Trustees say law firm is liable for not spotting theft
Here are some excerpts from Rebecca Beyer [no relation to his blog editor], Trustees, Firm at Odds Over Responsibility for Spotting Theft, Los Angeles Daily Journal:
Family betrayal was at the heart of a financial elder abuse case in which a daughter stole $1.2 million from her mother and $3.6 million from her family’s trust while acting as co-trustee.
But her brother and sister believe the law firm retained to handle the family trust should also be held liable for not discovering the elder abuse and theft. [***]
[Los Angeles attorney Phillip Heller] represents co-special trustees Joseph Sternlight and Eve Sternlight Cohen, whose sister Helen Sternlight Fabe, was convicted of stealing millions from the trust and their mother Sara Sternlight. The Sternlight siblings seek $5.6 million to cover the theft, plus punitive damages. [***]
According to Heller, when the firm [Hoffman, Sabban & Watenmaker] discovered on old tax returns that $1 million in bonds were missing, it accepted Fabe’s explanation that the money had been used to pay a $3,000 decades-old debt and did not notify [then beneficiary] Cohen.
Instead, Heller said, the firm had the trustees sign a tax return that did not mention the bonds. [***]
Heller said Hoffman, Sabban lawyers…failed to take an accurate inventory of the Sternlight assets by looking at previous years tax returns or having its clients pay for a surety bond that would have required a detailed inventory. The clients waived the surety bond. [***]
[Defense attorney David DiBiase of Anderson, McPharlin & Conners said] “The plaintiffs claim that it is a lawyer’s duty to audit the client’s financial records, hold the client’s checkbook, and only allow the client to write check that the lawyer approves.” [***]
He added, “the plaintiffs appear to claim that the lawyer for a trustee has to act as a sort of ‘super-trustee’ and oversee every action that a trustee takes.”[***]
“It’s a lawyers job to advise…not to take over the client’s job” said DiBiase.
Special thanks to Julia M. Wei of The Law Offices of Peter N. Brewer in Palo Alto, California, for bringing this article to my attention.
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