Fraud/Embezzlement—A Case Study

Overview

THE CHALLENGE:
A home health aide (“Respondent”) used undue influence while an elderly woman (“Decedent”) was alive enabling him to transfer over $5 million in Decedents' assets into bank accounts that he owned and controlled.  The Decedent was a woman in her 90s with dementia.  The home health aide, while taking care of the elderly woman, disbursed $900,000 to himself during a five-year period.  While the elderly woman was close to death, she made the Respondent the sole beneficiary of all her assets (assets that in a prior will were to go to her nieces and nephews).  Petitioners (relatives of the Decedent) sought the return of these assets to the Decedent's estate.  Forensic accounting expert testimony was needed to educate and inform the Judge about a series of complicated financial banking transactions—including the closing of conservative investment accounts on behalf of the elderly woman, resulting in the liquidation of assets formerly held in long- term growth investment accounts. The Respondent then transferred these assets into his own aggressively traded equity investment accounts controlled by him.
 
DISCOVERIES MADE:
 
  1. The home health aide claimed that he was never paid a salary for taking care of the Decedent and the Decedent treated him like a son, as such she made him sole beneficiary of her assets.  We reviewed banking documentation and testified as forensic expert to the Petitioners that the Respondent would disburse two checks to himself on a bi-weekly basis—one for a fixed amount and the other for a varying amount for a period of five years.  Overtime, the amounts kept gradually increasing.  Further testimony was given showing that during this time, the checks were deposited into the home health aid's personal bank accounts and immediately the same amount of monies were withdrawn by him.  The Respondent denied that such checks were payment of salary, claiming that when the funds were withdrawn they would be used to pay for the Decedent's personal expenses.
 
  1. The Respondent was unable to provide supporting documentation and/or clearly identify what the approximate $15,000 per month in disbursements from the Decedent's accounts were used for.  In fact, we found that a majority of the Decedent's larger expenses (i.e., rent, credit card bills, etc.) were paid separately via check and/or as automatic debits to credit cards and not paid in cash.
 
  1. We identified other suspect financial transactions that were authorized by the Respondent.  Thirteen checks were made payable to an unknown entity totaling $123,000.  What was unusual about these disbursements was that the checks were all in sequential order even though the dates of the checks were spread out over a long period of time.  Additionally, each check was just under the $10,000 federal reporting requirement.
 
  1. Between the Decedent's hospitalization date and her death (a period of three months), the home health aide wrote $72,000 in checks to himself and in the memo line wrote “household expenses”.  Highly unusual given the fact that the Decedent was in the hospital those three months. While Decedent was alive and close to death, the home health aide was given signature authority and transferred funds from the Decedent's accounts into joint accounts giving him title to such accounts.  Within a week of the elderly woman's death, more than $5 million in the Decedent's assets were transferred through multiple bank and investment accounts further creating an obscure trail.
     
  2. At trial, we prepared detailed flowcharts as demonstratives to be used in conjunction with the forensic expert testimony to help explain the timeline of events and the flow of assets from the various conservative accounts into the home health aide's personal aggressive investment accounts.  
 
RESOLUTION
 
Our Team:
  1. Analyzed banking documents in order to identify irregularities and highly suspect transactions authorized by the home health aide.
     
  2. Created detailed flowcharts explaining the flow of funds from conservative investment and bank accounts into aggressive investment accounts owned and controlled by the home health aide.
     
  3. Provided expert forensic testimony in conjunction with using flowcharts and blown up check images as demonstratives in order to explain complicated and detailed financial transactions to the Judge.
 
The Court, after considering the evidence presented at trial, granted the turnover petition and directed the Respondent to deliver to the Petitioners any and all assets in his possession acquired through these financial transactions.
 
 For more information on how our experts can be of service to you in Forensic, Litigation, and Valuation Services, contact Sareena Malik Sawhney at SSawhney@grassicpas.com.