Jim Collar, Post-Crescent Media
Last year's death of Jeffrey M. Schend, a former Appleton guardian, effectively ended the criminal case that accused him of living lavishly off the elderly and disabled people he was sworn to protect.
But frustrations remain high for ex-clients of Schend, including John Pike of Appleton, who suspects he lost close to $35,000. He's still trying to recoup his losses.
"I'm penniless," Pike said. "I'm trying to pay back on all these bills that Jeff Schend should have already paid."
A civil court hearing in Outagamie County on Monday will determine whether the lone safety net required of Schend — a business service bond — provided protection of the assets of vulnerable people who were placed under his care. Schend purchased a $250,000 bond as part of his contract with the county to handle the finances of those who were determined by a court to be incompetent.
The firm that sold the bond, Minnesota-based Platte River Insurance Co., is asking Judge Mitch Metropulos to declare it isn't liable for losses.
The company's arguments boil down to contract language. Under terms of the bond, the company would pay in the event of "any fraudulent or dishonest act." The trigger point for payout, however, would come only after Schend or one of his employees was "tried and convicted by a court of proper jurisdiction."
Schend committed suicide before the case concluded.
"Because no criminal conviction was entered against Schend, Platte River has no obligation to any actual or potential claimant under the bond," attorney Daniel Gregerson said in written arguments.
Carey Reed, an attorney for Pike, argues that the company is relying on a technicality and trying to benefit from a suicide "despite overwhelming evidence against Schend."
Money was missing
An investigation into Schend began after county officials received complaints in late 2010 that the bills of those placed under his watch weren't being paid.
Police determined that about $500,000 was missing from accounts within his oversight. Schend maintained his innocence and attributed discrepancies to poor bookkeeping.
Guardians are appointed by courts to oversee assets and pay bills when it's determined a person can no longer manage his or her finances.
An accountant hired by prosecutors combed bank records and provided a detailed analysis of Schend's income and spending. Spending included flights, cruises, limousine rentals and yacht club fees.
His lifestyle, however, didn't match his earning capacity.
Schend's business, JMS Guardianship Services, could have collected a maximum $51,000 in fees from those placed under his watch in 2010. His personal spending reached nearly $165,000 that year, records show.
In addition to personal spending, the accountant determined Schend spent $84,000 on business-related expenses in 2010, or more than $33,000 in excess of his possible business income.
Coverage was 'illusory'
Reed wants the judge to strike the conviction clause from the bonding terms, saying the terms violate public policy and provide "illusory" coverage. It's set up in a manner that left the company with little real risk it would ever have to pay out, and it provided leeway to deny payment even if Schend admitted to the thefts, Reed argued.
The majority of criminal cases end with plea agreements. The bond, however, required that Schend be "tried and convicted."
"Under this scenario, the 'tried' part of the bond's condition precedent would still not be met," Reed wrote in pleadings to the court.
Gregerson, in response, said Schend's case was on the path to trial by jury.
Schend accepted the conditions of the bond, as did Outagamie County based on its approval of Schend as a guardian, Gregerson wrote.
"The bond cannot be reformed to bind Platte River to a risk that it did not contemplate or anticipate when the bond was issued," he stated.
Joseph Guidote, attorney for Outagamie County, said county officials scrutinize contracts, though declined further comment as he was unfamiliar with the specifics of the bond in question.
Should Metropulos decide the contract language is insufficient for a ruling in the insurance company's favor, the case would continue. Attorneys for Platte River would ask that any payouts be capped at $250,000. The company would also ask the court to determine the recipients of the money and the amounts that should be granted to them.
The theft case led to several changes in the county. They include bond requirements based on the amount of coverage held by Schend in comparison to the suspected losses of his clients.
County judges in 2012 approved a rule that now requires guardians to hold either a bond or crime insurance policy for the amount of the aggregate assets of their clientele.
Pike, who became disabled after suffering a head injury, said his frustration and anger extend beyond his former guardian.
Pike didn't have a choice as to who would oversee his finances. He had suspicions that Schend was dipping into his money.
At a court hearing, "they basically told me that I was nuts," Pike said.
There's no solace today — living on Social Security income and with a big stack of bills — in knowing his hunch was on target.
"I think it's high time the county admits they were wrong," Pike said.
— Jim Collar: 920-993-1000, ext. 216, or jcollar@postcrescent.com; on Twitter @JimCollar
About this case
Post-Crescent Media has been following the case of Jeffrey M. Schend since 2012. He was hired by Outagamie County to serve as a guardian for people ruled legally incompetent. He was charged with felony theft after being unable to account for about $500,000 in transactions from clients' accounts. The newspaper's work has included watchdog reporting about failings in the system responsible for oversight of guardians. Schend committed suicide before the court case was resolved.
What's 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.
But frustrations remain high for ex-clients of Schend, including John Pike of Appleton, who suspects he lost close to $35,000. He's still trying to recoup his losses.
"I'm penniless," Pike said. "I'm trying to pay back on all these bills that Jeff Schend should have already paid."
A civil court hearing in Outagamie County on Monday will determine whether the lone safety net required of Schend — a business service bond — provided protection of the assets of vulnerable people who were placed under his care. Schend purchased a $250,000 bond as part of his contract with the county to handle the finances of those who were determined by a court to be incompetent.
The firm that sold the bond, Minnesota-based Platte River Insurance Co., is asking Judge Mitch Metropulos to declare it isn't liable for losses.
The company's arguments boil down to contract language. Under terms of the bond, the company would pay in the event of "any fraudulent or dishonest act." The trigger point for payout, however, would come only after Schend or one of his employees was "tried and convicted by a court of proper jurisdiction."
Schend committed suicide before the case concluded.
"Because no criminal conviction was entered against Schend, Platte River has no obligation to any actual or potential claimant under the bond," attorney Daniel Gregerson said in written arguments.
Carey Reed, an attorney for Pike, argues that the company is relying on a technicality and trying to benefit from a suicide "despite overwhelming evidence against Schend."
Money was missing
An investigation into Schend began after county officials received complaints in late 2010 that the bills of those placed under his watch weren't being paid.
Police determined that about $500,000 was missing from accounts within his oversight. Schend maintained his innocence and attributed discrepancies to poor bookkeeping.
Guardians are appointed by courts to oversee assets and pay bills when it's determined a person can no longer manage his or her finances.
An accountant hired by prosecutors combed bank records and provided a detailed analysis of Schend's income and spending. Spending included flights, cruises, limousine rentals and yacht club fees.
His lifestyle, however, didn't match his earning capacity.
Schend's business, JMS Guardianship Services, could have collected a maximum $51,000 in fees from those placed under his watch in 2010. His personal spending reached nearly $165,000 that year, records show.
In addition to personal spending, the accountant determined Schend spent $84,000 on business-related expenses in 2010, or more than $33,000 in excess of his possible business income.
Coverage was 'illusory'
Reed wants the judge to strike the conviction clause from the bonding terms, saying the terms violate public policy and provide "illusory" coverage. It's set up in a manner that left the company with little real risk it would ever have to pay out, and it provided leeway to deny payment even if Schend admitted to the thefts, Reed argued.
The majority of criminal cases end with plea agreements. The bond, however, required that Schend be "tried and convicted."
"Under this scenario, the 'tried' part of the bond's condition precedent would still not be met," Reed wrote in pleadings to the court.
Gregerson, in response, said Schend's case was on the path to trial by jury.
Schend accepted the conditions of the bond, as did Outagamie County based on its approval of Schend as a guardian, Gregerson wrote.
"The bond cannot be reformed to bind Platte River to a risk that it did not contemplate or anticipate when the bond was issued," he stated.
Joseph Guidote, attorney for Outagamie County, said county officials scrutinize contracts, though declined further comment as he was unfamiliar with the specifics of the bond in question.
Should Metropulos decide the contract language is insufficient for a ruling in the insurance company's favor, the case would continue. Attorneys for Platte River would ask that any payouts be capped at $250,000. The company would also ask the court to determine the recipients of the money and the amounts that should be granted to them.
The theft case led to several changes in the county. They include bond requirements based on the amount of coverage held by Schend in comparison to the suspected losses of his clients.
County judges in 2012 approved a rule that now requires guardians to hold either a bond or crime insurance policy for the amount of the aggregate assets of their clientele.
Pike, who became disabled after suffering a head injury, said his frustration and anger extend beyond his former guardian.
Pike didn't have a choice as to who would oversee his finances. He had suspicions that Schend was dipping into his money.
At a court hearing, "they basically told me that I was nuts," Pike said.
There's no solace today — living on Social Security income and with a big stack of bills — in knowing his hunch was on target.
"I think it's high time the county admits they were wrong," Pike said.
— Jim Collar: 920-993-1000, ext. 216, or jcollar@postcrescent.com; on Twitter @JimCollar
About this case
Post-Crescent Media has been following the case of Jeffrey M. Schend since 2012. He was hired by Outagamie County to serve as a guardian for people ruled legally incompetent. He was charged with felony theft after being unable to account for about $500,000 in transactions from clients' accounts. The newspaper's work has included watchdog reporting about failings in the system responsible for oversight of guardians. Schend committed suicide before the court case was resolved.
What's 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.
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