Attorney Targeted Elderly in Ponzi, Says SEC

Tuesday, April 19, 2016Last Update: 12:02 PM PT

Attorney Targeted Elderly in Ponzi, Says SEC By DON J. DEBENEDICTIS ShareThis        LOS ANGELES (CN) — Using ads in USA Today, an attorney and a businessman defrauded 250 people, mostly retirees, of nearly $12 million by promising huge returns from investing in lawsuits, the SEC claims in court.      The SEC accused Michigan tax attorney James A. Catipay, Washington state legal marketer David A. Aldridge, and their California-based company Prometheus Law of four counts of securities fraud, in an April 15 lawsuit in Federal Court.      The scheme capitalized on the growing business of "litigation funding," in which investors underwrite attorneys' high-dollar commercial lawsuits, in hope of profiting from settlements.      Catipay and Aldridge took money from small investors, allegedly to fund personal injury and mass tort cases, but the SEC says it was a Ponzi scheme.      "Catipay and Aldrich spent millions of dollars on personal items, including a million-dollar loft in downtown Los Angeles and paying Aldrich's personal income taxes. So when the first approximately $120,000 of investor returns came due, the defendants used money raised from new investors to pay the existing investors — payments that both Catipay and Aldrich admitted were, in fact, Ponzi payments," the SEC says in the lengthy complaint.      They defrauded investors "by repeatedly downplaying the risks associated with their investments and the fact that their entire business model was unrealistic to afford the exorbitant returns promised," Michele Layne, the head of the SEC's Los Angeles office, said in a statement.      Catipay and Aldridge told victims their money "is never at risk," the SEC says, citing the defendants' 2014 "information packet." They promised to spend the money lining up plaintiffs to bring class actions against drug companies and medical device makers, and guaranteed returns of 100 to 300 percent, according to the complaint.      They offered what they called "forward contracts" that would pay off after a specific number of months, and said the mass tort cases "had settlement funds just waiting in escrow to be claimed," the SEC says. But "In fact, the investments were highly speculative and risky."      Also, the SEC says, it is illegal for an attorney and a non-lawyer — such as Aldridge and the 250 investors — to share legal fees. Such fee-splitting "is widely prohibited, and therefore potentially unenforceable."      Aldridge came up with the idea to market investments in medical litigation in mid-2013, but had trouble finding a lawyer to join him. Before meeting Catipay, he interviewed approximately 100 attorneys, who all "declined because of the ethical prohibition against fee-sharing with non-lawyers," according the complaint.      After beginning in October 2013, Aldridge and Catipay's venture attracted $11.7 million, generally in small investments ranging from $5,000 to $10,000. The two struck a deal with a personal injury lawyer in Seattle — called "Attorney A" in the complaint — to represent any tort plaintiffs they found and to give their company one-third of any fees he collected.      But they spent only about a third of the investors' money on looking for tort plaintiffs. And by early this year, those marketing efforts had returned less than $10,000 in attorneys' fees from the plaintiffs, the SEC said.      The men spent most of the money on themselves. Aldridge withdrew $3.7 million of the investors' money, including $1 million to buy a condo and another $1 million to pay state and federal taxes, the SEC says.      Catipay took $1.87 million for himself. After a dispute and lawsuit between the partners, Catipay acquired Aldridge's condo in a settlement.      The SEC seeks freezing of assets, disgorgement of ill-gotten gains and civil penalties.      Attorneys representing Catipay and Aldridge did not return calls seeking comment Monday.

Officials: Stealing money from elderly a common abuse

Officials: Stealing money from elderly a common abuse

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Posted on December 17, 2014

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By Donald W. Meyers / Yakima Herald-Republic
dmeyers@yakimaherald.com

YAKIMA, Wash. — A 90-year-old Sunnyside woman who had almost $20,000 stolen from her checking account is a victim of one of the more common forms of elder abuse, according to one expert.

“Financial exploitation is a significant issue,” said Lori Brown, director of Southeast Washington Aging and Long Term Care, an area agency on aging. “It is the primary issue relating to adult protective services.”

Brown and a Yakima County sheriff’s detective recommend that people find a trustworthy person — or more than one — to handle the finances of elderly relatives who may not be able to do it themselves.

Christina Contreras, 39, of Sunnyside was recently arraigned in Yakima County Superior Court on a single count of first-degree theft related to 57 unauthorized withdrawals from the woman’s checking account. Contreras worked as an in-home caregiver for the woman since August 2012, according to an affidavit filed by Sunnyside police.

Brown said in some cases it is a family member who is taking money from the elderly victim. She said the person may have relied on the grandparent or parent for money in the past, and dependency has turned into exploitation.

Sheriff’s Detective Sgt. Mike Russell said his office has handled many similar cases. Part of the challenge, Russell said, is that an elderly person with memory issues may not remember if he or she authorized a family member or friend to spend money in a particular way.

Advocates for the elderly will be pushing the Legislature for funding to enhance aging services to address issues such as financial exploitation, Brown said.

She said people should consider alternatives to guardianship, which requires going to court, to help an elderly relative manage his or her affairs. A durable power of attorney that would allow a trusted family member or friend to handle financial matters is one alternative.

Russell said a simple way to reduce the risk of financial exploitation is to have more than one person working together on the finances, creating greater accountability.

The Sunnyside woman discovered the theft in May, when she asked a neighbor for help with a bank statement, according to the affidavit. The statement showed withdrawals made through an ATM, which the woman said she never used and did not know what an ATM was, the affidavit said.

Police checked the bank records and found ATM withdrawals from Nov. 5, 2013, to May 27, 2014, when Contreras was no longer employed by the woman, the affidavit said. Security camera photos from the ATM show Contreras making all but one of the transactions; the single transaction was made by another, unidentified person.

10 Reasons People Get Railroaded into Guardianship

10 Reasons People Get Railroaded into Guardianship

by MARGARET K. DORE

1. A Misconception of Guardianship
The first factor that contributes to unnecessary guardianships is a misconception of guardianship itself. The word “guardian” creates a warm and fuzzy image. Guardianship is, however, a severe loss of liberty.
 

2. Trolling for Clients
Some professional guardians petition the court to have themselves appointed guardian of persons with whom they have no prior relationship. If appointed, the professional guardian becomes entitled to an income stream, i.e. , fees from the person’s assets. This practice has been termed “trolling for clients.”
 

3. Ageism
Ageism is “prejudice or discrimination on the basis of age.” In the context of guardianship, ageism can influence whether a guardianship is imposed.
 

4. Court Visitors Recommend the Lawyers
Court visitors also contribute to the imposition of unnecessary guardianships because in many states, the visitor recommends whether the proposed ward should be given a lawyer. The proposed ward does not have an automatic right to counsel. This situation creates a conflict of interest.

5. The Visitor’s Fee Creates Another Conflict of Interest
If the guardian ad litem recommends counsel for the proposed ward, or if the guardian ad litem recommends against the guardianship, the petitioner may object to the guardian ad litem’s fee. The “smart” guardian ad litem, who wants to get paid, is thus under pressure to go along with the petition, not “make waves.” The guardian ad litem is, regardless, more likely to be paid if the guardianship is imposed. This is because with the appointment of a guardian, there is an official person (the guardian) who will be ordered to pay the guardian ad litem’s fee from the ward’s assets.
 

6. Vague, “Politically Correct” Statutes
In many states, persons subject to guardianship were formerly deemed “incompetent.” To eliminate the stigma, many states passed statutes employing the word “incapacitated” instead. This terminology is also contained in the Uniform Guardianship and Protective Proceedings Act (1998). This change in terminology has caused an implicit lowering of the burden of proof. A judge or jury might think twice about deeming someone “incompetent” to handle his affairs. But deeming someone “incapacitated” or as having “incapacities” is not that big a deal.
 

7. Sudden Change and Potential Heirs
Another factor that contributes to unnecessary guardianships is sudden change, especially change that threatens potential heirs. More common examples include changing one’s will, selling family property, seeing a younger woman and/or marrying her. Any such action by an older person can result in a petition for guardianship.
 

8. Court Visitors Are Not Always Neutral
As custody attorneys know, guardians ad litem and evaluators are not always neutral; they instead follow their own value systems or other private criteria. With this situation, custody attorneys often advocate for the appointment of a guardian ad litem/parenting evaluator whose views are compatible with their cases. They may also move for the appointment of a guardian ad litem or parenting evaluator with whom they have an established relationship. The person appointed can be prealigned to one side.
 

9. Court Visitors Effectively Lower the Burden of Proof
Case law provides that the constitutionally required burden of proof for a guardianship is “clear and convincing evidence.” In many cases, this burden is easily met. The proposed ward is demented. There is no alternative to guardianship such as a power of attorney because the proposed ward is incompetent to execute such a document. In other cases, however, the burden would not be easily met i.e., if the petitioner would actually be required to show clear and convincing evidence. The petitioner, however, is often not required to meet this burden because as a practical matter, he only needs to convince the court visitor.
 

10. Incentives to Sell Out the Client (No “Dream Team” for the AIP)
Like the guardian ad litem, the “smart” lawyer who wants to be paid will not do anything that causes the petitioner to be unhappy, such as vigorously fighting the petition. The “smart” lawyer will also avoid disagreeing with the court, as the court has direct authority to appoint him, approve fees and order payment. The bottom line, there is pressure on the lawyer to sell out his client. For this reason also, a person may be placed under guardianship when it is not appropriate.

PROPOSALS FOR REFORM
Politically Correct Statutes
Eliminate Court Visitors/Mandatory Appointment of Counsel
Remove the Conflicts of Interest
Public Awareness

CONCLUSION
The law provides that guardianship not be imposed unless there is clear and convincing proof. In practice, this proof is often not required due to the factors identified above: vague, politically correct statutes; the role of court visitors; and in many states, the lack of mandatory counsel for the proposed ward. More broadly, there are numerous conflicts of interest that allow competent individuals to find themselves forced into guardianship. The next time, it could be you.

Full Article and Source:
Margaret Dore - AJFL 2008 (pdf)

Auburn woman arrested for bilking $400,000 in fake cancer scheme

BY Josh Kerns  on June 24, 2013 @ 5:52 pm (Updated: 5:54 pm - 6/24/13 )

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A 51-year-old Auburn woman was arrested Monday on federal wire fraud charges for faking cancer and bilking more than $400,000 from an elderly Auburn resident who believed her story.
U.S. Attorney Jenny Durkan says Julie Ann Dahlquist claimed to have cancer but no medical insurance or money for treatment. The victim wrote checks to Dahlquist for as much as $9,000 three times a month to pay for the non-existent treatment. The federal indictment says the victim wrote 190 checks between May 2009 and September 2012 totaling over $400,000. Dahlquist allegedly used the money for gambling and other expenses. Along with the wire fraud charge, Dahlquist is also charged with Social Security fraud for hiding the $400,000 she defrauded out of the victim to collect Supplemental Security Income benefits . She also failed to disclose another $100,000 in gambling winnings. The indictment says that additional income would have disqualified her from collecting benefits. Dahlquist faces up to 20 years in prison for the wire fraud charge, and an additional five years for Social Security fraud. She's schedule to appear in U.S. District Court in Seattle Tuesday afternoon