Sunday, November 24, 2013

The setup

The facts are straightforward and easily understood.

The issue is how to collect money removed from the bank accounts of an estate trust.

The trust was initially funded with $150,000 plus money from an oil lease royalty paid monthly. I am the beneficiary of the trust and its assets. I receive social security disability income, or SSDI.

The bank can’t show me statements, and I can’t do a transaction on the bank accounts. So, I’m totally dependent on the trustee. He must be forthcoming and honest, and he must follow instructions. In most cases, that happens more or less satisfactorily.

In this case, the trustee wrote himself and his business checks until the bank accounts were depleted. They should contain around $200,000; instead, they have about $2,000. As misconduct, this is among the worst.

The trustee is a CPA, a state-licensed professional. Having asked him to restore the assets, and being fully assured he will never put back one dime, I’m placed in a time frame to respond.

As beneficiary, there are two appropriate action plans. One is to pursue criminal charges, because stealing from a trust is a crime. The other is to launch an aggressive collection effort in the form of a civil lawsuit. The goal is to restore the assets. If a favorable judgment is rendered, the trustee is ordered to pay back the money or make payments according to a schedule.

I can’t make those things happen by myself, even if I’m king. A legal process remedy depends on what the facts and I can convince other people to do, the trustee’s ability to restore the money and the role of unexpected intervening variables. The process has no integrity. Derailment waits at every step.

There is now at least a 99.9% chance recovery will fail. Does it matter that I don’t have the tens or hundreds of thousands of dollars lawyers want to pick up the file and pursue collection? Probably not, which is amusing and sad. Lawyers don’t want it, and don’t want to refer it because I have no money.

No doubt, the trustee can show he is cash poor. However, he can probably command more than adequate legal funding. He isn’t bonded, and his insurance portfolio is unknown and no help. He has been a trusted business associate for more than 30 years, so the trouble is disappointing.

The trust agreement document is a piece of schlock work from a $900/hr. lawyer. The executor helped engineer it. The adequately funded executor exerts backpressure. Law enforcement assigned a case number. It was passed to the attorney general’s office, then to the FBI. It was declined, with the curious comment they were “shorthanded,” as per the APS specialist.

The trustee represented he was investing the money he placed in his personal and business accounts in short-term loans. He says a government contract bottleneck has tied up the money. The trustee is the borrower’s registered agent, and the borrower looks like a phony company.

That the trustee laundered the money should be enough for the criminal case. To hire a lawyer to perform a forensic audit and analysis or file a lawsuit to litigate collection requires a large initial retainer I don’t have. The criminal case is at square one after months of frantic, desperate effort.

Public and private advocates generally have little practice in this area and little financial incentive, particularly in a learning curve situation—another way both criminal and civil cases are losers for the complainant.

The trustee assured me the investment is routine. I opposed it, and told him not to do it. In a three-way phone conversation with the executor, she and he decided to commit all the money. I told them not to withdraw any. The trustee told me I had seen the last of the trust’s money, “ever.” That was July, 2012. Thereafter, the trustee withdrew bulk money the next six months, and waited another six months to show the bank statements, despite growing concern and requests to see them and for a report.

According to one lawyer, the statute of limitations for fraud runs in two weeks. Fraud is the centerpiece of the recovery action. If nothing can happen, the law will allow a CPA to steal about $200,000 from a client on SSDI.

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