A lawsuit filed in Florida accused a group of elder care professionals of a racketeering scheme defrauding an elderly man with dementia. This case explores the challenges of combating elder fraud and the importance of finding the "predicate" fraud that started the chain of illegal acts.
Two dozen “elder care” professionals from the Tallahassee region are named as defendants in a federal civil racketeering (RICO) complaint filed in the Northern District of Florida.
Racketeering, or “RICO” statues, originated in the fight against organized crime and drug cartels. What transforms a simple fraud into a “racket” is when two or more people work together in the commission of the illegal act.
Defendants include local doctors, attorneys and realtors, as well as multiple corporate entities, including FSU SeniorHealth, Cherry Laurel, Holiday By Atria, Inc., Tallahassee Memorial Healthcare and St. Augustine Plantation.
The plaintiffs are the three daughters of the late Victor Lambou, who are heirs of his estate. The women claim their family’s estate was the target of a theft-by-fraud scheme carried out by the elder care professionals using a “guardianship” that was unwanted and unneeded. The suit alleges wire fraud, obstruction, identity fraud, pension embezzlement, witness tampering and healthcare billing fraud.
Broadly, the suit, which is currently in the discovery phase, claims that rather than protect and serve Mr. Lambou, the “elder care professionals” used their power to target the assets of the retired widower.
About 2.5 million people die each year in the United States, and the “baby boomer” generation are now passing trillions of dollars of their assets to the next generation. If just two percent of these transfers are touched by fraud, it is a $20 billion problem every year.
The Florida RICO case, like many cases rooted in probates, trusts and estates, involves multiple components. The Lambou suit has three intersecting components: The Florida legal code; established fiduciary rules and requirements; and civil rights law governing care of the elderly and incapacitated.
For ACFE members and anti-fraud professionals, fighting fraud in trusts, estates and guardianships is an opportunity to serve, but the cases are complex and challenging because they live at the intersection of law and finance.
The Florida RICO case is complex: It is 130 pages long and cites more than 400 events that involve more than a dozen defendants. Out of this sea of data, a fraud researcher must find the “predicate fraud,” or the first bad act that “starts the ball rolling.”
In this suit, the story of the predicate fraud starts on page 33, where it details how plaintiff Geralyn Lambou had moved from out of state to live with and care for her father, Victor, after the death of his wife, Geralyn’s mother.
The suit states that not only did Geralyn provide in-home care for her father, but she took him to get expert care from Dr. Paul Katz at Florida State University Senior Health. Dr. Katz is the professor and chair of the department of Geriatrics.
Dr. Katz diagnosed Victor with dementia. He also recommended that Victor live in his home, and advised Geralyn, who already had been given Power of Attorney (POA) by Victor, to take over the management of his finances. Victor and Geralyn complied with Dr. Katz’s recommendations.
But then the story takes a sharp turn. The complaint details that attorney Twyla Sketchley, who is listed on her website as a veteran elder care attorney, had written Victor’s estate plan and was called by the family for advice on what seemed to be a trivial matter: Mr. Lambou’s longtime housekeeper was suspected of stealing from him.
The suit claims that Sketchley teamed up with defendants Howard Kessler, M.D., and Dr. Kessler’s wife, Ann Van Meter. Together, they allegedly advised Victor to reject the advice of Dr. Katz and told the elderly dementia patient that he should move out of his house to avoid firing the housekeeper. Victor followed the advice of Sketchley and Dr. Kessler. The defendants then coordinated Victor’s move out of his home to an elder-care facility.
The complaint then reveals the first alleged fraud in the timeline: During this time, Sketchley used her status (as an officer of the court) to contact Victor’s post office and had Victor’s mail redirected to the home of Van Meter and Dr. Kessler. The suit states that Sketchley did not get permission from either Victor or Geralyn to change his mailing information, nor had Kessler and Van Meter been authorized by Victor to receive Victor’s mail. The suit states that Victor didn’t even know that Sketchley, Kessler and Van Meter had re-routed his mail.
But the fraud that triggered thefts of Victor’s assets — the predicate fraud — is detailed on page 36: The suit states that in October 2019, Sketchley had Victor Lambou sign multiple legal documents that changed his estate plan — even though the attorney knew that Victor had been diagnosed with dementia.
The suit accuses Sketchley of having “Victor sign a Petition for a Voluntary Guardianship over his property, requesting the appointment of Attorney Leonard Helfand (a defendant) as Guardian of Property, revocation of DPOA, and has Victor sign an amendment to his Trust appointing (Ann) Van Meter as his Successor Trustee and Helfand in the alternative.”
Florida statutes broadly direct elder care professionals to use the “least restrictive means” to assist individuals, such as durable powers of attorney, trusts or supported decision-making.
The Florida legislature wants guardianship to be a “last resort.” The suit claims the defendants did exactly the opposite of what Florida’s law directs. It accuses the defendants of violating Florida Statute 744.341, which details that “voluntary guardianship” is when “a mentally competent adult, who is physically incapable of managing their property or financial affairs (often due to age or physical condition), voluntarily petitions the court to appoint a guardian to manage their estate.”
The suit claims the defendants knew that Victor Lambou suffered from dementia and lacked the capacity to enter into a contractual agreement. Additionally, defendants knew that as a dementia patient, Victor did not qualify for the voluntary guardianship agreement they allegedly lured him into signing.
The RICO complaint details in length how the defendants, having led a dementia patient to changing his legal documents, then allegedly used those documents to exploit their court authority and deplete Victor’s life savings. The man who thought he was a client was in fact a target.
This case offers fresh insights into the creative ways that fraud operators target their victims. With more than two million new probates being opened every year in the U.S., there are many opportunities for ACFE members to bring clarity into chaotic circumstances.
