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
- pressure;
- opportunity; and
- 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 4th 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 4th 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 4th 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 4th National Guardianship
Summit recommendations will continue to fight Silver Collar Crimes
occurring in guardianship for the next decade.
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