judgment12


enforcement procedures.13 It is our hope that once litigants in the


probate division and their attorneys be- come familiar with how to use these new rules, an individual filing a petition in the probate division that alleges defalcation from the decedent’s estate should be able to request a temporary restraining order or prejudgment attachment, issue subpoenas without having to suffer a thirty- to forty- day delay in seeking a court order, and in short, avail themselves of all of the normal civil court procedures typically used to de- fend litigants’ rights and protect their finan- cial assets.


Criminal Procedure


ous provisions that criminalize thefts from fiduciary relationships,14


While the Vermont statutes have numer- they do not im-


pose penalties consistent with larceny stat- utes nor provide for restitution. Whatever the State of Vermont’s stat- utes may actually say, in practice we find that referral to state’s attorneys concern- ing thefts from estates are rarely made by the judges of probate when they become aware of such thefts.15


Litigants seeking to


have Vermont criminal law applied to indi- viduals stealing from estates also are likely to find that the local state’s attorney will re- sist taking such a case. It is our experience that the only governmental authority in Ver- mont that has been willing to pursue thefts from fiduciary arrangements is the U.S. At- torney’s office.16 The current state of law enforcement concerning thefts from estates, guard- ianships, and trusts, and from vulnerable adults, reminds us of the general attitude in our country some years ago concerning spousal abuse, which was often viewed as a private “family matter” outside the scope of law enforcement. We hope that this ar- ticle may help bring the attention this issue deserves, at least within the Vermont legal community. We believe that the state’s attorneys in Vermont have an obligation to protect fi-


nancially vulnerable adults and elders by allocating resources to the prosecution of individuals who steal from their families or those they are entrusted to care for under legal authority as fiduciary, where their fi- duciary obligations are violated in a willful and knowing manner in contravention of our state’s criminal laws. To facilitate a “reset” of Vermont atti- tudes towards thefts from elders and oth- er vulnerable adults, we advocate that the Vermont legislature pass a single statute that criminalizes thefts from all varieties of fiduciary arrangements and has uniform penalties for such thefts.17


We also believe


that the Vermont legislature should require the Attorney General to report on thefts from fiduciary arrangements, in particular by providing statistics concerning referrals to its office by individuals, attorneys, and the probate courts, including the number of criminal complaints filed and successful prosecutions.


Summary The prevalence of thefts from fiduciary


relationships is a problem that has been ig- nored by the general public and many pub- lic authorities, or swept under the proverbi- al rug by vulnerable adults too embarrassed to report the crimes against them. We hope that the Vermont bar will take the lead in ending the unwelcome phenomena of fidu- ciaries living well on other people’s mon- ey by drafting documents that place clear boundaries on the use of money and that impose appropriate accounting responsi- bilities on fiduciaries. In addition, we hope that members of the bar will take care in vetting potential fiduciaries, and that they will consider regularly arguing for surety bonds in court appointments of guardians and estate fiduciaries.


Please contact any of the authors of this article for assistance or resources if you find yourself confronted with these issues in your practice. We will also be posting blogs and sample documents, such as a sample power of attorney, on our website in the


next few months to continue our campaign against this form of theft. ____________________ Paula McCann, Esq., Ron Morgan, Esq.,


and John Newman, Esq., are all members of the trust and estate practice group at Kenlan Schweibert Facey & Goss, P.C., in Rutland, Vermont. The authors would like to thank Matt Getty, also a member of the practice group, for his assistance, and their paralegal, Kim Miller, for suffering through helping them “track down the money.”


2011 Marquest Report on Embezzlement, published by Marquest International, Ltd.,


____________________ 1


January 17, 2012. 2


On a national level, The Associated Press


reports on a 2009 National Institute of Justice Study that concluded that “5 percent of Americans 60 and older had been the victim of recent financial exploitation by a family member.” See Losses mount from scams targeting older Americans, March 3, 2012, at http://articles.bos- ton.com/2012-03-03/news/31120117_1_older-


americans-scammers-older-adults. 3


We explain Medicaid asset rules generally in our 2007 article, John C. Newman & Ronald Mor- gan, Tax and Medicaid Planning Aspects of the Standard Vermont Estate Plan—2007 Update,


upon request. 4


This statute (§3510) gives jurisdiction to the superior court for accountings and for damages. A criminal case would have allowed the estate to obtain restitution through the restorative justice


VT. B.J., Winter 2007-08, at p. 28. 5


program. 6


pany. 7


ARC’s insurance company has paid all of Ms.


Smith’s victims in full. Once released, Ms. Smith is required to pay restitution to the insurance com-


This proposed rule is reported on “Newman’s Blog” at http://www.kenlanlaw.com/newman-


blog.html. 8


A draft of this draft probate rule can be found under “Newman’s Blog” at http://www.kenlan-


9


law.com/newman-blog.html. 10


at p. 32. 11


John C. Newman, Alden v. Alden: Lessons of the Vermont Trust Code, Vt. B.J., Summer 2011,


For example, temporary restraining orders, preliminary injunctions, permanent injunctions,


and prejudgment attachment. 12


tions, and post-judgment levies. 13


13 VSA §2534 makes it a felony for an execu- tor or administrator to embezzle from an estate. 13 VSA §2028 makes it a felony to misappropri- ate funds from a joint fiduciary account. 13 VSA §2535 makes it a felony for a guardian to embez- zle from the guardianship estate. 13 VSA§2533


blog.html. 14


makes it a felony to embezzle from a trust. 15


We prefer that probate judges make such re- ferrals without prompting by the attorneys in- volved because VRPC 4.5 cautions that an at- torney “shall not … threaten to present criminal charges in order to gain an advantage in a civil


matter.” 16


5:11-cr-26 (2011). 17


See United States vs. Donah Smith, Case No: A copy of the statute that was proposed dur-


ing revisions to the spousal share rules in intes- tacy is reprinted on “Newman’s Blog,” at http:// www.kenlanlaw.com/newman-blog.html.


22 THE VERMONT BAR JOURNAL • SPRING 2012 www.vtbar.org


For example, trustee process, debtor deposi- The current draft may be found on “Newman’s


Blog” at http://www.kenlanlaw.com/newman- 14 VSA §2108(1). The exact court references may be supplied


Living Well on Other People’s Money


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