MICHIGAN TRUST THEIF SENTENCED

ESTATE PREDATOR HEADED TO JAIL

Tuesday, June 14, 2022 | Benzonia, Michigan

By Brett Darken

It took nearly four years, but they did it.

In the smallest county in Michigan, an 89 year old widow, her son, a sheriff’s detective, and a county attorney joined forces to stop a financial predator from stealing from a family’s trust.

Now that predator is going to jail.

Robert Ellis Pleads guilty to theft from a Michigan trust.

Robert Ellis, a resident of McHenry, Illinois, pled guilty to embezzling money from the trust of H.L. and Beverly Markword. In order to avoid a trial, Ellis worked out a plea deal with Benzie County prosecuting attorney Sara Swanson: Ellis restored some of the money he had spent from the Markword trust and will spend three months in prison.

In the reporting by Marti Link and Luca Powell of the Traverse City Record-Eagle, 13th Circuit Court Judge David A. Thompson said at the sentencing hearing that ‘“My instincts are telling me that what you did, Mr. Ellis, was criminal,” adding there was “no way on earth” the approximately $100,000 Ellis spent from the trust was reasonable.'”

The story by Link and Powell can be read here: https://www.record-eagle.com/news/local_news/trustee-sentenced-in-benzie-county-embezzlement-case/article_526444c2-d619-11ec-9276-7bad5cc4b181.html

FINANCIAL ASSAULT ON GENTLE PEOPLE

H.L. and Beverly Markword got married on her 18th birthday in 1947, and Mr. Markword maintained that she was the “love of his life.” They had been married more than 70 years when Mr. Markword had a stroke and was taken to the hospital. He survived for a while, but was never able to return to the couple’s farm.

On May 25, 2018, just days before Mr. Markword died, he was visited in his hospital room by Robert “Rob” Ellis and the Markword’s granddaughter, Christine Del Riva. The Markwords knew Ellis because he was in a relationship with Del Riva.

On that day, Ellis and Del Riva brought with them a set of trust and estate documents that they had Mr. Markword sign. Ellis and Del Riva served as witnesses to the signing.

Michigan Attorney John Rizzo (now retired and living in Miami) via Justia.

The trust and estate documents had been created for Ellis by attorney John J. Rizzo (left). According to his Justia profile, Rizzo has more than two decades of experience as an “eldercare” attorney with a focus on “Elder Law, Estate Planning and Social Security Disability.”

In 2018, when Ellis had engaged Rizzo write the irrevocable trust for Mr. and Mrs. Markword, Rizzo was practicing “of counsel” with a Traverse City firm named Swogger, Bruce & Miller.

Michigan estate planning attorney Michael Swogger (via Swogger & Bruce website).

The firm is now called Swogger and Bruce. Rizzo has since left the firm, as has attorney Miller, and Michael Swogger (right) is now representing Rob Ellis.

The irrevocable trust that Mr. Markword signed in his hospital bed created an estate plan that could not be changed by the Markword’s. An irrevocable trust is an estate planning tool that strips control of the Markword’s assets away from the couple. By design, the only person(s) who would have a say in the Markword’s assets in an irrevocable trust is the trustee.

In the case of the Markword’s irrevocable trust, attorney Rizzo had written the trust to make Rob Ellis the sole trustee. Once the Markword’s assets were placed in the irrevocable trust, the only person who could manage or “touch” those assets was Rob Ellis.  By Michigan law, this was legal and intentional.

CASHING IN: 

In late May 2018, just days after getting Mr. Markword to surrender his assets to the trust, case files show that Ellis began seizing control of, and transferring, the Markword’s bank, retirement and investment accounts so that only he had access to their life savings—and hiding the paper trail of what Ellis was doing with the Markword’s money.

On June 3, 2018, H.L. Markword died.

Trustee Rob Ellis, withdrawing cash from Honor bank ATM.

Court records show In just the next three weeks, Ellis used his position as “trustee” to withdraw nearly three thousand dollars from the ATM at the Markword’s bank. The pattern of Ellis using the Honor Bank ATM to “cash out” money from the Markword’s savings continued for months.

Beverly Markword’s suspicions spiked when Ellis acted dodgy whenever she asked him about her finances. Beverly’s son, Jim Markham, had the same instinct: Ellis’ actions didn’t line up with what a person dealing in good faith would do.

Their concerns were confirmed when Honor Bank reported an unusual number of withdrawals by Ellis from Markword accounts.

FINANCIAL BULLY

Then, the problems with Ellis jumped to whole new level: Ellis sold the farm house in which the 89 year woman old had lived for decades. Since the home was in that irrevocable trust, and Ellis was the sole trustee, the law gave him control over everything in the trust. Including the farmhouse. By law, Ellis—as the sole trustee—had the right to sell the couple’s farmhouse—with or without widow’s consent.

Without notice, Ellis then moved Beveerly Markword to an assisted living facility.

Beverly Markword spent a half a century of her life building her savings and pension and restoring the farmhouse where she lived with the love of her life. But she had lost control over all of it to Ellis because she had given him here POA or “power of attorney.” This gave him the right to sign legal and financial documents on her behalf: Ellis could open and close accounts in her name, and buy and sell her things in her name.

As it turns out, this is exactly what he did, and it was all in compliance with Michigan law.

HELPLESS PREY

The Markword family could see the money Ellis drained from her accounts, but as the beneficiary, she had no control over the trust. No way to stop Ellis, or even force an accounting.

When she asked about her finances, Ellis gave her the “brush off.” Beverly seemed to be caught in a legal “trust-trap.”

TRUST LAW: ACCESS AND ACCOUNTABILITY

But, there are two parts to the Ellis story:

The first part deals with Ellis’ access to their assets: Nobody has claimed that Ellis forged documents or signatures. On paper, the Markwords had given him access to their finances.

What Ellis was doing was “by the book” of Michigan’s trust and estate code. Additionally, billing records show that Ellis had the on-going professional advice of Rizzo and Swogger, the elder-care attorneys he had hired to create the Markword’s irrevocable trust.

The second part of the issue is one of finance and accounting. A different story altogether.

Specifically this: Once Ellis had gained legal access to their finances, did he give the Markword’s the “standard of care” that is required of a trustee or fiduciary in Michigan? These are standards that apply to bankers, brokers, attorneys, mortgage lenders, and others who are entrusted with people’s finances.

In a way, the Markword’s were like shopkeepers who had trusted Ellis to look after their shop and given him the keys to run it in their absence. There is little question that they gave him the keys to “their shop.”

But once Ellis had “the keys to the store” did he act in good faith on behalf of Beverly Markword?

FOLLOW THE MONEY

When Michigan’s legal seemed to give the Markword’s no way to hold Ellis accountable, Beverly and Jim took a different path.

While Beverly had given Ellis the rights to handle her money, he was supposed to be doing this to benefit her. But the record shows that as soon as Ellis got access to the Markword accounts, they bgan shrinking.

And while the Markword’s accounts drained, Ellis’ fees and expenses ballooned. The issue wasn’t his legal access to her money, it was what he was doing with her money that was the problem.

In short, they could see that Ellis was using the language of the law to hide his theft from the family’s savings.

CREATIVE ENFORCEMENT

In late 2018, they reported Ellis’ spending to the Benzie County Sheriffs’ department. The case was framed not as an issue of “trust law” but one that was rooted in theft, fraud and embezzlement. A financial crime.

Lt. Troy Lamerson, a Benzie County Sheriff’s detective, took the case and worked with Beverly, Jim and Honor Bank to assemble the evidence of Ellis’ spending from the trust account.

In addition to the facts about Ellis’ use of trust funds, Detective Lamerson discovered a rarely used piece of legal code: In Michigan, while the beneficiary of an irrevocable trust does not have the power to remove a trustee, a probate judge does have that power.

By April, 2019, Detective Lamerson and his team had enough hard facts to make a case, and Lamerson took the evidence directly to Benzie County Probate Judge John D. Mead. After reviewing the detectives research, Judge Mead agreed to intervene in the case and removed Ellis as the trustee of the Markword trusts. Ellis was never again able to touch the assets in the Markword estate.

Control of the trust was given to a local professional fiduciary company and the retainer that Ellis had paid the Swogger law firm was placed in escrow, until Ellis’ criminal fraud and embezzlement case had closed.

A felony warrant went out in May, 2019. Ellis was arrested but was able to post bond. He has been free for the 3 years needed by the courts to reach his plea and his prison sentencing agreement.

THE NEXT CHAPTER

Michigan Probate judge John Mead

Now that the criminal component has ended, the case moves back to the probate court of Judge Mead. Judge Mead will be looking at three core issues:

  1. Coercion, intimidation and undue influence: Was the signing of the irrevocable trust by H. L. Markword done in good faith, with full disclosure and without threat, coercion or undue influence?
  2. Spousal rights: Can one spouse sign away the rights to marital assets without the informed consent of the other spouse? Can Mr. Markword make legal, financial or medical decisions that impact Mrs. Markword without her consent?
  3. Is it legal in Michigan for a company to bill a person (or trust) for work they did not order? Specific to this case: Does the law firm who worked with Ellis to create the irrevocable trust for the Markword’s have a right to bill the Markword’s trust for the work they did for Ellis?

The hearing before Judge Mead is scheduled for July 5, 2022.

 

 

 

About Edmund Burke 112 Articles
Volunteers working to help people spot, stop and recover from fraud and corruption in probate, trusts, estates & guardianships.