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Court officials are about to launch a pilot project aimed at the principal flaw identified by a special grand jury in Queens in the system used for protecting the assets of incapacitated persons. In a report issued Tuesday, the grand jury recommended overhauling the system used to monitor the work of guardians, who are appointed by judges to manage the affairs of the mentally incapacitated and the elderly who are too frail to manage their own affairs. The planned pilot project would assign auditors on the Office of Court Administration’s payroll in some cases to oversee the work of court-appointed guardians. The auditors would take the place of private lawyers who are paid a percentage of the incapacitated person’s assets. Queens District Attorney Richard A. Brown empaneled the grand jury in the wake of a guilty plea by a Long Island City lawyer who admitted stealing $2.1 million from 14 incapacitated people whose assets he had been appointed as a guardian to protect. The lawyer, Robert B. Kress, was sentenced in October to a minimum of 3 years in prison. The Queens grand jury found that the system for overseeing the work of court-appointed guardians has broken down and needs to be overhauled. Specifically, the report found that court examiners, who had been appointed by Queens judges to oversee Mr. Kress’ work, had failed to detect his crimes because they gave only “cursory attention” to his filings, failed to notice or question “obvious irregularities”or blow the whistle on his failure to file required accountings. Some of Mr. Kress’ transgressions were flagrant, according to Mr. Brown. In one instance, Mr. Kress wrote a check from one of his ward’s accounts and deposited it into his own account. In two others, he drafted wills bequeathing to himself the bulk of his wards’ estates. Because of grand jury secrecy rules, Mr. Kress was referred to as “John Doe” in the report. The grand jury report called for the replacement of court examiners � who are appointed from a roster approved by the Appellate Division � with salaried, full-time court system employees. The examiners are compensated from the ward’s property, with annual fees ranging from $100 for those with less than $5,000 in assets, to $5,490 for those with $4 million. The rate increases by $1,000 for each $1 million in assets beyond $4 million. OCA Pilot The pilot project being readied by the OCA would assign court system auditors to oversee the work of guardians in selected cases throughout the Second Department, including Queens, Chief Administrative Judge Jonathan Lippman said yesterday. The program will be reviewed with administrative judges from the Second Department in a meeting next Thursday, and will be implemented later this spring, Judge Lippman said. Judge Lippman noted that the use of court system auditors could be expensive and would cost about $3 million annually if used in all guardianship cases within the Second Department. However, he noted a number of different revenue models are possible, including tapping into the funds that the statute now requires to be paid to the private lawyers appointed to monitor the work of guardians. Separately, Chief Judge Judith S. Kaye said in her State of the Judiciary speech last month that she would reconvene a commission headed by Sheila Birnbaum to examine many of the problems identified in the Queens grand jury report. OCA has already developed strict new rules governing the appointment and conduct of guardians and other court-appointed fiduciaries. In doing so, OCA followed recommendation made by Ms. Birnbaum’s Commission on Fiduciary Appointments in 2001. The problems detected by the Queens grand jury are by no means new. In 1999, the Appellate Division, First Department, reported that it had removed five court examiners from its roster, and two others had resigned under pressure for failing to submit required reports. Guardians are required to submit annual reports regarding their wards’ financial affairs in cases involving more than $50,000, and they must file reports every other year in cases involving less than that amount. At the time of the First Department crackdown, court officials said that examiners were filing about 50 percent of the required reports in Manhattan, and less than one-third of those required in the Bronx (NYLJ, Jan. 25, 1999). Last year, court examiners filed 432 reports in Manhattan, which has approximately 700 cases with assets of more than $50,000, requiring annual filings, said Scott Singer, who oversees the work of court examiners appointed in Manhattan. The borough has another 700 cases that require filings only every other year, and it is not possible to estimate how many reports on those cases were due last year, Mr. Singer said. He added, though, that both guardians and examiners have a greater incentive to file reports in large-assets cases because of the sliding percentage fee structure. As a result, he said, the largest cases � where the potential for theft is greatest � get the closest scrutiny. In any event, guardians are required to be bonded, and the grand jury report noted that all losses caused by Mr. Kress’ thefts have been covered. In Queens there are currently only eight examiners on the Appellate Division’s roster eligible to take new cases, said Administrative Judge Steven W. Fisher. With about 2,000 guardianship cases, that leaves each examiner with a caseload of about 250 cases, he noted. Justice Fisher said that so far efforts have lagged to set up a computerized system that would flag when reports from either guardians or examiners are overdue. But he noted that the Kress case was “a wake up call” to the system, and the number motions filed by court examiners to have guardians removed has “increased substantially” in recent months. Justice Fisher took exception to one aspect of the grand jury report: that there is a gap in oversight when an incapacitated person dies and the case moves from the Supreme Court to the Surrogate’s Court. Court examiners in Queens are not authorized to review the final accounting filed by the guardian after the ward dies because of the added expense involved, Justice Fisher said. But all those filings are reviewed by court personnel, he added, and any uncovered problems are brought to the attention of the Surrogate’s Court.

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