Tuesday, May 01, 2007

Allegheny Co Trust Acts Questioned

Yesterday's posting about a trust's litigation in Allegheny County, PA, drew my attention to another case reported by the same newspaper, the Pittsburgh Post-Gazette, about potential abuse in a trust's administration.

An article entitled
"New trust account mystery: Lawyer said woman's signature forged, then moved her money", by Dennis B. Roddy, published April 22, 2207, reported about questionable acts in the administration of a "living trust" established by an elderly woman for her own benefit.

The facts are distinctive -- and disputed. The article touches on issues of counsel independence, trustee competency, conflicts of interest & self-interest, proper authority to act, full disclosure, dual roles as counsel and a co-trustee, and appropriateness of transfers.

Allegations of a forged signature on a trust document ended in the transfer of more than $14 million in an elderly woman's trust fund from PNC Bank to Warren County-based Northwest Savings Bank. Expenditures from that trust are now at the center of a dispute over a series of $10,000 political donations the woman says she never approved.

Charles P. McCullough, the attorney for Shirley H. Jordan, a wealthy Upper St. Clair widow, last summer summoned the township police -- he is also solicitor for Upper St. Clair -- and asked them to find a handwriting expert to help him establish that Mrs. Jordan did not sign a document dated five months earlier that set up a trust account at PNC Bank. The bank has roundly asserted that no forgery took place. By year's end, Mrs. Jordan's trust arrangement with PNC was ended, with Mr. McCullough signing her name along with his own under his power of attorney.

After a court ordered audit of expenses -- which included $33,000 in legal fees to Mr. McCullough's law firm, Eckert Seamans, the money was moved to Northwest Savings. Mr. McCullough's handling of the Jordan trust last week became the focus of three different inquiries.

District Attorney Stephen A. Zappala assigned staff to review the case file in a preliminary look to determine if any laws had been broken, according to spokesman Mike Manko. Orphans Court Judge Lee Mazur has also issued an order for Mr. McCullough to submit an accounting of disbursements and financial transactions in the trust. Eckert Seamans, the Downtown law firm at which Mr. McCullough is a member, began an in-house investigation, according to the firm's Chief Executive Officer Timothy Ryan. * * *

This is one more case study about how trust arrangements can be altered or fiduciary actions taken, that later can be questioned as being unauthorized or inappropriate. The diminished capacity of the trust's creator -- and its lifetime beneficiary -- certainly adds to the confusion.

Thus, even in trust administrations with reputable professionals involved, there is always a standby role for reviews by law enforcement (including the PA Attorney General's Office where charities are benefitted) and the courts (through the Orphans' Court Division). These oversight roles should be activated under appropriate circumstances.

And, despite concerns about personal privacy, there is also a role for newspapers that report such investigations or audits.

The article's publication or the ongoing investigations already appear to have affected some of the parties involved, without the substantive objections yet being resolved by a court. See: "Embattled lawyer quits race for County Council", also by Dennis B. Roddy, published in the Pittsburgh Post-Gazette on April 27, 2007.
A lawyer whose handling of an elderly client's $14.5 million trust fund is under investigation has asked that his name be pulled from the May primary ballot for Allegheny County Council more than a month after the deadline to drop out. Charles P. McCullough, 52, an Upper St. Clair attorney and the solicitor for that township, announced he is ending his campaign for an at-large council post.

He has been under scrutiny by both the Allegheny County district attorney's office and Orphans Court over a quartet of $10,000 political donations from the trust fund of Shirley H. Jordan of Upper St. Clair.

Mr. McCullough has insisted she approved the donations, while Mrs. Jordan, in an interview with the Pittsburgh Post-Gazette, said she never authorized them and would never make such contributions.

* * *
Update: 05/06/07:

On Saturday, May 5, 2007, the Pittsburgh Post-Gazette published a long & detailed follow-up story, by Dennis B. Roddy, entitled "Widow's estate is frozen as lawyer investigated". The initial paragraphs only hint at developments in the case, so you should read the entire article.

An Allegheny County judge yesterday froze the $14.5 million trust fund of an elderly Upper St. Clair widow after prosecutors told the court the woman's attorney is under investigation in connection with political contributions made from her account.

Prosecutors from the office of Allegheny County District Attorney Stephen A. Zappala Jr. said they are investigating Charles P. McCullough, the woman's attorney, for possible theft by failure to make disposition of funds received and misapplication of entrusted property.

A petition filed with the court yesterday also says the woman, Shirley H. Jordan, 90, was unaware her money had been moved from PNC Bank to a Warren County-based savings bank. Legal documents making those transfers were signed by Mr. McCullough, acting under a broad power of attorney she granted him. * * *

Update: 05/08/07:

For further developments, read the complete article "Bank cooperating with trust fund inquiry", again by Dennis B. Roddy, published on Tuesday, May 8, 2007, in the Pittsburgh Post-Gazette:
A lawyer for Northwest Savings Bank last night said the company is cooperating with a search warrant issued by Allegheny County detectives for the bank records of an Upper St. Clair widow who says she never approved $50,000 in checks issued to political candidates and a local charity. * * *

* * * Mrs. Jordan had previously been adjudged incapacitated -- a ruling that was later lifted -- and was subject of a guardianship petition when she gave Mr. McCullough the power of attorney that halted efforts to have someone appointed to handle her personal affairs. * * *
Update: 02/20/09:

Further developments were reported in this matter by the Pittsburgh press and media. For example, see: Allegheny County Councilman McCullough arrested (02/19/09) by Jim McKinnon and Paula Reed Ward, published in the Pittsburgh Post-Gazette.
Allegheny County Councilman Charles McCullough was arrested and arraigned today on nearly two dozen counts following an investigation last year of his handling of an elderly widow's trust funds.
See also: McCullough Denies Charges Named In Indictment (02/20/09), posted by KDKA News.