A Window on a "Small" Case of Exploitation in New York

A recent court decision in New York details the extraordinary efforts made by an individual to take advantage of a former co-worker as she aged and became affected by dementia.  One of the tools of abuse was a Power of Attorney, dated 2010, that he reportedly used as his authority to isolate her from family members.  The court found that he  was able to then manipulate her as he controlled her finances, having the woman sign checks he later claimed were "gifts," for purposes such as to "defray costs of his visit to France to see his daughter," "to help him buy a house in Normandy," or to cover "the costs of his art exhibit in Paris."  Ultimately, the court concluded that the respondent/defendant, who under New York law was in the role of fiduciary as an appointed agent, could not satisfy his burden of proof to show the alleged gifts were free from undue influence.  

The trial level court entered an order finding him liable for $122,000 plus costs and interest, and restraining him from "transferring, using, spending or hypothecating any of his assets" until the judgment was paid.  See Matter of Mitchell, 2016 NY Slip Opinion 50853(U), decided June 3, 2016 by the New York Supreme court, Kings County.  

That is the "befriender" side of the issues.  However, the court also addressed the possibility of a will executed in 2013.  The discussion of the will brings into play the role of an attorney who was called by the defendant to testify at the hearing on the gift transactions, apparently in an attempt to bolster his arguments about the woman's capacity.  That plan backfired.

The way it all plays out through the testimony, as recounted by the judge in his opinion, raises important questions about what could or should the lawyer have done differently.  

The court wrote:

Defendant's only witness was [an] ... attorney from the [incapacitated person's] free legal services, District Counsel 37 Municipal Employees Legal Plan (Plan), who drafted the IP's Will....

 

[The attorney] explained the process by which a municipal employee would use the legal services. The employee calls the Plan and requests a Will. The Plan's screening department then determines if the person qualifies for its services and if she does, mails the employee a questionnaire form.... Because of a significant backlog at the Plan's office, the IP's file was sent to [the attorney in question] several months after she mailed back her completed questionnaire.... As a result of hurricane Sandy, there was [additional] delay in getting the will completed....

 

Sometime in early 2013, Mr. Shadoian [the defendant ultimately found to have manipulated the IP] and... on behalf of the IP, asked that the Will be completed.   

 

[The attorney] explained that he would have to telephone the IP so that he could speak with his actual client. Mr. Shadoian told him not to bother, because the IP would only answer the telephone if she knew who was calling. The two then set a date and time for [the attorney] to telephone the IP.

 

[The attorney] called at the appointed date and time. The IP answered the phone, and the two spoke. Although [the attorney could not recall [at the hearing] his conservation with the IP, it apparently was satisfactory, and he drafted the IP's Will. [The attorney] was unconcerned of Mr. Shadoian's involvement in the process. [The attorney] saw no problems in sending a copy of the IP's Will to Mr. Shadoian's attorney, and at the hearing [the attorney] saw no problems in placing attorney-client conversations and communications into the record, despite attorney-client privilege.

 

On the Will questionnaire, the IP indicated that some of her assets had been sent to the State as unclaimed funds, but it did not occur to [the attorney] that the IP did not know the extent of her estate. The IP had advised the Plan that the approximate value of her assets, excluding her co-op apartment, was $66,000.00. However, the IP's liquid estate at the end of 2014 was, in fact, some $838,000.00 in various accounts most of which existed in 2013.

 

On July 13, 2013 the IP, accompanied by Mr. Shadoian, executed her Will, and [the attorney] supervised and witnessed said execution. [The attorney] saw no obvious mental deficits in the IP, and the entire process took no more than a half hour. [The attorney] explained that although he would usually exclude a named beneficiary under the Will during the Will's execution, he might not have done so when the IP signed her Will because the Plan was in cramped temporary quarters, not in its usual office, during downtown Manhattan's recovery from Hurricane Sandy.

 

[The attorney] seemed genuinely surprised to hear that the IP had multiple diagnoses of dementia and hospitalizations due to self neglect. He likewise seemed disconcerted to learn that the Mr. Shadoian was "gifted" over a hundred thousand dollars from the IP the year before the Will was signed.

Ultimately, the court concluded:

To prove that the IP freely and knowingly made these gifts, Mr. Shadoian called [the attorney who drafted the will] to testify. [That attorney's] testimony did nothing to prove that the gifts were voluntary. He spoke to the IP briefly over the phone and met her one time for 30 minutes while the IP was in the company of Mr. Shadoian. Additionally, when [the attorney] telephoned the IP and she answered the phone and the two spoke, we do not know if Mr. Shadoian was present and influencing the IP. [The attorney's] testimony was too threadbare to carry much weight. He spent so little time with the IP that his impression cannot be given much weight, especially in light of the fact that [the attorney] was never informed that APS had intervened in the IP's life, that the IP had been prescribed Alzheimer medication, that she had been hospitalized on several occasions due to her own and Mr. Shadoian's neglect.

 

Moreover, [the attorney] failed to make even elementary inquiries as to the actual size of the IP's estate, her medical condition, her social and familial history. Contrary to usual practice, he allowed an unrelated person, designated as beneficiary, to orchestrate the completion and execution of the Will. As to the validity of the Will, it will have to be decided on another day in another court, if the Will ever arrives back in the United States from its sojourn in Iran.Also as Mr. Shadoian's case, two letters, purportedly from medical personnel, placed into evidence by Mr. Shadoian, stating the IP was fine are likewise given little to no weight. These providers were unaware of IP's hospitalizations or history with APS, and their statements are devoid of any medical basis for their declarations.

While this might be a "small" New York case, nowhere near as "exciting" as Brooke Astor and her vast wealth, this is another reminder of the pitfalls that can attend "routine" document executions. What if the lawyer, instead of completing the will transaction, had said, "Stop. I need to know more before we go one step further."