The former Brooklyn judge who appointed Steven T. Rondos to oversee at least seven of the guardianship accounts Rondos is charged with fleecing expressed dismay at the news in a phone interview Thursday.
"I must say I am disappointed -- I just thought he was really one of the good guys," said former Brooklyn Supreme Court Justice Leonard Scholnick, who was reached at his Florida home. But, he added, "nothing shocks me anymore."
Rondos, who is booked under the alias Stavras Rontoyiannis, is at the Bergen County Jail in New Jersey awaiting extradition.
A spokesman for the Office of Court Administration acknowledged Thursday that there had been some "inherent flaws" in the system for overseeing the work of guardians but said those flaws had now been corrected.
"It should eliminate the possibility of anything like this happening in the future," David Bookstaver said.
Scholnick, who retired in 2002, said he knew both Rondos and Camille Raia, his wife and law firm partner, as both had appeared before him. He said he was not aware of any improprieties involving the two.
Rondos and the Brooklyn-based law firm Raia & Rondos have been indicted on charges of money laundering, grand larceny, a scheme to defraud and offering a false instrument for filing, according to Manhattan District Attorney Robert M. Morgenthau. Raia has not been charged.
Rondos is accused of stealing from 23 victims, including mentally and physically impaired elderly people as well as children suffering from cerebral palsy due to medical malpractice at birth. On at least three occasions, Morgenthau said Wednesday, when Rondos was confronted with the thefts, he stole funds from other victims to pay back his prior victim.
The attorney allegedly used the money to pay his mortgage and make extensive improvements to his Ridgewood, N.J., home.
Scholnick, who spent 29 years on the bench, said he relied on observations of a prospective guardian's conduct in court, as well as the manner in which he related to the incapacitated person before making an appointment.
Scholnick said he appointed Rondos in one case involving a "family feud" because he felt Rondos' Greek heritage could help resolve the dispute. His intent was not to be "politically correct" but to apply common sense to fix a real-world situation.
Attorney Andrew G. Sfouggatakis, of counsel to Manhattan's Krez & Peisner, said in an interview that Rondos had been appointed to represent three family members, including his grandfather, Andrew, and grandmother, Olga, in a dispute involving the family real estate business.
Sfouggatakis declined to comment on whether he or his family knew about the alleged theft, citing the pending investigation, but said the dispute had ultimately been resolved.
COURT EXAMINERS' ROLE
According to court officials, a lapse in the oversight provided by court examiners, who are appointed by judges from a list compiled by each Appellate Division department, may have contributed to the alleged thefts.
Examiners are not court employees and are compensated annually based on the size of the estates they monitor. They are required to examine reports and bills provided by the guardians.
So far, five court examiners have resigned from the state list of court-approved examiners and one has been suspended pending further investigation. Sixteen different examiners signed off on cases involved in the indictment, including a Manhattan surrogate's court attorney.
Scholnick said that judges did not rely solely on court examiners to keep them informed as to how a guardian was performing. He referred to the examiners as "basically number crunchers."
But a 2005 report by a state commission on court fiduciaries concluded that court examiners are "key to guardian oversight in New York." One witness described examiners as the "eyes and ears" of the court.
However, the commission found significant problems.
"We heard repeated testimony that examinations of financial records are often cursory, confirmation of the guardian's report with backup documents is not common, face-to-face interviews with guardians are rarely conducted, many key issues are delegated to secretarial staff, and lines of communication between examiners and guardians are frequently so poor or nonexistent that many examiners learn about the deaths of [incapacitated persons] only by reading obituary columns."
Chief Administrative Judge Ann Pfau said in an interview Thursday that the position of court examiner specialist has been created in the last few years to add another layer oversight to the guardianship system, although one has not been named in Manhattan.
Of the cases cited by Morgenthau, 14 were in Brooklyn, two in Manhattan, one in the Bronx, one on Staten Island and three in an undetermined location.
Pfau said the Office of Court Administration would make sure the computerized warnings of potential problems with the filing of guardians' reports are directed to the right people in the courts. In that case, a mandatory compliance conference would be held either with a examiner specialist or a judicial hearing officer.
"The statutory system isn't a perfect system where you have two people outside the court monitoring these cases with annual accounting," she said. "These cases don't often come back before a judge unless there is something a judge actively has to do, change the order, approve something, things like that."
Morgenthau suggested in an interview with the New York Post that the court system has to do a better job of monitoring guardian activities.
"I think that's a little bit of an overstatement," Pfau said. "The system in many, many, many cases works fine. These are human beings and when you have this statutory system of one lawyer sort of overseeing another lawyer, we can make it better by doing what we're doing, by really getting this engaged with the court, which the statute doesn't require."
That will make a "huge difference in the system," she said, adding, "It is very much an anomaly where this kind of thing happens."
Bookstaver, the OCA spokesman, said, "Obviously, there were some inherent flaws in our process. These have now been addressed to ensure accountability. The responsibility for tracking accounts will now be done in a centralized way through the Office of Court Administration and hearings will be ordered whenever an accounting is overdue."
Bookstaver said the new electronic tracking system was introduced on Wednesday, the same day Morgenthau announced his indictment.
"It should eliminate the possibility of anything like this happening in the future," Bookstaver said. "We now have a solid triggering mechanism."
Bookstaver said county clerks, not guardians or examiners, will provide to the OCA information about the status of the reports required of the guardians.
PROBE'S GENESIS
Pfau said the OCA cooperated with Morgenthau's office in the investigation of the thefts, which occurred between 2001 and 2008.
Court documents show the probe began when co-guardians of 12 incapacitated persons contacted account representatives at Smith Barney about large withdrawals made from the accounts by either Raia or Rondos.
One of those guardians was Ralph Spagnoletti. According to the prosecutor, Raia was the guardian of Andrea Spagnoletti, Mr. Spagnoletti's sister from whom Rondos allegedly stole property in excess of $1 million. Mr. Spagnoletti contacted Raia & Rondos to inquire about $200,000 withdrawn from the account between 2007 and 2008, court documents show.
Rondos allegedly told Mr. Spagnoletti the withdrawal was "a mistake and that he meant to withdraw the money from two other accounts, where Rondos was entitled to commissions on estates."
It was Mr. Spagnoletti and an attorney from Louisiana who was a friend of one of the incapacitated persons Rondos served as guardian who went to the district attorney.
Morgenthau's office is suing Raia & Rondos for approximately $4.7 million, which includes the total amount allegedly stolen and the value of the law firm. In court documents, the prosecutor charged that Raia "allowed her husband to act as guardian on cases to which she was appointed" without formal court permission and allowed Rondos to make "unauthorized withdrawals" from those accounts.
According to the prosecutor's suit, Rondos admitted making withdrawals without court approval after being interviewed by an investigator from the district attorney's office.
Raia, on the other hand, attempted to "disclaim all knowledge of the fraud," saying she knew very little about the finances and allowed her husband to "do and handle everything."
Rondos faces one count of money laundering in the first degree, one count of grand larceny in the first degree, nine counts of grand larceny in the second degree, five counts of grand larceny in the third degree and one count of scheme to defraud in the first degree. The most serious charges are punishable by up to 25 years in prison.
He also may face charges in New Jersey, where he already has consented to disbarment.
