Jeffrey Schend theft case prompts tougher guardian rules

Jeffrey Schend theft case prompts tougher guardian rules


Guardians must provide detailed records to courts

11:43 PM, Jan. 21, 2012

About this report

Following the arrest of Jeffrey Schend last May, The Post-Crescent began examining the system of oversight for guardians appointed by Outagamie County courts to handle the affairs of people deemed incompetent. In a Watchdog Report in June, The P-C revealed holes in the system. To read that report, related stories and court documents, visit postcrescent.com/schend.

WHAT IS A GUARDIAN?

Guardianship is a legal process put in place when people can no longer make safe or sound decisions about themselves or their property, according to the National Guardianship Association.

A guardian's responsibilities vary on a case-by-case basis, but often include handling a client's finances and protecting a client's assets. In some cases, a court-appointed guardian determines where a client lives, monitors the client's medical treatment and makes end-of-life decisions.

Guardianships begin with a petition to the court. Judges consider evidence in determining whether a person is incompetent, whether guardianship is appropriate, who will serve as guardian and with what authority.

Mental illness, developmental disability, physical incapacity and advanced age are among various conditions that have been the basis for appointing guardians, the association says.

Closer oversight

Among other things, Outagamie County's new rules require court-appointed guardians to:

» Provide a complete, itemized ledger for the entire year for each of their clients when they file their annual accounting documents.

» Obtain bonding valued at the amount of the aggregate assets of their clients plus an additional $75,000 to cover costs in cases of theft or other misconduct.

» Provide the court with a credit report for themselves and everyone in the guardian's company that handles financial matters.



APPLETON — Financial caretakers appointed to assist the elderly and disabled in Outagamie County face more stringent requirements after a former guardian was charged with siphoning nearly $500,000 from clients.

New rules that took effect Jan. 1 are aimed at adding safeguards to the guardianship system that prosecutors say was exploited by Jeffrey M. Schend of Appleton.

Schend faces a trial in March on six felony counts of theft and one misdemeanor theft charge. In watchdog reporting after his arrest last year, The Post-Crescent found that he operated within a system that relied largely on his word alone.

State law does not require detailed audits, the newspaper found. Even if the law did, the oversight office in Outagamie County would not be able to handle the workload, its director said at the time.

Generally, the new rules require guardians to provide more detailed financial records to Outagamie County's circuit courts as part of their responsibility to clients who are deemed incompetent to handle their own affairs.

Also, county officials now will choose guardianship cases randomly each year for review, and those guardians will be required to give the court all receipts and canceled checks for the year. And, the rules also establish fines for guardians whose failure to answer questions about their work require court intervention.

"It's a good idea," said Gary Apitz of Bryant, guardian for his 63-year-old developmentally disabled brother who lives in an Appleton nursing home. Schend had served as the guardian for Apitz's brother when he lived in Shawano County. A judge there ordered Schend to pay nearly $5,000 based on the man's unpaid bills.

"Every guardian should be responsible to explain what he's done," Apitz said.

Outagamie County Judge Michael Gage said the fallout from Schend's case could have a positive effect beyond the county's borders.

"A proper response to this can result in all of us being better prepared," he said.

Schend case

The Outagamie County investigation into Schend began after county officials received complaints in late 2010 that clients' bills weren't being paid.

An attorney appointed by the county last year to review the accounts of some of Schend's clients found tens of thousands of dollars in transactions weren't properly documented.

One of Schend's former employees told police Schend boasted about traveling first-class and took one or two expensive vacations each year. She said he owned a boat and a Mercedes-Benz that he later traded for a Cadillac.

Another former employee said Schend gambled often, bought watches and clothes frequently and had his home remodeled. At the end of 2010, the employee said, she started taking calls from people complaining his business was not paying its bills.

Investigators say Schend, who oversaw the finances of 48 people in Outagamie County through his business, JMS Guardianship Services, is unable to account for about $500,000 in transactions from clients' accounts.

One client's bank records show he received $9,000 in distributions from a trust fund during Schend's tenure as guardian. His annual report to the county reflected just $5,000 of it.

Schend, who received state approval to work as a guardian in 2004, also served clients in Manitowoc, Shawano and Waupaca counties and in the Oneida Tribe of Indians. He is no longer approved to serve as a guardian in Wisconsin.

'Good start'

Gage said the new rules were a collaborative effort that included judges, the county's attorney and its probate office.

Requirements for more detailed financial records ensure the accuracy in filings and also serve as a warning to the few — professional or not — who might be tempted to take advantage of their positions.

"It reinforces the idea that, 'they're looking over my shoulder here,'" Gage said, "and that in itself is a deterrent to some degree."

The vast majority of those who assume guardianships have the very best of intentions, Gage stressed.

Outagamie officials plan to meet with guardians later this month to explain the rules.

Four professional guardians who serve Outagamie County couldn't be reached for comment. Two others declined comment.

National experts who are familiar with the vulnerabilities inherent in guardianship cases said Outagamie took an important step forward.

"I think it's a wonderful thing," said Elaine Renoire, director of the National Association to Stop Guardian Abuse. "It's a really good start and it does send a message."

For years, advocates and government groups have called for stronger protections for those under guardianship.

In September, the U.S. Senate Subcommittee on Administrative Oversight and the Courts heard testimony on guardianship abuses and potential solutions to strengthen state systems.

Voluminous records aren't useful if there aren't enough people to review them, Renoire said. Often, unethical guardians don't steal outright. Instead, they drain accounts by overbilling, she said.

Sylvia Rudek, another member of the national association, said guardians have life-altering power over clients that must be checked. "Someone comes into your house and takes over your life," Rudek said. "What can they conceal?"

More improvements

Gage credited the county's probate office for creating rules aimed at fostering integrity in the system.

He noted that Outagamie County hasn't waived annual accounting requirements from guardians serving clients with minimal assets, as some counties do.

Sue Lutz, register in probate for Outagamie County, whose office is responsible for collecting and reviewing guardians' account filings, could not be reached for comment.

Gage said those who assisted in establishing the new rules wanted to get the highest impact while remaining mindful of the county's limited resources.

"We're still looking at improvements to make sure we're not missing something significant," he said.

The judiciary is in the process of developing safeguards aimed at protecting the assets of those who have far more in accounts, income and otherwise than is necessary to meet their usual costs of living, Gage said, even though such cases are rare.

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