New York: A Sink-Hole for Estates

Legal Fox Watches New York's "Guardianships"

LAWYERS PROFIT FROM GUARDIANSHIP RACKET

By Alisa Partlan | June 5, 2018

It is a New Yorker’s nightmare: losing all that a family has worked for, even down to the place they call home. But what if it was all taken in the name of protection?

Ann Masotti, a born-and-raised Bronxite, says that she and her 31 year-old daughter have been “exiled” to Texas in the wake of a protracted legal battle over the estate of her late ex-husband, Vito. Ann and Vito adopted Andrea, nicknamed Andi, from Hungary when she was six years old. Andi is autistic, and during the year after Vito’s death in 2006 she experienced mental health troubles and became suicidal. She was hospitalized multiple times and could not seem to stabilize.

Ann found a residential facility about 50 miles north of the city that she believed could help, and sought to place Andi there. However, this placement would have cost more than Ann says she could reasonably afford. Ann asked the Westchester County Surrogate’s Court to allow her to withdraw funds from Vito’s estate to pay for Andi’s treatment. Vito had always intended for his estate to go to his daughter, says Ann, and after he was diagnosed with cancer he set up a will and trust with his long-time tax attorney specifying that intent.

There was one major problem. In 2005, Joseph Pisani, a former state senator and lawyer who had previously been disbarred on federal charges of fraud, embezzlement, and tax evasion, had cozied up to Vito in his last months. Pisani and Vito had changed the will and named Pisani as Executor and Trustee of the estate, including a rental property that reportedly generated revenue income substantial enough to sustain Andi for the rest of her life. Pisani refused to release any of the funds. Instead, he drained them, dissipating accounts and paying himself and other attorneys he hired with the money from Andrea’s estate.

Pisani claimed in court records that he was looking after Andrea’s well-being and had her best interests in mind. As a fiduciary Pisani was supposed to file an accounting of the estate with the court when requested and upon closing, but the one accounting Pisani did file in 10 years was rejected by the court and never corrected.

Ann tried every legal remedy she could think of, including applying for legal guardianship of her adult daughter under Article 81 of the Mental Hygiene Law, but nothing succeeded in removing Pisani’s hold over the accounts. Even after Ann successfully had Pisani removed as Trustee, the court kept him on as Executor. Meanwhile, as Andi bounced from facility to facility, Ann paid for her daughter’s care out of her own pocket. After Andi’s last stint at a facility in Houston, they settled in Texas, unable to afford to return to New York.

“Nobody could make up this stuff,” says Masotti. “It’s worse than any crime novel that you could pick up. And it’s true.”

Hopes for action dashed

Ann Masotti took her complaints to the New York State Attorney General’s office twice. The first time, in 2008, the office was headed by Andrew Cuomo. In a phone call, Ann says, his office responded that they had deemed her detailed, documented complaint to be without merit. The second time, in 2014, Masotti addressed her complaint to Eric Schneiderman. The response on his behalf came from the office’s Public Integrity Bureau: By their determination the complaint did not warrant action. The office did not provide a reason.

Now, more alleged victims of guardianship abuse and trust fraud have come forward to say that Schneiderman’s office refused to investigate their complaints, even after reaching out to them directly in an apparent show of good faith. Lately, Albany has been talking about fixing the state’s adult guardianship system, which even a longstanding judge says is “broken,” but victims have yet to experience relief or see justice. As a new Attorney General takes the helm, will justice be served?

“The Attorney General’s Office is the chief law enforcement officer for the state. It’s their responsibility to accept and process complaints for serious infractions,” says Dr. Sam Sugar, founder of Americans Against Abusive Probate Guardianship. “When they establish a policy of ignoring complaints that are well-documented, they are breaking their own laws and their oath to uphold the constitution of the United States and the constitutions of their individual states, all of whom make it clear that discrimination against anyone for any reason is illegal.”

The Attorney General’s Office and Governor Cuomo’s office did not respond to requests for comment.

Guardianship is a legal system designed to protect people who are incapable of managing their own personal, medical, and/or financial affairs due to mental or physical disability. Under Article 81 of New York’s Mental Hygiene Law, a person concerned with the welfare of an individual can commence a proceeding in court. From there, a judge makes a determination that the individual is incapacitated and appoints a guardian for the person. The guardian then has the legal authority to make decisions regarding the person’s property and/or care, depending upon whether they are guardians of personal needs, property management, or both. Article 81 directs guardians to consider the needs and wishes of the individual and choose the “least restrictive” interventions. The guardian can be discharged if the court is satisfied that the guardianship is no longer necessary, if the person becomes capable of managing their own affairs again, or if the person dies.

According to Michele Gartner, Esq., Special Counsel for Surrogate & Fiduciary Matters in the Office of Court Administration, there are more than 17,000 active open Article 81 guardianship cases in the state of New York. Richard Black, director of the Center for Estate Administration Reform, estimates that there are closer to 60,000 to 80,000 adults currently in guardianship in the state. Black’s estimate includes adult guardianship cases that would not fall under Article 81, such as Article 17-A guardianships in Surrogate’s Court. Black estimates that 5 to 10 percent of adult guardianships are fraudulent to some extent, costing victims and their families approximately $10 billion nationwide each year.

Although abuse cases vary, the pattern typically includes a declaration of incompetence by a judge, the appointment of a guardian — in New York, when not a family member, the guardian is generally an attorney from an approved list — and the isolation of the individual, either in their own home or in a nursing home or other facility. At that point, a person is nearly powerless against any personal care and/or financial decisions the guardian chooses to take. A guardian can enrich his/herself by billing fees for his/her time to the person’s estate, and in the absence of sufficient supervision of a guardian’s activities — for example, if he/she chooses not to submit proper accounting of the estate to the court, or if a court evaluator does not carefully review the accounting reports — there is potential for mishandling of assets.

Alleged: that $3M was taken

One such case is the nearly 13-year ordeal of Bertha Kornicki. In 2004, Bertha and her husband Manny reportedly discovered that their daughter Terri had been taking money from their accounts without their knowledge. In total, Terri was alleged to have stolen approximately $3 million from her parents over seven years. In order to protect Bertha, who had Alzheimer’s, from future exploitation, Manny and his other daughter Marian sought guardianship over Bertha under Article 81. Instead, the judge appointed as guardian attorney Ellyn Kravitz, who was unknown to the family, and agreed to appoint Bertha’s cousin Rudy Shur as co-guardian.

Marian alleges that Kravitz never marshaled the family’s assets, which allowed Terri to take more, and did not visit Bertha or attend to her personal needs. Kravitz also failed to file a final accounting when she stepped down as co-guardian.

Eventually Kravitz was replaced by another lawyer, and then another. The court received bills for the guardians’ time at rates as high as $400 and $600 per hour for tasks as menial as responding to emails and reviewing receipts. These fees were paid from Bertha’s estate. Over more than 12 years and a succession of numerous guardians, lawyers, and accountants, the estate of Bertha and Manny Kornicki trickled out. Some of the funds went to Terri, who by then had been arrested on felony theft charges and entered into a plea bargain (the grand larceny charges were dismissed, citing Manny’s death and the lack of a legally sufficient case by the DA, and she pleaded guilty to offering a false instrument for filing, a misdemeanor.)

Now, there is almost nothing left. Meanwhile, Marian charges that the guardians did nothing to help with her mother’s day-to-day care, so Marian took it over after her father’s death. “I came to the judiciary system for help because I was a victim of elder abuse and I feel that I am being treated in an abusive way by the very system I am seeking help from,” wrote Manny to the judge in 2005.

A representative for Kravitz provided the following statement: “As an elder law attorney in practice for 25 years, I’ve always held myself and my work to the highest legal and ethical standards. Any suggestion to the contrary is incorrect and misinformed.”

Marian wrote to and called the Attorney General’s office multiple times in recent years and was disappointed when the office’s only response was to forward her complaint to the Office of Court Administration, where it languished.

In recent months, conversations with Assistant Attorney General Sean Courtney and Legal Intern Micheleen C. Karnacewicz in the Public Integrity Bureau raised her hopes for action. However, other victims recently told Black, who also spoke with Courtney and Karnacewicz about nine additional cases in the state, that the office was refusing to help them after an initial conversation, so Kornicki and Black are not optimistic that the office will pursue their complaints.

Their remaining hope lies with the AG’s Charities Bureau, which Black says reached out to him May 24th requesting more information.

Bertha passed away on May 8th, the same day Attorney General Schneiderman resigned. Now, Marian hopes that the family’s guardianship ordeal will end, but first she has to wait and see if the deed to her parents’ house will be released to her. The current guardian, Deborah Rosenthal, was supposed to turn it over to Marian two years ago as part of a settlement between the sisters. Rosenthal instead proposed that a reverse mortgage be taken out on the house to increase the money in the guardianship account. Marian, who has been very active throughout nearly 13 years of guardianship proceedings, now hesitates to take any more action to obtain the deed because she fears that the legal process will drain what’s left of the estate. Says Marian, “As soon as you do something, everyone starts billing you.”

Rosenthal refused to comment on the allegations, but said, “Despite the court requesting that she do so, a law requesting that she do so, [Marian Kornicki] refused to provide the court and her sister information regarding her mother’s burial arrangements. It’s required by law. If you’re going to go and start criticizing people I think that’s an obvious criticism.”

A national issue

Guardianship and trust abuse are well-documented locally and nationally. In October 2017, The New Yorker covered guardianship abuse in Nevada, telling the story of an older couple removed from their home through guardianship proceedings. In New York state, a 2016 study estimated statewide losses due to financial exploitation of the elderly at a whopping $1.5 billion; of those cases, 15 percent involved power of attorney abuse, 6 percent involved fraud, and 4 percent involved denial of access to assets. Within the city, thefts from guardianships have been reported for more than a decade.

Errol Rappaport of Manhattan says that his mother, Frances, age 100, has been moved from her long-time home at 200 Central Park South to a place in Queens and the apartment sold after a dispute between Rappaport and his two brothers. Rappaport has reportedly been prevented from seeing his mother except with 48 hours’ advance notice, for a visit of up to two hours. Each visit is requested by email, for which the guardian, Madeleine Egelfeld, bills for 15 to 20 minutes at a rate of $450 per hour.

Egelfeld was paid at least $12,000 to $20,000 per year beginning in 2013, and hired Ellyn Kravitz as her own counsel in the matter for a sum of $123,139 as of January 2018. Egelfeld also billed for hours spent communicating with Kravitz, so that both were paid for the same time spent, a common practice known as double-billing. Through this process and a separate matter in Surrogate’s Court, Rappaport has been removed from the home where he was staying with his mother and has been unable to access his portion of the estate, which he says was to be split equally among the brothers, and is now homeless and couch-surfing at age 74.

Rappaport’s brothers declined to comment. Egelfeld did not respond to a request for comment.

On January 8, the New York State Senate held a round table on guardianship. Present at the round table were judges — including Kornicki’s judge, Hon. Arthur M. Diamond — and lawyers, practitioners, and senators. Attendees lamented a lack of data surrounding guardianship in New York as well as a lack of funding to pay guardians and court evaluators in guardianship cases. No victims of guardianship abuse were invited to speak.

Meanwhile, Ann Masotti is her daughter’s legal guardian under Article 81, yet she was unable to protect Andrea from an unscrupulous executor. It seems that this system, although designed to protect some of the most vulnerable, can fail when used by a family member in good faith but enable abuse by those who use it for personal gain.

A few years ago, Masotti and an accountant pored over financial documents submitted by Pisani to the court and found what she believes is a smoking gun: Pisani had deposited funds intended for Andrea’s escrow account into his own private bank account. Masotti went to her District Attorney, Janet DiFiore, who is now Chief Judge of New York. By the time that office got back to her, the statute of limitations on her case against Pisani had run out. Pisani died in 2016.

“There was far more care taken to protect Joseph Pisani, the felon, than to protect Andrea Masotti, the disabled young woman,” says Ann Masotti. Because the system is so entrenched and no one at the county or state level would take up her complaints, Masotti declares, “There was going to be no day of reckoning for Joe Pisani.”