Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Mudpuppy
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by Mudpuppy » Sat Mar 18, 2017 11:36 pm

BeneIRA, I'm not sure why you're talking about suing. I think the consensus was to report this to the appropriate authorities, which would be the elder and disabled adult services in the OP's mother's area. The divorce case will be enough lawyers involved, but the state needs to know what the BIL did as well.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by AndrewXnn » Sun Mar 19, 2017 6:34 am

phatkev;

This is a very sad situation for your Sister, Mother, nieces and nephews as well as for yourself to deal with. My condolences. However, what is also troubling is that your BIL works as a Financial Advisor. He has clearly proven himself to be both a liar and thief and can not be trusted. That this behavior has also gone on for an extended period of time is indicative of some type of personality disorder. As much as I'd like to suggest that you forgive him and just move on, there is also a serious risk that this behavior will continue and that he will actively seek out other victims. His clients need some protection and you are in position to help them too.

At a minimum, his employer should be notified of how he treated your mother finances. Also, does he have any type of financial license? If so, then they should also be notified as well. He should not be handling other people's finances and needs to find honest work as he has committed more than one felony.

Sadly, these types of criminals are difficult to prosecute and can ruin many peoples lives. Allowing him to continue working as a Financial advisor is very wrong. He needs to be stopped! :(

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by maria00200 » Sun Mar 19, 2017 6:40 am

You should immediately, like today, remove your BIL from being financial power of attorney. Then file charges against him for fraud. Best of luck.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by Saving$ » Sun Mar 19, 2017 10:03 am

Your posts states you are "in the process of reporting everything." I hope this includes reporting him to his employer, so he cannot do this to others. Do NOT assume his employer has enough checks and balances in place to prevent this. Reporting him is also vital to get this information to show up in a background check on him; otherwise he may, unbeknownst to you, ingratiate himself with others, using his status as a financial advisor as leverage, and clean out some other unwitting person (neighbor, someone with no relatives, church member, etc.).

There have been many comments about not pursuing him for reimbursement of what he stole. I did not see mentioned that as a financial advisor, he or his firm may have insurance. If so, and if it would improve your mothers situation, you may wish to pursue reimbursement from the policy insuring him. Based on what you posted it should be no problem to prove fraud and theft.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by cheese_breath » Sun Mar 19, 2017 10:55 am

Saving$ wrote:... There have been many comments about not pursuing him for reimbursement of what he stole. I did not see mentioned that as a financial advisor, he or his firm may have insurance....

If I understand all the previous posts he wasn't acting as a representative of his firm, so that insurance may not apply. Even if he has insurance of his own I doubt it would cover criminal actions when he's not acting in an official capacity. But I agree it would certainly wouldn't hurt to investigate it.
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by TIAX » Sun Mar 19, 2017 11:21 am

BeneIRA wrote:The moral of the story, as hard as it is, I would let it go. There is nothing to gain by suing him. Sure, he deserves to be jailed, but really what he did was he saw an out for his financial situation by stealing from your mother. The money is gone and it isn't coming back. You are going to have your plate full. Best of luck to you.

Won't the criminal court order restitution?

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by BeneIRA » Tue Mar 21, 2017 8:04 pm

Mudpuppy wrote:BeneIRA, I'm not sure why you're talking about suing. I think the consensus was to report this to the appropriate authorities, which would be the elder and disabled adult services in the OP's mother's area. The divorce case will be enough lawyers involved, but the state needs to know what the BIL did as well.


That's a little murkier, but I am not sure how much it would matter at this point. I would leave it up to the OP's sister, but I could go either way on that.

TIAX wrote:
BeneIRA wrote:The moral of the story, as hard as it is, I would let it go. There is nothing to gain by suing him. Sure, he deserves to be jailed, but really what he did was he saw an out for his financial situation by stealing from your mother. The money is gone and it isn't coming back. You are going to have your plate full. Best of luck to you.


Won't the criminal court order restitution?


The BIL is broke with a negative net worth. Having watched enough American Greed, a court ordering someone to pay restitution doesn't mean very much when they are bankrupt.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by aristotelian » Wed Mar 22, 2017 2:25 pm

Setting aside the criminal aspect, your brother in law should be reporting to the Court that approved him to be guardian of an incompetent. He is supposed to report every expense to make sure it was spent on your mother. Call your county probate court immediately and find out what the process is for reporting it. (Most of the cases these days are public record and all the documents are posted online). The judge is not going to be happy.

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cheese_breath
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by cheese_breath » Wed Mar 22, 2017 2:35 pm

aristotelian wrote:Setting aside the criminal aspect, your brother in law should be reporting to the Court that approved him to be guardian of an incompetent. He is supposed to report every expense to make sure it was spent on your mother. Call your county probate court immediately and find out what the process is for reporting it. (Most of the cases these days are public record and all the documents are posted online). The judge is not going to be happy.

I don't recall seeing any mention of him being Mom's guardian, just having POA. And I don't know about OP's state but in mine I could just print some forms off the Internet, have my wife sign them with a couple witnesses, and I would have her POA. Period. No court involvement.
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by aristotelian » Wed Mar 22, 2017 3:10 pm

cheese_breath wrote:I don't recall seeing any mention of him being Mom's guardian, just having POA. And I don't know about OP's state but in mine I could just print some forms off the Internet, have my wife sign them with a couple witnesses, and I would have her POA. Period. No court involvement.


Sorry to confuse, I am sure you are correct. If she appointed him when she was of sound mind, then she would not need a guardian.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by cheese_breath » Wed Mar 22, 2017 3:40 pm

aristotelian wrote:
cheese_breath wrote:I don't recall seeing any mention of him being Mom's guardian, just having POA. And I don't know about OP's state but in mine I could just print some forms off the Internet, have my wife sign them with a couple witnesses, and I would have her POA. Period. No court involvement.


Sorry to confuse, I am sure you are correct. If she appointed him when she was of sound mind, then she would not need a guardian.

In MI she'd need a guardian for her physical care and a conservator for her financial affairs. Both are appointed and monitored by the court. And you're right about the financial reporting. It's just the conservator that does it.
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Minot
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by Minot » Wed Mar 22, 2017 3:49 pm

OP is the conservator; see his/her post at 8:21 on 3/12/2017.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by cheese_breath » Wed Mar 22, 2017 6:01 pm

Minot wrote:OP is the conservator; see his/her post at 8:21 on 3/12/2017.

He is now, but he wasn't when this started.
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by denovo » Sun May 21, 2017 3:22 am

phatkev wrote:

I am in the process of reporting everything, but it is quite a long ordeal. This has been like a second full time job for me but luckily I'm making headway on everything. Thanks for the feedback.
Any update?

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by phatkev » Sun May 21, 2017 6:24 pm

denovo wrote:
Any update?
Funny you should mention, but there has been a lot of updates. Also, now I am seeking out some very boglehead.org forum-specific advice.

For the past few months, I've been working on discovering how to make sure my mother's state aid was reinstated, and that I knew of the extent of her financial problems. I've also discovered a lot of ways to help offset some of her costs, and sought out help from various free agencies.

The judge gave my BIL 60 days to provide a financial accounting of all transactions from 2009. That date came and went and the BIL did not provide it.
We had a hearing scheduled to discuss the financial accounting set for earlier this month, and my BIL did not show up to court. While I was in court, I showed the judge the over $50K of suspicious charges, fees, etc made by my BIL. I told the judge that I needed to know whether or not the expenses were for legitimate purchases before I filed police reports saying the large cash advances were fraudulent. During that hearing, the judge filed for a contempt of court hearing, and arranged to have my BIL personally served with the summons to appear in court.

I'm betting that if the BIL ignores it, he will be arrested. I'm still awaiting the hearing date for that.

But here's where the situation gets tricky. I've been spending countless hours dealing with the various agencies to continue state aid on the assumption that my mother has no money. This had been set up for over a year by my BIL and I renewed it based on this information. While researching the transactions made by my BIL, I noticed that he had cleared out her Fidelity IRA a few years ago. I called to get more information on it (i.e. who made the transactions, where they went, etc). They had a hard time finding that account because it was purged since it was emptied 4 years ago. However, they mentioned to me that she had another account: a 403b from her previous employer. This account has over $245k in it, and has never been touched. I also found out that she had a Janus investment fund of around $5k.

Normally I would be thrilled to find out that she has additional money. However, we have been getting state assistance and now I think we will need to go off state assistance and spend this money down. That's going to be an incredibly difficult process to reapply and go through this all over again, though hopefully it would be easier now that we are in the system. I've spoken with my lawyer who said that we will probably need to do this. He suggested that I wait until we have this hearing with my BIL to get his explanation as to why he didn't spend this money before applying for state assistance. I'm sure he just didn't know about it, but why didn't he? It wasn't that hard for me to find and he already cleared out her IRA from the same broker.

What I would like to know from you is how should I best invest this money? What asset allocation would you suggest? It is 85% stocks 15% bonds, which we need to change. I am awaiting the statement from Janus, but I think it's all in the Janus 40 fund.
Here's a link to the investment options for Fidelity:
https://401k.fidelity.com/static/dcl/sh ... POOLED.pdf

I'm going to wait until the hearing with my BIL before I do anything, because as of this point, I would just be speculating on her finances. If we have the hearing and he denies everything, it's going to be very hard for him to prove that he did NOT commit fraud. There are soooooo many cash transactions over the years and I know that he will not have the receipts to show where everything went. I'm doing everything by the book and consulting with my lawyers on my actions, basing my decisions on the best possible information I have at the time, and always trying to do the right thing (and backing it all up with meticulous records). Also, the judge really likes me and doesn't like the fact that my BIL blew him off twice.

Thanks for the advice.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by ResearchMed » Sun May 21, 2017 6:32 pm

Glad you have made so much progress, but it must have been *tedious* (and stressful!).

About the newly found money... My guess is that the first thing, with respect to the "aid" she's received, is that the aid will need to be paid back.
Given the court case documentation, there shouldn't be any penalties, although I wouldn't be surprised at interest (which is likely to be *much* less than commercial loan type interest that we usually hear about).

You might try to get her "approvals" changed to some sort of suspended status until she's spent down and she could reinstate or such, rather then cancelling and needing to re-apply.

Good luck again!

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by CAsage » Sun May 21, 2017 6:42 pm

Invest the money conservatively, as though it was cash needed short term. Possibly an intermediate or short term bond fund, or just savings. It sounds like it will be spent down on your MIL over the next very few years... match the balance and budget to your expense window. If you think it's more than a few years' need, a 2015 Target retirement fund maybe?
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by dbr » Sun May 21, 2017 7:45 pm

1. I agree the money should just be held as "cash" rather than attempting to invest at risk for return.

2. I suspect a previous suggestion that this just suspends the approval of assistance could be correct. I am engaged in some similar processes even as we speak -- but not involving nefarious activities or gross oversights, just standard procedure.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by gr7070 » Sun May 21, 2017 9:01 pm

Been following the thread. Good for you for taking on this for your mother/family. I'm sure it's been a difficult ordeal for you and the rest of your family.

Most allocations for individuals should have a stock component. I don't think your mom differs in that regard, in general So I'd consider 30/70. I doubt I'd want higher than that and may opt for as low as, say, 20/80.

If the government will end up taking all of that in arrears or will soon have all of it the argument could be made to go ultra conservative to avoid any pitfalls that may exist in the systems legalities. Conversations with the layers would be needed to determine if going ultra conservative is potentially less harmful for you mother or more harmful (risk losing market returns).

Judges don't like getting the middle finger. For every party involved I hope he starts cooperating with the courts. Good luck to you and the family.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by F150HD » Sun May 21, 2017 9:55 pm

please post updates as they occur! I had forgotten about this thread but it popped up again today.

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by Sandi_k » Tue May 30, 2017 9:18 pm

OP, thanks for the update, this has been a really sad (yet heartening!) thread. I am sad for your sister and MIL, and heartened by your obvious devotion to doing the right thing.

What concerns me in your most recent update - he cleaned out a Fidelity IRA, and now there's $250k he didn't touch. I suspect he didn't KNOW about it, or those accounts would be gone too. If he does find out about them, are you absolutely sure he couldn't Social Engineer additional liquidations and withdrawals, *especially* if he has old POA paperwork? I'd be so concerned about this, I'd consider a trustee-to-trustee transfer to a different institution altogether....

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by setancre » Wed May 31, 2017 12:15 pm

phatkev wrote:
denovo wrote:
Any update?
Funny you should mention, but there has been a lot of updates. Also, now I am seeking out some very boglehead.org forum-specific advice.

For the past few months, I've been working on discovering how to make sure my mother's state aid was reinstated, and that I knew of the extent of her financial problems. I've also discovered a lot of ways to help offset some of her costs, and sought out help from various free agencies.

The judge gave my BIL 60 days to provide a financial accounting of all transactions from 2009. That date came and went and the BIL did not provide it.
We had a hearing scheduled to discuss the financial accounting set for earlier this month, and my BIL did not show up to court. While I was in court, I showed the judge the over $50K of suspicious charges, fees, etc made by my BIL. I told the judge that I needed to know whether or not the expenses were for legitimate purchases before I filed police reports saying the large cash advances were fraudulent. During that hearing, the judge filed for a contempt of court hearing, and arranged to have my BIL personally served with the summons to appear in court.

I'm betting that if the BIL ignores it, he will be arrested. I'm still awaiting the hearing date for that.

But here's where the situation gets tricky. I've been spending countless hours dealing with the various agencies to continue state aid on the assumption that my mother has no money. This had been set up for over a year by my BIL and I renewed it based on this information. While researching the transactions made by my BIL, I noticed that he had cleared out her Fidelity IRA a few years ago. I called to get more information on it (i.e. who made the transactions, where they went, etc). They had a hard time finding that account because it was purged since it was emptied 4 years ago. However, they mentioned to me that she had another account: a 403b from her previous employer. This account has over $245k in it, and has never been touched. I also found out that she had a Janus investment fund of around $5k.

Normally I would be thrilled to find out that she has additional money. However, we have been getting state assistance and now I think we will need to go off state assistance and spend this money down. That's going to be an incredibly difficult process to reapply and go through this all over again, though hopefully it would be easier now that we are in the system. I've spoken with my lawyer who said that we will probably need to do this. He suggested that I wait until we have this hearing with my BIL to get his explanation as to why he didn't spend this money before applying for state assistance. I'm sure he just didn't know about it, but why didn't he? It wasn't that hard for me to find and he already cleared out her IRA from the same broker.

What I would like to know from you is how should I best invest this money? What asset allocation would you suggest? It is 85% stocks 15% bonds, which we need to change. I am awaiting the statement from Janus, but I think it's all in the Janus 40 fund.
Here's a link to the investment options for Fidelity:
https://401k.fidelity.com/static/dcl/sh ... POOLED.pdf

I'm going to wait until the hearing with my BIL before I do anything, because as of this point, I would just be speculating on her finances. If we have the hearing and he denies everything, it's going to be very hard for him to prove that he did NOT commit fraud. There are soooooo many cash transactions over the years and I know that he will not have the receipts to show where everything went. I'm doing everything by the book and consulting with my lawyers on my actions, basing my decisions on the best possible information I have at the time, and always trying to do the right thing (and backing it all up with meticulous records). Also, the judge really likes me and doesn't like the fact that my BIL blew him off twice.

Thanks for the advice.
I read through this thread in full, and am so sorry to hear about your family's situation. With respect to the new 403(b) you found, I would not concern yourself with changing the current asset allocation. Your family will likely never benefit from this money as it probably (1) owed to the state, (2) owed to creditors, or (3) will just be used to pay down your mother's assets again for Medicaid. I would not want my fingers on any transactions in her accounts until the all of legal matters with your BIL are fully resolved.

denovo
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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by denovo » Fri Sep 15, 2017 4:38 pm

phatkev wrote:
Tue Dec 27, 2016 11:34 pm
My family is going through an unfortunate situation that is continuing to unfold, and I suspect that the bogleheads could offer some words of wisdom.

Any updates

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Re: Surprise financial disaster, severe debt $300K caused by brother-in-law - Please help!

Post by phatkev » Thu Oct 12, 2017 10:25 pm

I thought I would post a reply with an update. I’ve been quiet because not that much has happened. My sister finally divorced my now ex-BIL and we had a contempt of court hearing because he ignored 3 requests by the judge for a financial accounting. He finally showed up after being hand served a summons and claimed that he didn’t receive the notices, though his mail was being forwarded to him.

At the hearing he claimed that he couldn’t provide an accounting until he had access to the documents which I had in my possession. The court set a date of 6 weeks for him to get the docs and review them. I scanned and organized all the documents and gave them to him. They court date was set but he asked for a continuance for a “medical procedure” and it was granted. We are having the next hearing next week.

During this time of waiting we discovered 250k in a 403b and subsequently had to go off Medicaid. We are waiting for that to go through.

I’m just waiting to see what explanation he has for all the financial indiscretions he made. ALso I’m not sure what the next step would be after the hearing where I am sure he can’t explain everything adequately. Over the course of 6 months I’ve spoken with at least 21 different lawyers on this subject. I’m amazed at how many there are! I’m sure I’ll be able to get some advice from some of them. Most of the have been free advice from friends and family lawyers which have been great. I’ll keep you updated.

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