POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan...

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POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney Onondaga County Department of Law Melanie Spuches Carden Bureau Chief, Economic Fraud and Rackets Bureau Senior Assistant District Attorney Onondaga County District Attorney’s Office

Transcript of POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan...

Page 1: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

POWER OF ATTORNEY USES, ABUSES & PROSECUTION

Morgan R. ThurstonAssistant Welfare AttorneyOnondaga County Department of Law

Melanie Spuches CardenBureau Chief, Economic Fraud and Rackets BureauSenior Assistant District AttorneyOnondaga County District Attorney’s Office

Page 2: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

Powers of Attorney and Guardianships

Power of Attorney An instrument which delegates to another

person authority to make financial decisions to another

Guardianship A court order granting powers to a family

member, other individual, governmental agency, or institution to control the affairs of another person

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AUTHORITY – REVOKE

You do not give up your independent authority to continue to act or your ability to revoke the power of attorney

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COMPLICATED

The implementation of it has become more involved. The reason for this is that was major changes to the power of attorney legislation in 2009.

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LICENSE TO STEAL

Powers of attorney have often been called a license to steal - The reason being that you have given someone authority to manage your assets. What happens thereafter the loved one, family member, friend or professional you have appointed to act on your behalf takes advantage of that authority and accesses your assets for their benefit often to your detriment and because they had the authority to do so law enforcement would not view these actions as a criminal matter.

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CIVIL MATTER

It was a civil matter with often little recourse against the individual.

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STANDARD OF CARE

In dealing with property of the principal, an agent shall observe the standard of care that would be observed by a prudent person dealing with property of another.

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FIDUCIARY DUTIES

To act according to any instructions from the principal or, where there are no instructions, in the best interest of the principal.

To avoid conflicts of interest.

The agent may not make gifts to the principal's property to himself or herself without specific authorization in a power of attorney.

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FIDUCIARY DUTIES

To keep the principal's property separate and distinct from any other property owned or controlled by the agent, except for property that is properly jointly owned by the principal and agent

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FIDUCIARY DUTIES

Keep a record of all receipts and disbursements

Make such record and power of attorney available to the principal or to third parties at the request of the principal.

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RECORD

The agent shall make such record and a copy of the power of attorney available within 15 days of a written request by any of the following:1) a monitor; 2) a co-agent or successor agent acting under the power of

attorney; 3) a government entity, or official thereof;4) a court evaluator; 5) a guardian ad litem;6) the guardian or conservator of the estate of the principal;7) the personal representative of the estate of a deceased

principal.

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SPECIAL PROCEEDING

If the Agent fails to provide the power of attorney or the accounting within 15 days, a special proceeding can be commenced

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SPECIAL PROCEEDING - REMEDIES

To determine whether the power of attorney is valid

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SPECIAL PROCEEDING - REMEDIES

To determine whether the principal had capacity at the time the power of attorney was executed

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SPECIAL PROCEEDING - REMEDIES

To determine whether the power of attorney was procured through duress, fraud or undue influence

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SPECIAL PROCEEDING - REMEDIES

To determine whether the agent is entitled to receive compensation or whether the compensation received by the agent is reasonable for the responsibilities performed

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SPECIAL PROCEEDING - REMEDIES

To approve the record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal

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SPECIAL PROCEEDING - REMEDIES

To remove the agent upon the grounds that the agent has violated, or is unfit, unable, or unwilling to perform, the fiduciary duties under the power of attorney

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SPECIAL PROCEEDING - REMEDIES

To determine how multiple agents must act

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SPECIAL PROCEEDING - REMEDIES

To construe any provision of a power of attorney

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SPECIAL PROCEEDING - REMEDIES

To compel acceptance of the power of attorney in which event the relief to be granted is limited to an order compelling acceptance

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SPECIAL PROCEEDING –COMMENCEMENT

1) The agent;

2) The spouse, child or parent of the principal;

3) The principal's successor in interest, or any third party who may be required to accept a power of attorney;

4) Those listed before that may request an accounting. (Slide 10)

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SPECIAL PROCEEDING

If a power of attorney is suspended or revoked or the agent is removed by the court, the court may require the agent to provide a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal and to deliver any property belonging to the principal and copies of records concerning the principal's property and affairs to a successor agent, a government entity or the principal's legal representative

Page 24: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

CRIMINAL PROSECUTION

POA is no longer a license to steal

Variety of Different Potential Charges

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Financial Exploitation

Illegal or improper use of an older adult's funds, property or assets.

Because not all older adults use the banking system, consider cash, gold, jewelry, antiques, and homes as assets.

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Methods of Financial Exploitation

Abuse of legal authority (i.e., Power of Attorney)

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Larceny (PL 155.25, 155.30, 155.35, 155.40, 155.42)

Fraudulently obtaining a signature (PL 165.20) Forgery (PL 170.05,170.10, 170.15) Scheme to defraud (PL 190.60, 190.65) Identity Theft (PL 190.78, 190. 29, 190.80) Tampering with a witness (PL 215.10, 215.11,

215.12, 215.13) Intimidating a victim or witness (PL 215.15, 215.16, 215.17)

Crimes Related to Financial Exploitation27

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Crimes Related to Financial Exploitation28

Family Offenses to help in Financial Exploitation Cases:Effective December 18, 2013

Chapter 526 Adds identity theft, larceny and coercion to the list of family

offenses, allowing victims to seek relief and an order of protection in Family Court, as well as Criminal Court.

Subject to mandatory arrest and the order of protection will be added to the statewide order of protection registry.

Adds a new condition that can be included in orders of protection requires the abuser to return specified “identification documents,”

such as a passport, immigration documents, birth certificate, benefits/ insurance cards, bank or credit cards etc., to the protected party.

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Who Commits Financial Exploitation Crimes?

Strangers Trusted Individuals Family members and friends Partners Caregivers Strangers who become “friends” (sweetheart

scams) Lawyers, doctors and faith leaders and

representatives Interpreters who have a unique trust relationship Guardians, Powers of Attorney and other legal

representatives

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Criminal Misuse of Power of Attorney and Guardianship

POA/guardianship is not a license to steal

Just because a POA or guardianship was used does not make it a civil matter

Page 31: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

Criminal Misuse of Power of Attorney

Determine if guardian or person with the POA spent victim’s money on themselves rather than to benefit victim.

Get copy of POA/guardianship documents. Check POA for gifting provision.

Check for prior complaints or investigations involving either the victim or suspect.

Work with local experts – probate court and APS.

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Common Defenses

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Consent as a Defense

Valid consent is given:FREELY, KNOWINGLY, and VOLUNTARILY

Must have the capacity to understand the nature and consequences of one’s acts

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Page 34: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

Consent Is Not Valid When:

Obtained by: Force Lies CoercionManipulation

Victim lacks capacity

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EXAMINING THE CONSENT

Don’t take perpetrator’s claim of consent at face value

Interview victim alone, away from suspect Document pattern of conduct and concerns

expressed by others Contact APS Refer to detective or contact prosecutor to

discuss further investigation

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Investigative Strategies

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Specific Crimes

What specific crimes may be occurring?

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Interviewing

Who should you interview?

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Who to Interview

Victim Suspect Family members

Neighbors

Victim’s health care providers

Victim’s pharmacist

Victim’s lawyer

Bank employees

APS

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What evidence should you collect?

Evidence Collection 26

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Evidence Collection

Checkbooks and registers

Overdue or unpaid bills

Bank statements of victim and suspect

Tax records Receipts for purchases ATM transactions Surveillance footage at

bank, ATMs

Credit card statements Credit reports Data off home or work

computers Power of Attorney and

other legal documents

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Page 42: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

Evidence Collection

Medical records of victim Capacity evaluation of victim Mental health and substance abuse

treatment records of suspect Employment records for suspect Toxicology screen for victim Prescription records of suspect and

victim

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Collaboration: Financial Exploitation Cases

State Attorney General Offices

Onondaga County District Attorney’s Office –Economic Fraud and Rackets Bureau

Adult Protective Services

Vera House Inc

For internet crimes – report on IC3.gov

Banks – Suspicious Activity Reports (SARs)

Presenter
Presentation Notes
Page 44: POWER OF ATTORNEY USES, ABUSES & PROSECUTION · POWER OF ATTORNEY USES, ABUSES & PROSECUTION Morgan R. Thurston Assistant Welfare Attorney. Onondaga County Department of Law. Melanie

Potential Interdisciplinary Responses

Elder Justice Committee of the Syracuse Area Domestic & Sexual Violence Coalition

Enhanced Multidisciplinary Team (E-MDT) Access to Forensic Accountant through E-

MDT resource

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In re Conklin, 48 Misc.3d 29, 16 N.Y.S.3d 449 (Sup. Ct. Nassau Co. 2015)

5.45

This case looked at several issues concerning a power of attorney. First, the Court determined that regarding the appointment of one the agents for the decedent, the instrument failed on its face. The power of attorney in question had the name of the additional agent handwritten into the document next to the other agents name. The first agent’s signature is properly acknowledged but the document is silent with regard to the second agent. As such, the power of attorney was not valid with regard to her and she had no authority to liquidate an account. Second, the Court examined the authority of an agent to closet Totten Trust accounts. The Court found that in reading the General Obligations Law and the EPTL together, it is clear that the authority to close a Totten trust account must be expressly given in the gifts rider and ruled that without the appropriate language, the agent was without the authority to close out the Totten trust accounts. Finally the Court found that even if the agent had the authority, the relationship of an agent to the principal is such that the agent “must act in the utmost good faith and undivided loyalty toward the principal, and must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing” (citing Semmler v. Naples, 166 A.D.2d 751, 752, 563 N.Y.S.2d 116 [3d Dept.1990] ). An agent, moreover, must always act in the best interest of the principal (citing Matter of Ferrara, 7 N.Y.3d 244, 254, 819 N.Y.S.2d 215, 852 N.E.2d 138 [2006] ). The agent is further directed in the General Obligations Law to act according to instructions of the principal and to avoid conflicts of interest (General Obligations Law § 5–1505[2][a][1] ). The Court determined that the agent breached her fiduciary duty when she closed out almost every Totten trust account except for the accounts in trust for her mother.

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Cascardo v. Cascardo, 163 A.D.3d 912 (2nd

Dept. 2018)5.46

The Second Department upheld a Summary Judgment motion against a plaintiff that commenced an action against her brother to recover damages for fraud and breach of fiduciary duty in connection with powers of attorney executed by the parties' father. The plaintiff failed to present evidence that the defendant committed fraud or used duress or undue influence in connection with the powers of attorney executed by their father or any transaction where he acted as their father's attorney-in-fact, and failed to otherwise present a genuine issue of fact.

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Fallarino v. Fallarino, 56 N.Y.S.3d 414, 2017 N.Y. Slip Op. 27186 (2nd Dept., Appellate Term, 2017)

5.47

The 2nd Department Appellate Term found that the fact that petitioner may bear his mother's durable power of attorney does not permit him to commence this proceeding in his own name. Since a durable power of attorney creates only an agency relationship to the principal, petitioner gains no standing by virtue of that relationship. The deficiency would not be cured by amending the caption to name the proper party in because “[a] person not licensed to practice law in the State of New York ... may not appear pro se in court on behalf of a litigant as an attorney-in-fact pursuant to a power of attorney. A person who does so has unlawfully engaged in the unauthorized practice of law” (citations omitted).

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People v. Reeves, 124 A.D.3d 1068, 1 N.Y.S.3d 547 (3rd Dept. 2015); appeal denied 25 N.Y.3d 1076 (NY Ct. of Appeals 2015)

5.48

Defendant assisted the victim as she declined physically in the several years prior to her death and, as such, was named as a joint owner of the victim's checking account and was granted a limited power of attorney that did not include any authority over banking transactions. The victim’s nephew acting as Executor uncovered documentary evidence that defendant had siphoned off hundreds of thousands of dollars from the victim by various means, including misrepresenting the scope of her power of attorney to access certain funds and forging the victim's signature on documents designed to make her a joint owner of other accounts. The Executor and others testified that this activity was totally inconsistent with the prior behavior of the victim, who was known to be extremely frugal. Defendant further spent substantial sums of money, with no obvious source, at a casino during the period in question. Witnesses testified that the victim did not approve of gambling, and that she would not have given defendant any funds for that purpose. The conviction for grand larceny and forgery was upheld.

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In re Batlas, 144 A.D.3d 791, 41 N.Y.S.3d 110 (2d Dept., 2017)

5.49

The Second Department addressed the issue of what constitutes a valid acknowledgment of a signature on a power of attorney. Affirming the trial court's grant of summary judgment to the administrator, the appellate court called attention to the failure of the instrument to contain an acknowledgment prescribed for the conveyance of real property. The Court found that the defects in the instrument were threefold: 1) a notary did not witness the principal's signature; 2) the notary did not endorse or certify that “all the matters required to be done, known or proved on the taking of such acknowledgment”; and 3) the notary applied his notary stamp to a blank space on a one month old affirmation by the principal without stating that the person who signed the affirmation was the person he purported to be. These defects rendered the instrument invalid under the General Obligations Law.

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Burgwardt v. Burgwardt, 150 A.D.3d 1625, 54 N.Y.S.3d 242, (4th Dept. 2017)

5.50

Son used a power of attorney to transfer real property to himself. Parents properly executed a power of attorney which appointed their son as Agent, granted him authority to make real estate transactions, and signified their intention to make major gifts. The parents signed gift riders but failed to indicate what types of gifts could be made or that he could make gifts to himself. Parents moved for summary judgment as he didn’t have authority to make a gift to himself or their real property and that the transaction was not in their best interest. The Appellate Division affirmed the trial court’s denial of the motion for summary judgment as the documents read together were ambiguous and thus parole evidence was admissible to clarify the intent and defendant raised triable issues of fact.

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In the Matter of Delaney, 170 A.D.3d 1008, (2nd

Dept. 2019)5.51

An agent under a power of attorney appealed a denial of a petition to create a supplemental needs trust on behalf of an allegedly disabled person with paranoid schizophrenia. The Second Department reversed. To be valid, a statutory short form power of attorney must “[b]e signed and dated by a principal with capacity, with the signature of the principal duly acknowledged in the manner prescribed for the acknowledgment of a conveyance of real property”. “Capacity” is defined as the “ability to comprehend the nature and consequences of the act of executing and granting, revoking, amending or modifying a power of attorney, any provision in a power of attorney, or the authority of any person to act as agent under a power of attorney”. “A party's competence to enter into a transaction is presumed, even if the party suffers from a condition affecting cognitive function, and ‘the party asserting incapacity bears the burden of proof”. “The incapacity must be shown to exist at the time the pertinent document was executed”. Such incapacity was not shown here. As such, the Second Department ruled attorney-in-fact, had the authority to commence a proceeding in the Surrogate's Court for the creation of a supplemental trust. (Citations omitted).

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Matter of Jewish Home of Rochester v. Dworkin, 151 A.D.3d 1934, 54 N.Y.S.3d 899 (Mem) (4th Dept., 2017)

Son used a New Jersey POA to admit his parents to a nursing home located in New York.The nursing home commenced a special proceeding under section 5-1510 to compel the son as agent to provide an accounting and to remove respondent as the agent for his parents on the grounds that the agent had allegedly withheld available resources to pay for the care of his parents. The agent moved to dismiss the proceeding arguing that the General Obligations Law did not apply and that the Nursing Home petitioner lacked standing to commence the proceeding. The appellate court affirmed the trial court decision both as to the Nursing Home's standing to bring the special proceeding and the applicability of the General Obligations statute to a New Jersey power of attorney.

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McGregor v. McGregor, 55 Misc.3d 586, 48 N.Y.S.3d 877 (Sup. Ct. Kings Co. 2017)

Estate claim amongst brothers claiming fraud, conversion, demanding an accounting and improper conveyance of property by an invalid power of attorney. The decedent was a half brother of the litigants.The court found that the plaintiff brother failed to prove the requisite elements of fraud, conversion or requirement for an accounting. The court also found that the plaintiff brother did not have standing pursuant to section GOL §5-1510 because he did not fall within any of the enumerated categories given standing under this section, namely, “the agent, the spouse, child or parent of the principal, the principal's successor in interest, or any third party who may be required to accept a power of attorney.” The court noted that aside from not meeting the obvious familial categories, the brother could not establish that he was an agent or that he met any of the other legal relationships.

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Onondaga County Recent Cases

POA Special Proceedings for production of POA and account of records.

Same individual Attorney in Fact over 2 individuals ordered to produce POA and accountings or face potential fines and/or jail time.

Respondent failed to produce documentation on 1 case resulting in a Finding of Contempt. Respondent failed to purge the contempt and was sentenced to 90 days in jail.

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LOCAL CASES & QUESTIONS