Stealing money from children, senior citizens or mentally ill people ought to be harder than it is, and Palm Beach County’s comptroller wants clerks statewide to clamp down on guardianship fraud.
To date, only two Florida counties have procedures in place to investigate guardianship fraud. Sharon Bock, Palm Beach County’s clerk and comptroller, didn’t originate the idea. Pinellas County has gone after fraud against wards of the state for a decade. But once Bock saw the need she became an advocate beyond her borders.
"We’re going to be doing seminars for the newly elected clerks," she said. "Some counties are so small they don’t have substantial probate cases. But in Broward, Dade and Duval, you really are talking about a lot of money."
Twenty-one, or almost a third of the state’s county clerks, started their first term in January.
A milestone was reached in January when sheriff’s deputies made the first arrest from an investigation done by Bock’s inspector general’s division.
Willie E. Lockridge of Nashville temporarily moved to Lake Worth to take advantage of his brother, who had been appointed guardian of Lockridge’s daughter, investigators charged. The girl’s mother, Bernitha Burgess, died in 2011 and left her daughter a 401(k) account worth $58,866.
Lockridge posed as his brother during a phone call to the fund manager and had the entire account mailed by check to a Lake Worth residence, the sheriff’s report said. He then got his brother to open a joint account at a bank that was not the one designated by the probate judge. Within months, Lockridge allegedly emptied the account to purchase a 2007 Jaguar XK, large flat-screen television and gifts for his girlfriend.
He was extradited to Florida and faces felony charges of grand theft and fraud.
Opportunity For Fraud
The arrest would not have happened without a tip received by the county’s guardianship fraud hotline, part of a program that for Bock had its genesis in another case.
In 2010, Fredchen Keller, then 15 years old, made news when his attorney raised questions about the handling of his $30 million estate. Keller lost his mother in 2003 when she was murdered by his father, Fred Keller. A guardian was appointed for the boy.
"I noticed there was an uptick in the number of guardianship cases," Bock said. "That paired with the down economy generally means there is an opportunity for fraud."
News of Keller’s situation brought it home for Bock. She already had authority to audit court-generated accounts, but there was a communications gap.
The clerk has auditors who can spot irregularities but no direction from anyone to investigate.
"The problem is there was no one to go behind any kind of red flags except for the judge. But judges only know what they’re being told on the bench," Bock said.
She approached Chief Judge Peter Blanc, who drafted an administrative order formalizing communication between the clerk and probate judges and authorizing more in-depth audits for guardianship cases that get flagged.
Bock hired Anthony Palmieri as senior internal auditor, started a media awareness campaign, and on Oct. 20, 2011, put the fraud program in motion with the launch of the hotline in October 2011.
In its first year, the hotline generated 82 tips, and 37 merited referrals to some type of law enforcement agency for unauthorized disbursements that exceeded $1.14 million. There are three active cases with the Palm Beach sheriff, one with the Florida Department of Law Enforcement and one before The Florida Bar, Palmieri said.
Six inspector general’s auditors conduct initial audits, Palmieri said. When red flags turn up or if a tip comes in, he takes over and conducts more intensive reviews.
"This involves third-party verifications. We take everything in the guardianship reports and verify them against independent sources such as the IRS, Social Security Administration, bank records and other public records," Palmieri said.
If there are problems, the next step is to examine all original documents and to interview the ward and others directly involved in the ward’s affairs.
Looking beyond her backyard, Bock realized the need for a better coordinated attack on guardianship fraud. Somewhere between 30,000 and 55,000 children and adults are wards of the state in Florida, she said.
"A lot of people think that just because you are a ward of the court you are broke," Bock said. "That is so far from the truth."
A number of guardians in Palm Beach County manage seven-figure accounts, and one has an account worth $125 million, she said.
Nationwide, court-appointed guardians handle a total of $273 billion, Palmieri said. Yet only 20 states have laws requiring some form of audit.
Palmieri has become Bock’s emissary on the subject. The two attended the National Guardianship Association national conference in Portland, Oregon, last fall to discuss the results of the program’s first year.
Since then, Palmieri traveled to Tennessee to meet with the legislative committee of the Tennessee Bar Association, which is drafting a bill for guardianship fraud enforcement.
"This is something all counties across the United States should be taking very seriously," Bock said.
Compared to the impact these programs can have, they are inexpensive to run, she said. And in Florida, the authority is already built into the clerk’s role. It’s just a matter of coordinating with the court.