Betrayal of Trust

Article excerpt

Lawyers, for-profit fiduciaries plunder finances of the elderly

A judge locks a man in an Alzheimer's unit despite the fact that he doesn't have the disease. A woman with more than $1.3 million in assets is left penniless and dependent on state assistance after court-appointed lawyers and private fiduciaries manage her care and finances. A law firm ratchets up the hourly rates of incapacitated adults it has been appointed by a judge to protect in violation of court rules, yet judge after judge approves the fees.

These snapshots are just a few of the cases in Maricopa County Probate Court, which is one of the nation's largest probate courts and until last year was viewed as a leader In laws to protect the elderly. Rules and regulations established by Arizona's Supreme Court to guard the welfare of vulnerable adults were held up as models for other states to follow.

But our ongoing investigation, "Probate Court: A Troubled System," exposed how the court has allowed the life savings of vulnerable adults to become cash machines for lawyers and forprofit fiduciaries. News stories and columns showed the failure of judges, state regulators and social service agencies to stop the drainage of incapacitated adults' assets, even when they ended up on welfare.The complete series - stories, video and interactive graphics - can be found at www.probate.azcentral.com.

For years, Arizona probate courts operated without oversight or scrutiny. A close-knit community of lawyers and for-profit fiduciary businesses paid themselves enormous fees out of the assets of the individuals, whose health and welfare they were appointed by the court to manage. And judges overseeing these cases rarely stepped in to limit these fees, which wiped out estates worth hundreds of thousands of dollars in a matter of months.

Fees weren't limited to the rich; modest savings of average working people also were depleted in probate court. Even in cases where fees did not wipe out an estate, the costs were so high as to undermine a person's ability to pay for nursing and other long-term care.

When outsiders, including lawyers and relatives of court wards, attempted to object or intervene, they were sometimes fined by the court.

The result: Some of those charged with protecting Arizona's oldest and most frail population were given legal authority to wipe out savings accounts, sell family homes and auction personal belongings for maximum profit.

And taxpayers picked up the tab when the accounts ran dry.

Squandered family fortunes

Of course, the first time any of us heard that millionaires were being driven onto Medicaid by the court system, we were more than a tad skeptical.

Stories of probate-court woes are often recounted by "victims" who are on the losing side of epic legal disputes that can be traced back to long-simmering family disputes. In many ways they are like custody disputes, where facts mix with emotion.

During our investigation, we encountered multiple cases where family fortunes were squandered in legal battles over such trivial things as who should attend a funeral, where ashes should be scattered and who would retain possession of a spatula.

But beginning in late 2008, Arizona Republic columnist Laurie Roberts started writing about individual probate court cases. Through court records, Roberts detailed the plights of three individuals whose dealings with the court system left them broke, locked up against their will and hiring new lawyers to fight their court-appointed ones.

In the newsroom, we were receiving financial documents from other sources, including lawyers and court wards and their relatives, about the fees being charged by court-appointed lawyers and fiduciaries.

Financials were backed by visceral allegations of abuse by fiduciaries and lawyers. In one case, a fiduciary paid itself $24,000 from a ward's accounts while telling relatives that the ward did not have enough money to pay for a hearing aid and dental work. …