(Note: The pdf for the issue in which this article appears is available for download: BIFOCAL Vol. 35, Issue 4.)
As our nation’s population continues to age, the importance of independent monitoring of guardianship grows as well. Monitoring is critical to protecting society’s most vulnerable individuals—older individuals with dementia, younger individuals with disabilities, and minors. The Clerk & Comptroller, Palm Beach County’s Division of Inspector General team performs highly specialized, in-depth audits and investigations of guardianships.
Florida is fortunate to have many excellent guardians—professionals, corporations and family members—who do great work on behalf of vulnerable individuals. The Inspector General team helps to protect Floridians from those who don’t have the individual’s best interests at heart and, if unchecked, could do irreparable financial harm.
The Guardianship Fraud Program seeks to protect vulnerable individuals with combined assets of approximately $500 million. This article will highlight the Clerk & Comptroller, Palm Beach County’s monitoring program.
Identifying the Need for Reform
It is no secret—with over 3.4 million persons over 65 years of age, Florida has a large senior population.1 From the Panhandle to the Keys, there are an estimated 500,000 older persons with Alzheimer’s type dementia.2 With more than 100,000 persons over 80 years of age, Palm Beach County is considered “ground zero” for the aging of the nation.3 As a result, the county faces many age-related issues.
In the mid-2000’s, the Clerk & Comptroller’s office started actively tracking guardianships and discovered a growing trend of open guardianship cases. In addition to a case load of more than 2,700 open cases, there were approximately 400 new guardianship cases filed each year—a rate that far outpaced the number of closed guardianship cases.
This rise in guardianship cases coincided with increased economic pressures—the stock market declining and a housing bubble driving up home prices—and created an atmosphere ripe for financial exploitation, and specifically, guardianship fraud.
Guardianship fraud in Palm Beach County came to the forefront in 2010, after local attorney Ted Babbitt filed court documents alleging that lawyers representing an 8-year-old Palm Beach County boy drained an estate that was once valued at $50 million. The young boy was left parentless when his father, a real estate tycoon, killed his mother and later died in prison while serving a life sentence. After losing his family and receiving a large inheritance, the boy—who was adjudicated a minor ward and appointed a guardian—was allegedly victimized by his lawyers.4 It was after this case that the Clerk & Comptroller’s office committed to doing more for exploited wards. The office had the authority under Florida Statute and the expertise as the County’s auditor.
Independently elected Clerks of the Circuit Court in Florida have a statutory duty to audit guardianship reports, such as the verified inventory and annual accountings.5 Clerks also have the duty to advise the Court about the guardianship report audit results.6 When initially enacted in 1989, the statute did not define what was meant by “audit.” However, in 2006, “audit” was codified and defined as: “a systematic review of financial and all other documents to ensure compliance with s. 744.368 [Florida statute], rules of court, and local procedures using generally accepted accounting principles.”7
As a result of the statutory definition, the majority of the 67 Florida Clerk’s offices established audit procedures for guardianship cases to determine: (1) if guardianship reports were filed on a timely basis; (2) if guardianship reports were materially complete; and, (3) if all of the financial information in the guardianship reports were calculated accurately.
A Local Effort to Protect Vulnerable Individuals
The Clerk & Comptroller, Palm Beach County has performed basic audits on guardianship reports for the last 25 years. During this time, it became clear that these audits were insufficient in uncovering unscrupulous behavior, fraud, and the financial exploitation of wards. As a result, the Clerk & Comptroller’s office established a Guardianship Fraud Unit within an accredited Division of Inspector General. With our judicial partners through administrative order, this program is tasked with performing enhanced audits and advising the court of its findings.8
The Inspector General audits differ greatly from basic statutory minimum audits, which are somewhat superficial. Enhanced audits are comprehensive in scope, as third-party verification of income, disbursements, capital transactions and other assets are required and evaluated. These audits have resulted in heightened scrutiny and expanded oversight far beyond previous basic audits. As professional auditors, the Clerk’s office follows the assets back to the source, whether it’s a financial institution, the Internal Revenue Service, Social Security Administration, or even a public record. No petition or statement is accepted at face value without independent verification.
Next, the Inspector General team compares their findings to the guardianship reports, with an emphasis on discrepancies that may negatively impact the ward. These findings are reported to the Court, and if appropriate and warranted, to law enforcement, the State’s Attorney and/or the Florida Bar.
Impact and Next Steps
When initiated in 2011, the goal of Palm Beach County’s Guardianship Fraud Program was simple: protect the most vulnerable individuals from becoming victims of fraud and financial abuse. There have been significant strides in the first two years, including identifying more than $2.7 million in questionable expenses and misreported assets and two arrests resulting from the IG’s detailed investigations. These successes have kept Palm Beach County on the forefront of this issue locally, statewide, and nationally.
With established and proven programs in Palm Beach and Pinellas counties, the Clerk & Comptroller, Palm Beach County would like to see expansion throughout Florida. That’s why the Palm Beach County’s Clerk & Comptroller’s office, has asked state leaders to pass legislation that will allow all of Florida’s Clerks to perform enhanced audits that significantly improve the court’s oversight of guardianship cases.9 The legislation will codify the best practices that have been developed and implemented in Palm Beach and Pinellas counties. ■
1 U.S. Census Bureau: State and County QuickFacts: Florida. Retrieved January 10, 2014, from http://quickfacts.census.gov/qfd/states/12000.html
2 Linda Shrieves and Andrew Doughman, Alzheimer’s wave will make Florida its ground zero, Orlando Sentinel, Aug. 2, 2011 (online edition at: http://articles.orlandosentinel.com/2011-08-02/health/os-alzheimers-florida-20110802_1_alzheimer-s-association-ground-zero-byrd-alzheimer-s-institute).
3 George Bennett and Christine Stapleton, New census numbers show Palm Beach County’s 85-plus crowd grows 41%, May 5, 2011. (online edition at: http://www.palmbeachpost.com/news/news/new-census-numbers-show-palm-beach-countys-85-plus/nLsBF/).
4 Jane Musgrave, Lawyer accuses lawyers of spending too much as killer’s son awaits money from estate, Palm Beach Post, Apr. 15, 2010. (online edition at: http://www.palmbeachpost.com/news/news/lawyer-accuses-lawyers-of-spending-too-much-as-kil/nL6KQ/).
5 § 744.368(3), Fla. Stat. (2014).
6 § 744.368(3), Fla. Stat. (2014).
7 § 744.102(2), Fla. Stat. (2006).
8 Florida 15th Circuit Admin. Order 6.306-12/10 (Dec. 20, 2010) (on file with Chief Judge, Fla. 15th Cir. Ct. 2010).
9 To learn more about the legislation, see Florida Senate Bill 634 (2014) and Florida House of Representative Bill 635 (2014).