Monday, December 03, 2007

POA Abuse Cases Pressed by PA AG

On November 29, 2007, the Pennsylvania Attorney General, Tom Corbett, announced prosecution of a new fraud case enabled by a power of attorney, and also the sentencing of a defendant in a prior POA fraud case.

These developments were described in two separate Press Releases:

The first Press Release describes the situation that occurred in Schuylkill County, PA, resulting in a new prosecution:
A Schuylkill County couple were charged today by the Attorney General's Elder Abuse Unit, with stealing more than $84,000 from a 76-year old acquaintance.

Attorney General Tom Corbett identified the defendants as Catherine M. Whitney, 57, and Robert M. Whitney, 56, both of 718 Mahantango St., Pottsville.

Corbett said that the Whitney's were appointed to act in the best interests of, Louis V. Long, under the terms of a July 2003 power of attorney. The Whitney's are accused of systematically withdrawing or transferring funds from their friend's bank accounts for their own benefit.

According to the criminal complaint, the Whitney's befriended Long in 2001 after becoming acquainted through Long's church in Mahanoy City. Long had no family in the area and the Whitney's allegedly convinced him that they could care for him and act as his power of attorney.

In April 2004, Long's physician diagnosed him with the early stages of dementia. The following summer, Catherine Whitney began to pay herself $700 a week from Long's funds to take care of him.

The charges state that in September 2004, Catherine Whitney moved into Long's residence to provide him full-time home care and subsequently increased her weekly pay to $1,000.Corbett said that Catherine Whitney paid her own compensation from Long's checking account.

According to the criminal complaint, the Whitney's misappropriated more than $84,000 of Long's funds from July 2003 to February 2006.* * *

Corbett noted that Long died on March 24, 2006. * * *
The common elements of misuse of a power of attorney are reported in this Press Release: Assets owned by a senior; reduced capacity of the senior; execution of a broad power of attorney by the senior, as principal, in favor of individuals; conflicts of interest or self-interests traceable by the agent's activities under the POA; and significant, unilateral reduction of the senior's assets mainly benefiting the agent.

It is a pattern that the Attorney General, unfortunately, sees often:
"Sadly, Pennsylvania seniors often suffer at the hands of those entrusted with their care," Corbett said. "The Whitney's duped an elderly man into trusting them and then took advantage of that trust in order to pad their bank accounts."
The criminal prosecution poses serious potential penalities to an individual agent:
Catherine and Robert Whitney are both charged with seven counts of theft by unlawful taking and one count of criminal conspiracy, third-degree felonies punishable by up to seven years in prison and a $15,000 fine.
The second Press Release announced sentencing of a defendant in a criminal case previously pressed by the PA AG's Office over a year ago. See: PA EE&F Law Blog posting, "PA AG's Elder Abuse Unit Files Charges Against Daughter in McKean County" (09/27/06).

This other Press Release now announced the result of that prior prosecution:
Attorney General Tom Corbett today announced a substantial prison sentence for a McKean County woman accused of using a power-of-attorney to financially victimize her elderly mother.

Grace Telese Damon, 42, of Bradford, was sentenced today in McKean County Court of Common Pleas to a prison term of one to three years, to be served at the State Correctional Institution in Muncy, PA. Damon was also sentenced to two years probation, along with 120-hours of community service, and ordered to pay $33,342 in restitution and costs.

Corbett said that Damon was appointed to act in the best interests of her elderly mother under the terms of a power of attorney, but instead of properly administering her mother's accounts, Damon systematically withdrew or transferred funds for her own benefit. * * *

Fraud by POA, by becoming a nationwide phenomema, is creating a great debate in legal circles and in legislatures. There are many safeguards that could curb abuse of POAs, such as those suggested in the report issued March, 1994 by the Government Law Center of Albany Law School, entitled "Abuse and the Durable Power of Attorney: Options for Reform" (PDF, 119 pages).

However, many of those restrictions would unduly impede the ability of a good & faithful agent to act -- or even be willing to accept an appointment as agent.

And so, lesser, common sense tips are often applied. See: "
Steps can reduce risks associated with power of attorney", by Jim Flynn, published November 14, 2007, by the Colorado Springs Gazette.

The Wall Street Journal recently published an article reporting the Astor case in New York. The authors queried lawyers about practical tips to avoid becoming the subject of financial abuse under a POA.
See: "How to Ensure Relatives Don't Rip You Off -- Case of Astor's Son Highlights Risks of Powers of Attorney" (11/28/07), by Rachel Emma Silverman & Ashby Jones:
Estate lawyers say older people are often making use of a tool known as a durable financial power of attorney. This legal document authorizes an agent -- usually a spouse, another family member, or a trusted adviser -- to make financial decisions if you become unable to make them yourself.

But naming someone to take control over your money has the potential for serious abuse, and lawyers are increasingly devising strategies to help safeguard their clients. * * *

I have posted many entries about POAs on this blog under the heading "Power of Attorney". POA abuse now holds greater public & legislative attention. The headlines catch readers' attention. See: News report, "Man Charged with Stealing from Dad", by Josh Brogadir, posted by WNEP-News (06/13/07); and similar reports of cases (some story links no longer available), including:
  • "Financial Elder Abuse Cases in PA" (07/12/07), posted on this Blog.
  • "Chesco man accused of bilking ailing woman" (01/12/07), published in the Philadelphia Inquirer -- Authorities said a Tredyffrin Township man exploited the ailing wife of his late business partner, using his power of attorney to steal $44,500.
  • "Woman charged with stealing $141,000" (04/14/07), published in the York Dispatch -- A woman has been charged with stealing more than $141,000 from a woman for whom her husband allegedly had power of attorney.

Clearly, in the wrong hands, a powerful POA can become, as Business Week magazine characterized in its 2006 article, a "License To Steal" From Seniors (06/05/06) [from which the graphic above was copied]. Read the twenty posted reader comments for reactions to the article's points & warnings.

That article concludes: "
No one likes to think a family member, friend, or caregiver would steal money from them. But it does happen, and it is best to plan ahead to guard against it."

Update: 12/04/07:

For a case in Maryland regarding alleged misuse of a power of attorney,
see: "Court of Appeals hears dispute over daughter’s deed to herself", by Liz Farmer, published by the Maryland Daily Record on December 4, 2007.
Diane M. * * * Figgins’ father “expressed to his attorney that he wanted to give the equity of the family home” to her in October 2004 and asked the lawyer, Scott C. Borison, to draw up a deed when the financing fell through, Wood said. He added that Borison also told Figgins she could sign the deed herself after her father slipped into a coma.

Wood hoped to persuade the top court that Borison should be allowed to testify about those conversations in a legal dispute over the transfer.

Figgins’ brother, William A. Cochrane, took her to court over the deed to herself. Cochrane, the legal administrator of their father’s estate, claimed Figgins abused her power of attorney.

A Frederick County judge agreed after excluding Borison’s testimony from the 2006 trial. The Court of Special Appeals upheld the decision earlier this year. * * *
Update: 12/05/07:

My friend, fellow attorney & blogger Charles Goerth, sent me an email message, noting my posting, and responding with one of his own, posted today on his fascinating, hard-hitting blog.

Check out Charlie's ruminations on this problem in "
POA abuse can strike little people, too" (12/05/07):
Neil, your posting on the AG's action against the Pottstown couple was informative and timely, as have your other warnings about misuse of the PROPPA.

It spurred me to a
posting based on your report and the Astor indictment.

We lawyers who work with the elderly, in particular, on PROPPAs have a special responsibility.

-- Charlie Goerth
Update: 12/06/07:

For a case in New Jersey, reported on December 5, 2007, see: "Woodbridge couple indicted for robbing elderly woman -- Pair accused of defrauding 80-year-old with dementia of $400,000", by Kathy Chang, published by the Woodbridge Sentinel:
A Middlesex County grand jury has indicted a Woodbridge husband and wife for allegedly taking over $400,000 from their 80-year-old neighbor, who was diagnosed with a form of dementia in 2005, and allegedly using $300,000 to refurbish their home, open a restaurant in Piscataway and pay for their child's wedding. * * *

The indictment alleges that between January 2003 and Dec. 31, 2005, the Triantafillidises obtained funds totaling over $400,000 from their 80-year-old female next-door neighbor, whom Barbara befriended and for whom she obtained power of attorney in March 2003, the prosecutor's office said. * * *
Update: 12/13/07:

A blog posting by
my friend, Charles R. Goerth, Esq., notes a POA abuse case in Illinois, which resulted in an 8-year prison term. See: "Couple who misused POA gets 8 years".

Update: 12/10/08:

On December 4, 2008, the
AARP Public Policy Institute and the American Bar Association's Commission on Law & Aging, issued a research report entitled "Power of Attorney Abuse: What States Can Do About It" (Nov., 2008), which "explores the problem of power of attorney abuse and how state legislatures can protect vulnerable adults against it."

PA EE&F Law Blog posting "
POA Abuse Report and a PA POA Trial" (12/10/08).