A too good to not be fraud kind of deal

One of the greatest assets of a Trust Officer is patience — especially when dealing with a stroke-victim who struggles to communicate. Another key value is commitment.

The story of Dolores, her six children and many grandchildren, is a perfect illustration of how patience and commitment can make every difference for those we serve.

It started with a call from a local attorney — we’ll call her Betty — to Daniel, who was our Executive Vice President at that time, for a meeting ASAP. Betty had discovered a highly suspicious transaction made by her client, Dolores.

Arrangements were made, and less than 24 hours later Daniel sat with Betty and Dolores to help flesh out the situation. Dolores, who was 87 years old, had suffered several strokes, which left her unable to speak and the right side of her body paralyzed.

This is where Daniel’s combination of innate compassion and legal training as a licensed attorney became invaluable. He knew that he wasn’t just seeking answers about what happened, but also gauging Dolores’ mental capacity, because of her impaired ability to communicate.  Through careful use of open-ended questions, close attention to her body language and painstaking patience, he was able to understand that, although she was unable to articulate words, and substantially paralyzed, her ability to reason and think clearly was very much intact. With the development of trust between them, Dolores was able to give Daniel a very clear idea of not only what happened, but most importantly, what she wanted to do about it.

Turns out that Dolores had granted her oldest daughter, Josephine, Power of Attorney and made her Successor Trustee of her Trust, the primary means of supporting her.

Daniel discovered that Josephine had taken Dolores to the office of a family-member real estate broker, Dolores’ nephew and Josephine’s cousin, whom we’ll call Ben.  Together, Ben and Josephine managed to get Dolores to sign a real estate contract for the sale of the major asset belonging to Dolores’ Trust, to Josephine’s two daughters.  The first indicator that something was amiss came shortly thereafter, when Dolores came to understand that her entire family – including her children and their children -were locked in a family fight over the sale.

Both Josephine and Ben, clearly in cahoots, were keeping the details of the sale under lock and key.  And for good reason!  The transaction was seller financed at well below market value, made with no down payment, zero interest, and a long-term, comfortable pay-out of thirty years.  Further reducing any profit for Dolores’ trust, Ben received a ten percent commercial sale commission, even though he had done nothing but fill out the contract and get Dolores to sign. Finally, the sale price would be further, significantly reduced, because the IRS requires that a minimum interest rate be imputed on the sale, even though Dolores’ two daughter were to pay none. 

The sale was announced to the family by way of fabricated – typed - letters with Dolores’s pre-stroke signature, rather than the letter “X” which was all Dolores was capable of after the strokes.

Dolores made clear to Daniel and Betty that Josephine and Ben had shown her a contract with different terms, none of which included a commission or an interest rate of zero. What she did now understand perfectly, however, was that this new arrangement, which replaced rental payments from the commercial property, made for a significant reduction to the very funds she counted on to sustain her ongoing care and needs.

Because Josephine was the Successor Trustee, Heritage Trust’s appointment to replace Dolores as Trustee required the consent of Dolores’ other five children.

Once appointed, Daniel and Heritage Trust’s attorney, savvy in issues of fraud, approached Josephine and her accomplices to discuss the concerns. What we heard back was a consistent, stonewalled “we did nothing wrong!” response.

It was to be a dead end, unless a lawsuit was filed.

Dolores was crystal clear from the jump that she did not want to land any of her family in legal trouble, but hoped instead to rewrite the contract, at a price aligned to the actual value, with an appropriate interest rate, and zero commission for her nephew.

Josephine’s siblings had a different agenda altogether.

More than an income adjustment, they wanted justice and retribution, which would include not only a rescinded real-estate contract, but also damages for breach of fiduciary duty, punitive damages for the fraudulent conduct, a complaint filed with the New Mexico real-estate commission, and nothing less than total control of the commercial property.

The anguish and despair this caused Dolores was heart-breaking — she could not free herself of the notion that she was responsible in some way, even as she could see, and was clear to everyone, she was deeply misled.  As Trustee, Heritage Trust was determined to find a solution that honored her intentions and aligned with her best interest.

With Dolores’s knowledge, consent and support, which Daniel gleaned from so many, painstaking meetings, Dolores agreed to have Heritage Trust file a lawsuit which alleged the worst of what was suspected, but came with the promise from Heritage Trust’s brilliant attorney to use mediation once the discovery phase of the proceedings revealed the missing details of the real-estate transaction.

And lo and behold, that’s exactly what happened.

By way of a long, difficult, but ultimately rewarding day with all parties present — and thanks in large part to a terrific mediator (a retired judge familiar with Northern New Mexico land grabs) — the case was settled, the contract was re-written and significant value was added back to the Trust assets.  More details than that cannot be shared.

The Trust, which was created by her late husband’s will for Dolores’ welfare during her life, went on to provide great support for her care. Without our intervention, and the resulting mediation, however, there would have been little, if anything, available to her or future beneficiaries. Certainly the family would have been further torn apart and this we know would have caused Dolores much pain.

We’re happy to share that Dolores lived out her last years comfortably and without the unnecessary anguish of an unsettled family feud, and her heirs, including Josephine’s daughters (Josephine had passed before Dolores), did each receive a sizable distribution at her passing.

And there just is no greater reward for us than that.