Probate Judges Cracking Down on Conservators


Some Southern California probate judges have been waging a quiet campaign to stamp out abuses by a small number of professional conservators–entrepreneurs who control the lives and estates of mostly elderly people unable to take care of their personal and financial affairs.

With memories of an earlier probate scandal still fresh in their minds, probate judges in Orange County are believed to have taken the most aggressive stance, systematically slashing the fees that conservators propose paying themselves from clients’ estates.

A Los Angeles probate judge recently took the unusual step of hiring an outside law firm to investigate one professional conservator who cannot account for more than $1 million missing from the estates of 46 of his clients. In court documents, the law firm said the conservator, Rodney P. Swanson, embezzled the funds.

In Riverside County, the probate court instituted new procedures after discovering that another professional conservator, also registered to operate in Orange County, had paid her own home-care business thousands of dollars from the estates of 15 clients who were also billed hefty sums for her conservatorship fees.

The Riverside County probate judge now requires that professional conservators get court approval before hiring home-care providers for their clients.

In Orange County, the supervising probate court judge recently asked a prominent local conservator to explain the financial connections between her conservatorship business and a Silverado Canyon board-and-care home that housed some of her clients, and that her husband had made arrangements to buy.

The court dropped the issue when the conservator promised not to keep her clients in the facility, or to seek to become the conservator of any of the facility’s elderly patients. The conservator’s husband has since abandoned plans for the home.

In an age when California’s graying population has spawned a growing guardian industry, state lawmakers are also considering legislation to regulate professional conservators, establishing professional standards and prohibiting them from hiring businesses in which they have a financial interest.

A separate legislative proposal would create a statewide registry to protect the elderly and infirm from being defrauded by caretakers who may be barred by the courts from doing business in one county and then move to another

“These conservators have other people’s lives in their hands” said Robert Villegas, an aide to Assemblyman John Burton (D-San Francisco), who is the sponsor of one of the pending measures. “When there’s a profit motive, it is common sense that some kind of regulation is needed.”

The head of a statewide conservators group applauded efforts to set up uniform guidelines for those who manage millions of dollars for incapacitated people. “We’re taking care of the most vulnerable people in the state,” said James Moore, co-president of the Professional Fiduciary Assn. of California.

He said the current lack of regulation opens the door to unscrupulous operators. “If you have one bad apple, it really shows badly on the whole group,” Moore said.

The new push comes two years after lawmakers enacted legislation prohibiting attorneys from preparing wills and trusts that made them beneficiaries of their clients’ estates. Those reforms came after articles in The Times revealed how Orange County probate lawyer James Gunderson improperly inherited millions of dollars in cash, stock and real estate from some of his elderly clients whose wills and trusts he prepared. Gunderson also acted as conservator for some clients.

The latest proposals, due to be considered by the Assembly next week, focus on professional conservators who care for thousands of elderly and disabled for fees that can range from $25 to $120 an hour.

Retired social workers, bank trust officers and former employees of public guardian offices are among the entrepreneurs who have switched jobs to cash in on the growing demand for conservator services that range from paying their clients’ monthly bills to making critical decisions about their medical care.

Some conservators have as many as 60 clients and serve as custodians of millions of dollars in assets. Others manage a handful of cases at a time.

There are no requirements that conservators possess any special skill at financial management, no statewide ethical standards governing the way they operate and no requirement that they possess any specific qualifications.

There are no rules to prevent some conservators from using their clients’ money to promote their own investments, and no limits on the fees a conservator can bill an estate.

But Orange County’s probate judges say that under the state’s probate code, judges have both the authority and the duty to determine whether fees charged by conservators are reasonable.

Some months ago, they instituted an experimental and controversial new process for scrutinizing the fees that professional conservators charge. Court officials have been demanding to know why Orange County conservators have been billing their clients’ estates at a fairly uniform rate that hovers around $75 an hour for everything from arranging medical care to restaurant outings.

Under the new program, conservators are being obliged to disclose–three months after their appointment–how many hours they plan to spend managing their clients’ estates and their hourly rates for various services.

Richard O. Frazee, the supervising probate court judge in Orange County, said this new requirement is meant to head off the fee challenges that often occur when conservators wait almost an entire year before submitting a bill for 12 months of service.

At regular monthly hearings, the judges have also been systematically reducing some conservators’ fees from as much as $100 an hour to the $35 per hour that the public guardians office charges for similar services.

Frazee said he has received numerous inquiries about the Orange County fee program from other probate judges across the state.

But the program has raised the ire of nearly 50 professional conservators registered to do business in Orange County who are planning to file a lawsuit challenging the court’s new practice.

Some judges and lawyers in the probate field say that most professional conservators are dedicated people who work long hours to help elderly and disabled people.

“They’re honest and hard-working people and they are not getting rich,” said Ernest Hayward, a prominent Orange County probate attorney. “Some of them are barely making a living.”

Hayward, who represents several professional conservators, said most conservators support efforts to establish professional guidelines that could lead to formal certification and perhaps licensing of conservators.

“These people are managing so much money on behalf of other people that it should be no different than doctors, lawyers and bankers,” Hayward said.

Judith Okonski, an Orange County conservator for the last 16 years, said she and her colleagues welcome regulation.

“We want higher standards,” Okonski said. “We welcome licensure. We’ve always lobbied for it.”

But probate experts say that the millions of dollars that they manage can present temptations that a few conservators have been unable to resist.

Swanson, the Los Angeles conservator, is currently facing accusations in probate court that he cannot account for more than $2 million from the estates of 46 conservatees–mainly helpless, incapacitated seniors.

Swanson was suspended from operating in 1994 by Arthur Gold, the then-supervising probate court judge in Los Angeles, after he could not account for some valuable stock missing from one estate, Gold said.

After suspending Swanson, Gold hired a Los Angeles law firm to look into all of his conservatorships to determine how much money was missing.

Attorneys with the law firm of Ross, Sacks & Glazier have found that Swanson commingled the cash and assets of his clients and, in numerous cases, paid out large sums of money to himself without court approval.

Court officials do not have an exact figure, but estimate that the loss from the Swanson-managed estates is more than $1 million, and said that it might exceed twice that amount.

In a recent report to the Los Angeles probate court, the law firm reported that Swanson “has caused great suffering and hardship to helpless conservatees who were dependent upon him to guard and preserve their assets. By his own admissions, he has appropriated funds that likely will never be recovered. He has caused this court and the estates vast amounts of money to sort out the legal nightmare left in his wake.”

Sandra Flannery, a deputy district attorney in Los Angeles, said her office was investigating the allegations against Swanson, but she declined to say whether criminal charges are planned.

Allan B. Cutrow, a Los Angeles attorney who represents Swanson in 14 conservatorship cases, said his client is “cooperating with the district attorney’s office on the issue of the missing funds.”

Swanson has acknowledged that he withdrew money from his clients’ estates and transferred it from account to account, Cutrow said.

“There clearly are some funds missing,” said Cutrow, who said he did not represent Swanson before the conservator’s suspension. “I don’t know where the money is.”

Gold described Swanson’s action as “an aberration.”

A Riverside County case in which the stakes were much lower triggered a significant change in the local probate court’s rules.

In that case, Bonnie Cambalik, a former Orange County deputy public guardian, admitted in court papers that she had hired a home-care firm in which she was an investor.

In one case, the bill from the home-care firm exceeded $45,000, according to court records. In several other cases, the amounts paid to the firm over a two-year period for services to Cambalik’s clients ranged from several hundred dollars to $13,000.

Cambalik admitted in court papers that it was a “mistake” not to have notified court officials of her ties with the firm, Care World Enterprises. But she insisted that the company made no profit on her clients’ business.

In a court declaration, Cambalik promised not to hire the company for her conservatees.

In an interview Friday, Cambalik said her home-care business provided good services to her conservatees at a rate that was 25% cheaper than what comparable care providers charged in Riverside County.

“I don’t feel I ripped off the client. The client got care,” Cambalik said. “But I put the judge in a difficult position.”

Riverside County Superior Judge William H. Sullivan said the Cambalik case caused him to formulate new rules requiring conservators appear before him and gain approval before hiring a home-care agency.

Before the Care World controversy, Sullivan said, he had presided over another cases in which a San Bernardino County conservator hired her mother’s home-care firm.

Sullivan said his new policy has unearthed no other instances of apparent conflicts of interest since the disclosures about Cambalik and the San Bernardino County conservator. Only a handful of professional conservators operate in Riverside County, he said.

“I don’t know you can say they were unduly profiting, but it doesn’t look good on the face of it,” Sullivan said.

Cheryl Thompson, a deputy public defender in Riverside who represented two of Cambalik’s clients, said Sullivan’s new policy was “an important step. It’s putting constraints on conservators. I think he needs to put on more constraints.”

In the Orange County case, Frazee ordered conservator Okonski to explain whether she had a conflict of interest because of her husband’s plans to purchase the board-and-care home in Silverado Canyon. Some of Okonski’s clients stayed for months at a time at the home, which is now closed.

After the judge’s inquiry, Okonski wrote a letter to the state agency that licenses board and care homes, saying she would not place her clients in her husband’s home or act as conservator for any of the home’s residents. In an interview Friday, Okonski said her husband decided against buying the facility because licensing officials took too long to approve his application.

Also contributing to this report were Times staff librarians Sheila Kern and Lois Hooker.


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