners, a New York private equity fund, Embassy is one of its portfolio companies.

Aacres and Embassy Management did not respond to multiple requests for comment.

In previous statements, the company has said that shortcomings in care “in no way reflects our passion, commitment and resolve to our mission to safely serve individuals in their homes and communities.”

A beleaguered industry

Historically, people with developmental disabilities in Washington were served in state institutions known as Residential Habilitation Centers. But over the decades those facilities have downsized as part of a state and national shift to serving individuals in the community.

DDA’s largest community residential program for people with developmental disabilities and significant support needs is called Supported Living Services.

Today, roughly 140 supported living agencies, including Aacres, serve about 4,600 clients who qualify for DDA services.

Under the program, clients live in their own home with up to three other housemates while being supported, often around-the-clock, by agency staff.

The clients pay for rent, food and other expenses while the state’s Medicaid program covers the cost of the support staff. In 2020, Washington’s supported living expenditures were $768 million, according to DDA. That included a temporary COVID-19 rate increase for contracted agencies paid for with federal relief dollars.

But Scott Livengood, the legislative chair for the state’s Community Residential Services Association, said the industry has not caught back up since rates were cut during the Great Recession.

“Due to funding increases not keeping pace with the cost of living and the steady increase in our statewide minimum wage, the average starting wage for a [direct support professional] is now around $15 per hour, which is only 5% above the statewide minimum wage [that takes effect] next month and 25% below a self-sufficient wage,” Livengood said in a statement.

As a result, he said, most frontline support staff work two to three jobs and average turnover in the industry is about 50 percent. Livengood estimated the current vacancy rate is approaching 20 percent as agencies lose workers faster than they can hire them.

“The pandemic has made the situation even worse, as we are competing with fast food and retail jobs offering $18 to $20, along with attractive benefit packages and hiring bonuses,” said Livengood who is also CEO of Alpha Supported Living Services, a nonprofit serving clients in King, Snohomish and Spokane counties.

To try to slow the attrition, supported living agencies have offered signing bonuses and “hazard pay” during the pandemic. But the federal stimulus dollars that funded those enhancements are scheduled to expire at the end of the year making it even harder to recruit new employees, Livengood said.

It’s not just the pay, but the nature of the work that makes finding and keeping employees difficult. Staff are often required to work nights and weekends. And the clients can exhibit challenging and even violent behaviors.

In the past, Aacres has pointed to the challenge of recruiting and retaining front-line staff as a factor in its quality of care lapses.

State records show that since 2018 Aacres in Snohomish County has been subject to four inspections, two investigations and one enforcement action.

In January 2019, Aacres was fined $1,000 after the subflooring in one of its Snohomish County homes failed and a client fell into the space below and was injured.

Then in August of this year, an unannounced inspection of Aacres homes in Snohomish County found a number of deficiencies — especially around COVID-19 protocols. Among the findings was that visitors, staff and clients weren’t properly screened for COVID symptoms.

The concerns of family members have also reached state regulators. The state’s Residential Care Services (RCS), a division of DSHS, confirmed to the Northwest News Network that it has active investigations underway into multiple complaints about substandard care at Aacres homes in Snohomish County.

However, Aacres in Snohomish County has not been put on “stop placement” status, where an agency is barred from accepting new clients, or put on provisional certification status which is the last step before decertification.

“If the complaints are found to be substantiated, Aacres, like any other provider, will be held accountable for its deficiencies,” said RCS director Mike Anbesse in a statement.

Aacres isn’t the only supported living agency to draw scrutiny this year. Over the past 11 months, the state has issued 171 citations and 48 statements of deficiency against supported living providers for violations, according to data provided by DDA.

An unreported burn

For months, Bo Simmons and his former wife Louise had been uneasy about the care their son Andrew was receiving from Aacres. They noticed staff turnover was high and sometimes there was only one caregiver on duty in the home, despite there being four clients to care for.

Often Andrew would spend much of the day in bed. Occasionally, the staff failed to get him to dental and doctor appointments. He even missed virtual meetings with a job coach.

But concern turned to alarm earlier this year when Louise went to visit Andrew and discovered the palm of his hand had been burned, possibly from touching the stove.

Adding to their distress was the fact no one told them about the injury. Andrew had also not been taken to the doctor for treatment of the burn.

Then, about a month ago, there was another upsetting incident. Andrew, who has migraines and often bangs his head on surfaces because of the pain, slammed his head into a plaster wall in the bathroom. Shortly after that he knocked a staff member to the floor and in the tussle hit his head a second time.

Medics were called to the house. They evaluated Andrew, but did not take him to the hospital. Simmons said the staff was supposed to monitor Andrew for signs of a concussion. Instead, he said, they gave Andrew a sedative and let him go to sleep. When Louise came to visit Andrew that afternoon, she found him in bed soaked in urine.

For Andrew’s parents, that was the last straw.

“He’s a very amazing young man, and he deserves better,” Simmons said tearfully during an interview.

In his desperation, Simmons launched what he described as a “full court press” to bring attention to the plight of his son and other Aacres clients in Snohomish County.

Working closely with Louise, he's urged the state to conduct a “complete review” of Aacres and its parent company, Embassy Management. He's also lobbied DDA to move Andrew to a different supported living provider. And, recently, he retained an attorney who specializes in representing the interests of people with special needs.

In September, Simmons summarized his concerns about Aacres in an email to a top DDA official.

“Andrew has languished in their care,” Simmons wrote. “We suspect that there are many other clients who are not well represented who are in a similar state and we want to advocate for them as well.”

Last month, Simmons followed up with an even more desperate message to DDA’s regional administrator in Snohomish County.

“The situation is dangerous. Seriously dangerous,” Simmons wrote. “The residents and the caregivers are being placed in an extremely unsafe and dangerous environment. It is Aacres management who are to blame for this situation, not the caregivers.”

In response, DDA officials said they’re aware of the concerns.

“I do understand that we are experiencing some challenges right now up in Snohomish County with Aacres,” said Shaw Seaman, DDA’s quality assurance chief.

Seaman said the state is committed to quality improvement and interested in supporting Aacres so that it can get back on track.

Getting results

Lately, Bo Simmons said he’s seen some signs of progress.

First, DDA dispatched an inspector to visit all of the Aacres homes in Snohomish County to document immediate health and safety hazards. Aacres is now required to submit weekly reports on progress in correcting any deficiencies, according to email communications Simmons shared with the Northwest News Network.

Simmons also met with Aacres management and received assurances that the company would address his concerns. Soon after, Aacres held a retraining session for the staff who work with Andrew.

Aacres management also sent a behavioral clinician and its clinical director to visit Andrew and observe him in his environment. The behavioral clinician plans to continue twice weekly visits with the goal of modeling “for staff how to work with him,” according to an email Aacres’ area director sent Simmons.

Then, on the evening before Thanksgiving, both parents attended a virtual meeting with DDA officials. In a post-meeting email, Simmons said the DDA staff showed “empathy and compassion for our situation.”

The state has also agreed to make a referral for Andrew to a state-operated home for people with developmental disabilities, although there’s no guarantee of a bed being available for him.

Simmons is hopeful Andrew’s care will improve. But he also continues to question whether Aacres is deserving of the $726.28 a day that the state pays the company to care for his son.

“Andrew is most definitely not receiving what the state is paying for,” Simmons wrote in his September email to DDA.

Leigh Anne Francisco, Angus’ mother, also reported her concerns to DDA and RCS, but said months went by before she heard back from anyone. Separately, she was contacted by Adult Protective Services (APS) and provided the investigator with a statement. APS would neither confirm nor deny if it's currently investigating Aacres.

Like Simmons, Francisco also decided that she needed to get Angus moved out of the Aacres home. Her final straw came when her son and his housemate were left unattended overnight earlier this year.

“He’s not safe there, the other roommate is not safe,” Francisco said.

But in the months since, she’s had no luck finding another provider to take him.

“I feel as if I’ve failed as a mother because I haven’t gotten him out of there,” Francisco said.

Francisco recently had a conference call with the new area administrator for Aacres who apologized and told her they want to do better.

Even before that call there were some hopeful signs. The waist-high lawn in front of Angus’ house was finally mowed and damage the residents had done to the walls, which had previously been covered by cardboard, was repaired.

“I’m always cautiously optimistic,” Francisco said: “But the story that I’ve been given so many times is ‘we’re going to make this better, we’re so sorry, we’re retraining everybody.'"

Full Article & Source: 

Saturday, October 9, 2021

State Supreme Court orders disbarment of former Sewell attorney

by Jim Walsh

TRENTON - A former South Jersey attorney has been disbarred after a disciplinary panel called her "a detriment to the profession."

The state Supreme Court ordered the action against Stephanie Julia Brown, who formerly practiced in Sewell, after reviewing a 97-page report on seven complaints against her.

The report, prepared by the court's Disciplinary Review Board, asserted Brown "either refuses to provide, or is incapable of providing, her clients with even a rudimentary level of competent representation."

It also said Brown "has demonstrated a dangerous habit of undertaking the representation of vulnerable clients and utterly failing them, in some cases to their detriment, and lying to them."

And the report claimed Brown, who did not respond to the ethics charges against her in New Jersey, had "a long history of snubbing courts (and) disciplinary authorities."

Brown could not be reached for comment on the high court's Sept. 28 order.

The disciplinary board recommended disbarment for Brown, who received a law license in New Jersey in 2006 and in Pennsylvania two years earlier.

It noted she had been suspended from the practice of law in New Jersey since April 2019, and was previously disciplined in Pennsylvania.

Most of the allegations against Brown arose from the representation of clients seeking representation in U.S. Bankruptcy Court, the report said.

An account of one complaint noted a client's multiple efforts to obtain basic information about her bankruptcy filing.

"This was beyond dropping the ball," the client, Nicole Ferrara, wrote about Brown's performance in a letter cited by the report. "She lied about having my work completed and was unresponsive from the beginning."

Among other points, it said Brown failed to tell Ferrara that her bankruptcy action would allow her to recover a car that had been repossessed. She also incorrectly advised Ferrara to turn down a job, mistakenly saying the salary would exceed a level allowed under the bankruptcy filing.

One ethics complaint arose from Brown's guilty plea in March 2019 to charges of driving while intoxicated and driving during a license suspension for a previous DWI conviction.

The complaint alleged the conviction reflected "adversely" on Brown's honesty, trustworthiness or fitness as a lawyer.

"We are not unmindful of what appears to be (Brown's) serious substance abuse issue involving alcohol," said the report;

But it also noted "her inability or refusal to address this issue," as well as "the adverse consequences suffered by multiple clients … and her contemptuous conduct toward the courts."

As a result of those findings, the board said, "We reach the conclusion that she must be removed from the practice of law in order to protect the public and preserve confidence in the bar."

Full Article & Source:

Thursday, February 25, 2021

Brokerage Firms Face Litigation Risks With Senior, Vulnerable Clients

Litigation involving the elderly and other vulnerable investors is set to increase in the coming years due in part to an aging investor population (indeed, all baby boomers are set to reach at least age 65 in 2029!).

As investors age, brokerage firms and investment advisers will increasingly face dilemmas involving diminished capacity and financial exploitation of their senior and vulnerable customers. Spotting potential issues in this space is not always easy and firms can face costly litigation as a result.

Consider the following hypothetical:
A 75-year old customer calls his financial adviser seeking to change the beneficiary on his account to his new caregiver and instructs the adviser to liquidate a large and long-held position with Company X. Feeling that the customer’s requests are suspicious, especially given the customer’s age and a recent hospitalization, the financial adviser raises the issue with his manager, and the manager directs that a hold be placed on the transaction.

The firm conducts a thorough internal review and, determining there to be no evidence of financial exploitation, the transaction hold is lifted. In the interim, however, Company X’s share price drops. The customer loses out on a significant amount of profit per share and seeks recovery against the financial institution through litigation.

FINRA Rules and State Laws

A firm’s temporary hold on a customer’s transaction must be authorized by rule, statute, or account agreement. FINRA Rule 2165 permits firms to place temporary holds only on disbursements of securities from accounts of senior and vulnerable adults. Under current FINRA rules, therefore, the firm in the scenario above would not have the ability to place a temporary hold on the customer’s transaction. This situation, however, is evolving. FINRA has proposed an amendment to Rule 2165, which would allow firms to place transaction holds in suspected instances of financial exploitation.

But, the firm is not out of luck. Twenty-nine states have adopted, in whole or in part, a statute modeled after the North American Securities Administrators Association (NASAA) Model Act that is designed to protect vulnerable investors from financial exploitation. Most states permit firms to place a temporary transaction hold. This represents a growing trend—with New Jersey, Florida, West Virginia, and Oklahoma all adopting financial exploitation statutes with transaction holds in 2020.

Best Practices

Firms are under tremendous pressure to make correct decisions, as displayed in the case study above. If the broker or firm turns out to be wrong, it may find itself the subject of an arbitration action. So, how do firms make sure to get these calls right?

Firms should take proactive steps to protect senior and vulnerable customers before any financial exploitation is suspected. In addition to protecting the vulnerable customer, these steps, some of which are outlined below, will benefit the firm in future litigation.

Training and Policies and Procedures. Florida and New Mexico have statutes that require firms to develop training, policies, and procedures “reasonably designed” to train agents on issues relating to financial exploitation of vulnerable adults. Firms should design their training programs to educate their employees about different signs of financial exploitation.

The training, policies, and procedures should be robust: a customer’s counsel will attempt to attack the firm’s training to undermine state statutory immunity.

Centralized Reporting Groups. Firms that employ a centralized reporting group (or individual) are more likely to be equipped to identify and act on suspected financial exploitation. Individuals within a centralized group operate at an “expert” level on FINRA rules and state laws that is not always achievable for a registered representative.

Protecting the Customer (and the Firm) After Suspected Exploitation

Even the best training programs, policies, and procedures cannot prevent financial exploitation. The question then becomes: What steps should the firm take after suspecting financial exploitation to both protect its customer from harm and shield itself in a potential litigation? Thankfully, the steps taken to achieve these goals are typically aligned.

Contact Third Parties. FINRA Rule 4512 requires brokerage firms to make reasonable efforts to obtain the name and contact information for a trusted contact person. The trusted contact person is a great place to start when the firm suspects financial exploitation. However, clients often choose not to designate such a person, or the trusted contact may be the one suspected of engaging in the exploitation. In that case, firms should turn to state law.

Many states allow firms to go beyond FINRA’s trusted contact person to contact individuals “reasonably associated with the vulnerable adult.” Understanding state law requirements is a great first step.

Contact Government Agencies. Firms should look to the state where the customer is located and report to all applicable government agencies—no matter whether the state requires reporting. In states with NASAA-based financial exploitation statutes, firms should also be aware of their reporting obligations under long-standing adult protective services laws.

Documentation. Firms should document each step they take after suspecting financial exploitation, including the rationale for contacting third parties and government agencies, and the results of their internal review. For example, defending against the senior investor’s claim in the scenario above will require documentation as to why the registered rep developed a reasonable belief of financial exploitation, what steps the firm took to investigate, and which individuals/government agencies were contacted.

Firms are accustomed to lawsuits brought by disgruntled customers. By taking the steps above, firms can act proactively to protect their customers while developing important tools and evidence to be used in potential litigation.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Full Article & Source:

Tuesday, February 5, 2019

Albuquerque firm accused of embezzling about $50k from clients


ALBUQUERQUE, N.M. (KRQE) - A non-profit that's supposed to be helping vulnerable people with their finances is accused of bilking them out of money. Many of those clients had already fallen victim to crooks before.

Attorney General Hector Balderas says he got a tip from a local judge last year about the CEO of Guardian Angels Representative Payee Services, taking money from more than 240 disabled clients.

Thursday, he issued a search warrant and found the business took about $50,000 in a banking scheme.

"We already confirmed that we don't believe these proceeds were spent in the interest of the clients and so I'm very concerned," says Attorney General Hector Balderas.

Balderas says BBVA Compass Bank was offering a promotional $200 bonus for opening up a checking account. According to a search warrant, Guardian Angels opened up accounts for 247 clients, and CEO Pamela Crumpler would take the $200 bonuses and transfer them to the company's account.

The AG's Office found Crumpler had been doing this since June 2018, pocketing almost $50,000.

Friday, a client of Guardian Angels told KRQE News 13 he's had problems with them in the past.

"They need to do a more thorough background check and they need to do more audits on them," said Roger Hardy.

Hardy was also a victim of the now defunct Ayudando Guardians.

Many of Ayudando's clients were moved to Guardian Angels after their founders were charged with stealing more than $4 million from accounts to feed their lavish lifestyle.

KRQE News 13 reached out to Crumpler, the CEO of Guardian Angels, Friday afternoon. She did not wish to comment and said thank you for the call, then hung up.

The AG's Office anticipates charging Crumpler sometime next week.

Full Article & Source:
Albuquerque firm accused of embezzling about $50k from clients

Monday, February 4, 2019

AG says vulnerable clients were victimized a 2nd time

Attorney General Hector Balderas sounded the alarm Friday for more oversight of professional firms that handle money for vulnerable people, disclosing that his office has “credible evidence” that an Albuquerque company siphoned about $50,000 from nearly 250 clients after inheriting their cases from the now-defunct Ayudando Guardians Inc.

The AG’s allegations against Guardian Angels Representative Payee Services, located on San Pedro NE, represent the third time in less than two years that a private company entrusted to manage finances for special needs or otherwise vulnerable people has been accused of embezzling their funds.

No arrests have been made, but AG agents executed a search warrant Thursday at the firm and removed several dozen boxes of documents. The owner/operator of the company, Pamela Crumpler, had no comment Friday when contacted by the Journal.

Balderas cited the “critical investigation” of the firm in asking Gov. Michelle Lujan Grisham in a letter Friday for her assistance in combating the “guardianship crisis in our State.”

“In the wake of this investigation and previous scandals,” Balderas wrote, “we have the opportunity to trigger all available state resources and create more oversight in these matters.”

He noted “systemic failures of state and federal governments that must be immediately addressed by all stakeholders.”

“The current lack of state regulation and oversight of guardianship and representative-payee services presents a clear and present danger of repeated exploitation of this population that deserves our immediate attention, intervention and protection,” he wrote.

Ayudando Guardians Inc., one of the state’s largest guardian and representative payee services firms, was closed by the U.S. Marshals Service in late August 2017 after its two principals and two family members were implicated in a $4 million embezzlement of client funds.

The four defendants are awaiting trial in federal court on money laundering, fraud and other charges linked to the scheme that prosecutors say supported a lavish lifestyle that included vacation cruises and luxury cars.

Ayudando’s estimated 1,400 clients were transferred by U.S. Marshals to other guardians or firms, like Guardian Angels, whose website states that it is a nonprofit corporation formed for “charitable purposes.”

As a representative payee, the company charges a monthly fee to receive clients’ Social Security or other government benefits, annuity payments or settlement proceeds, and pay their expenses for food, housing and other needs.

In the federal Ayudando case, prosecutors chiefly focused on the federal military veteran benefits allegedly embezzled.

Months before the Ayudando revelations broke in 2017, state securities regulators announced that more than 70 clients of Desert State Life Management of Albuquerque were the victims of a separate $4 million embezzlement.

The clients of that now-closed firm, which acted as conservator and fiduciary for developmentally or physically disabled and elderly individuals, are still trying to recoup their losses. Meanwhile Paul Donisthorpe, former CEO of the firm, is to be sentenced in U.S. District Court in Albuquerque on Feb. 22 after pleading guilty to money laundering and wire fraud.

In his letter to Lujan Grisham, Balderas stated that in December 2017 he received a request from Albuquerque’s state district court judges asking that his office review “certain civil guardianship matters which were not investigated or prosecuted federally.”

That resulted in the investigation of Guardian Angels Representative Payee Services, which inherited nearly 250 of Ayudando’s clients who needed help managing their funds. Balderas told the governor it was tragic that these individuals had been victimized after their cases were transferred by the U.S. Marshals to Guardian Angels.

Guardian Angels, like any other representative payee organization, “takes complete control over how these funds are expended, and where that money is ultimately deposited,” Balderas wrote in another letter Friday to officials with BBVA Compass Bank, based in Birmingham, Ala.

Guardian Angels is accused of taking advantage of a promotion by Compass Bank, in which the bank would deposit $200 into a newly created account that met the promotional requirements.

“Unfortunately,” Balderas wrote, the CEO of Guardian Angels “shifted the accounts of 247 vulnerable persons to BBVA Compass.” Then the CEO withdrew the $200 promotion from each account and deposited the funds into “an account only she had control of.”

“Investigators in my agency have probable cause to believe that the CEO of GARP converted these funds to her own personal use, to the detriment of these vulnerable persons, to pay her own personal financial obligations,” stated Balderas’ letter to the bank.

In an affidavit to search the company’s premises, an AG investigator stated that during a guardianship hearing before state District Judge Shannon Bacon of Albuquerque last September, the court-appointed guardian from Professional Guardianship Associates told the judge she had concerns about a protected person’s bank account.

Guardian Angels had been appointed to act as representative payee a year earlier for that individual, and the guardian learned the protected person’s bank account had been transferred to Compass Bank without notifying the guardian.

When she inquired of Guardian Angels about the $200 bonus, the guardian was told there had been a mistake by the bank and the money should have gone directly to the representative payee firm.

After the judge was told of the discrepancy, Guardian Angels transferred the $200 back into the protected person’s account. That prompted the AG search of other clients’ accounts.

A search warrant executed last November by the AG showed expenditures and transaction that Guardian Angels “would not have been able to conduct … had it not been for the bonus money GARP unlawfully obtained from 247 of its clients,” the AG investigator stated in an affidavit.

Full Article & Source:
AG says vulnerable clients were victimized a 2nd time

Monday, September 4, 2017

Who guards the guardians?: Judge vows to fight for clients who lost trust funds

The civil case of Ayudando Guardians Inc. v. Desert State Life Management involves two companies accused of siphoning client accounts for personal gain.

With their owners absent for an initial hearing in the lawsuit Wednesday, a state district judge heard from those who are picking up the pieces after the shocking collapse this summer of the two New Mexico nonprofit companies that for more than a decade specialized in serving developmentally disabled, elderly and otherwise vulnerable clients.

In the audience were lawyers from the U.S. Attorney’s Office, which is prosecuting Ayudando Guardians and its two principals on criminal charges of embezzling at least $4 million in client funds; and Liane Kerr, whose former husband Paul Donisthorpe has been accused by state and federal authorities of embezzling $4 million from his clients’ accounts at Desert State. He hasn’t been criminally charged.

At issue Wednesday was how to proceed with the lawsuit filed by Ayudando Guardians on June 6 seeking damages from Desert State on behalf of seven clients. Those clients entrusted their funds for Desert State to manage, the lawsuit states.

That case was filed a month before Ayudando’s two principals, Susan Harris and Sharon Moore, and the company itself, were indicted July 11 by a federal grand jury for embezzling more than $4 million from their clients. The U.S. Marshals office has been running Ayudando since then, with the prospect of a shutdown of the company imminent. Harris and Moore have pleaded not guilty.

Donisthorpe didn’t attend Wednesday’s hearing. He hasn’t responded to requests for comment and is reportedly brain damaged from a botched suicide attempt.

His wife of 31 years, Kerr, filed for divorce in March after state financial examiners began to look into Desert State’s books. She appeared in court with her attorney Wednesday, but didn’t comment. In court records, Kerr has denied any involvement in the alleged embezzlement scheme or the trust company business.

Both companies are being dismantled by government agencies in light of the fraud and embezzlement allegations.

Judge Alan Malott on Wednesday denied a motion to dismiss Ayudando’s claims against Desert State, vowing to make sure the seven Ayudando clients who may have lost trust funds at Desert State “don’t fall through the cracks” because their guardian is under federal indictment.

“There may be nothing left, but I’m going to try to get as close to the penny as I can get,”said Malott.

Desert State in early August was placed into the receivership of the state Financial Institutions Division.

An estimated 70 people who were clients of Desert State have lost some or all of their trust money, state officials say. Malott, during the hearing, said state district judges are in “crisis management” mode trying to find replacement guardians for Ayudando’s clients.

State FID attorney Kevin Graham told Malott that families and individuals, some with “limited” ability to understand “what’s going on in the case,” have contacted the state to find lawyers to help recover their missing trust funds.

Meanwhile, the state Public Accountancy Board last week revoked Donisthorpe’s CPA license.

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Who guards the guardians?: Judge vows to fight for clients who lost trust funds