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Old lady goes to federal court (and now she has company)

The old lady who lost all her money while being “protected” by Maricopa County's probate court is now pleading her case to another court — and she isn't the only one.

Three federal racketeering lawsuits were filed this week, accusing a group of lawyers and fiduciaries of working together to squeeze their vulnerable clients while Maricopa County's judges look on and do, well, nothing.

“Obviously, it (the probate system) isn't doing what it's intended to do, it isn't protecting vulnerable adults,” said attorney Grant Goodman, who filed the lawsuits after reading about 88-year-old Marie Long, who went from having $1.3 million to nothing in four years. “It's actually allowing these predators to strip these estates bare under the cloth of a judicial rubber stamp.”

Goodman filed the lawsuits on behalf of Marie and two other Scottsdale residents. Each of the defendants who responded to a request for comment denied any wrongdoing.

“The mentally incapacitated often think a guardian is an obstacle to their freedom,” wrote Peter Frenette, president of Sun Valley Group, one of the fiduciaries being sued.

“The lawsuit is baseless and we are confident that we will prevail on the merits in court,” attorney Brenda Church wrote in an e-mail.

According to probate court records, Church's law firms have collected $343,000 from Marie's trust since 2005, when the widow suffered a stroke and came under the protection of the court. Sun Valley, meanwhile, has collected $413,000 in guardian and companion care fees while seven other attorneys have scooped up another $86,000. As a result of all this “protection”, Marie is now in the poorhouse and will need taxpayer support.

The federal lawsuits, filed against nine attorneys and two of the state's largest fiduciary companies, allege that once appointed to handle the affairs of incapacitated adults, they “siphon off” their money, “ultimately abandoning their victims once their trust accounts and other assets have been dissipated.”

“Judges and commissioners tasked with overseeing the probate process have simply ‘rubber stamped' the actions of the participants in the Enterprise,” the suits say. “Meaningful objections are not made to one another's requests for approval of outrageous inflated fees charged their victims.”

One of the lawsuits claims that Helga Mallet, a 77-year-old Scottsdale woman, had investments worth $1 million in January 2008, just days before a probate commissioner declared her incapacitated and brought in various fiduciaries and attorneys to oversee her finances.

Nine months later, Mallet was broke, her investment account worth $1.76, and many of her properties and personal belongings had been sold for a fraction of their value. Probate court records say even her wedding album was sold at auction over her objections, though it eventually was returned to her. She also was forced into a mental hospital and forcibly medicated, after she resisted efforts to take control of her assets and a doctor declared her bipolar.

The records indicate that Southwest Fiduciar petitioned to have Mallet declared incapacitated and themselves appointed temporary conservator over her estate in February 2008. This, at the request of a cousin and Adult Protective Services, who were concerned because Mallet had sent $350,000 to a scam artist in Jamaica. Sun Valley was then brought in, first as a limited guardian and later taking over as conservator. Attorney Gerd Zimmermann was appointed trustee.

Zimmermann told me that Mallet was a big spender and had only $600,000 when he took over her finances in April 2008. Some of the money, he said, was used to pay her bills, including several past-due mortgages, and the rest was lost in leveraged investments, purchased on margin. Zimmermann called the lawsuit “nonsense.” An attorney for Southwest said that the company “properly discharged its duties” and that everything it did was approved by the probate court. Sun Valley, which is named in all three lawsuits, also said it did nothing wrong.

“There is a cost to care for the incapacitated,” Frennette wrote. “Any professional guardian (private or public) must charge fees or tax its citizens for its expenses.”

Sun Valley has not disclosed what it has collected from Mallet. In fact, there has never been a full accounting to the probate court of what happened to Helga Mallet's money.

Nor in the case of Edward Abbott Ravenscroft.

In early 2008, Ravenscroft was arrested several times for possession of drugs and later violated his probation. When authorities realized he was rich, a commissioner appointed attorney Paul Theut as his guardian ad litem in January 2009. Theut, in turn, petitioned to have Ravenscroft declared incapacitated — citing his drug use and mental health issues — and brought in Sun Valley to manage his finances. His client, he wrote, “has property that will be wasted or dissipated until proper management is provided.”

“Proper management” allowed Theut to collect $62,000 of Ravenscroft's money for just the first 3 1/2 months of serving as guardian ad litem, according to probate records. Meanwhile, attorney Lawrence Scaringelli, Ravenscroft's court-appointed attorney, collected nearly $33,000 for his first five months of work. Sun Valley hasn't yet disclosed what it's collecting and there has been no accounting of how much of Ravenscroft's nearly $6 million has been spent.

Neither Theut nor Scaringelli returned calls.

Ravenscroft told me he's been advised that $500,000 is now gone but no one will give him an accounting of his own money. For now, he says he's living on an allowance they give him — $300 a week — and sleeping on a friend's couch because he's been locked of his own home.

“I don't have a vehicle, I'm taking the bus. I basically have a backpack and I can't get any clothes on $300 a week,” he said. “It's just basically like a nightmare and I can't get out of it.”