How Conservatorships/Guardianships Are Used As Tools Of Theft and Corruption

by Janet Phelan as published in the *Bernandino County Sentinel on June 12th 2009

Redlands Conservator’s Actions Raise Questions

A prominent and well-connected Redlands conservator is under investigation by the San Bernardino County grand jury and has had her fiduciary license denied by the California State Professional Fiduciary Bureau.

Melodie Z. Scott, President of Conservatorship and Resources for the Elderly, also known by its corporate acronym C.A.R.E.

Inc., received some bad press back in 2005 when the Los Angeles Times published a front page series exposing questionable business practices of professional conservators. As a result of the public outcry over the articles, the California State Legislature swung into action and passed the Omnibus Conservatorship Reform Act of 2006, The act established the Professional Fiduciary Bureau as a means to license and regulate professional fiduciaries and conservators, who manage the affairs of the elderly, disabled and often family trusts, as well.

Melodie Scott applied for this license and in August of 2008 it was denied on grounds that she had made misrepresentations on her application.

Blacks law dictionary defines a conservator as a ‘protector or guardian.’ A conservatorship is generally initiated through a court proceeding, when there are allegations that a person is becoming forgetful or is otherwise unable to handle his or her affairs. A “conservatorship of person” may be launched for another party to make personal decisions for the alleged incapacitated person. Upon initiation of a “conservatorship of estate,” however, all the assets are immediately transferred to the “care and protection” of the professional conservator.

This is how it works: A family member, or even a neighbor, may notice that an elderly person is alone and may be increasingly vulnerable. Depending on the morality and authenticity of the concerned party, that person may contact adult protective services, or may attempt to file for guardianship over the elder, in order to either protect or to gain access to that person’s funds. The police may become involved, if there are allegations of lack of capacity or of financial or
physical abuse. This opens the door for the professional conservator, buttressed by his or her lawyers, to take advantage of the situation.

A linchpin in this system in San Bernardino County is C.A.R.E., Inc., which is located a mere stone’s throw from the Redlands Courthouse, in a quaint, two story building at 25 E. State Street. The “C.A.R.E. Group” consists of conservator Melodie Z. Scott, president and founder of C.A.R.E. and, up until recently, Lawrence Dean II, and their attorneys, and an office support staff including caseworkers, bookkeepers and more. For many years, Scott was primarily represented by Hartnell, Horspool and Fox, which has split into two firms--Hartnell, Lister and Moore, and Horspool and Parker. Lawrence Dean disassociated himself from Scott following the denial of her license and has moved to other offices. According to the Los Angeles Times, Dean is also under grand jury investigation.

J. David Horspool appears as chief counsel on the lion’s share of C.A.R.E. cases. Horspool is a former councilman and mayor pro-tem of Moreno Valley, and was implicated in a vote fraud issue there in the nineties, during his campaign for city council.

The Horspool family was the subject of a Los Angeles Times article on September 17, 2006, which recounted how J. David

Horspool put his own father, Raymond Horspool, a WWII veteran and former chemist, under a conservatorship. Raymond Horspool

had previously granted a piece of property to another son, William Horspool, in 2005. J. David Horspool recently had that

property transfer nullified and the court has issued an eviction order for William Horspool, his wife and small children. This issue has been appealed.

Bryan Hartnell has contracted with the county and serves as counsel for the LPS (mental health) conservatorships. Hartnell recently received some national press, as one of the survivors of the infamous Zodiac killer, when the “Zodiac” movie hit the big screen. Hartnell had a bit part in the movie. While some detailed crime analysis has indicated that the attack on Hartnell and Cecelia Shepard was a copy-cat and not a bonafide Zodiac attack, this was not brought to light on the silver screen. Hartnell escaped with non-life threatening injuries, but Shepard died as a result of the attack.

A smattering of “independent” attorneys also serve the “C.A.R.E. Group,” such as president of the High Desert Bar Association, Sherri Kastilahn. Some of the court-appointed counsel for potential conservatees are known to regularly lob their clients in the direction of Scott and Dean. These include attorneys Donnasue Ortiz and Lenita Skoretz, among others.

By some estimates, the ”C.A.R.E. Group” now has connections to 60-70% of the conservatorship and estate administration cases in San Bernardino County.

One attorney, speaking on condition of anonymity, voiced her opinion that all San Bernardino probate cases were moved to

Redlands recently to accommodate the “C.A.R.E. Group,” most of whom maintain their offices in Redlands, within walking distance of the courthouse.

At the apex of this group is Melodie Z. Scott, who has been referred to as the richest and most powerful conservator in Southern California. A tall, well-dressed blonde with a college education and a private investigator’s license, Scott has a reputation as a bon vivant and frequently socializes with elected officials and other members of San Bernardino’s upper crust. Her resume reads like a poster-girl for an accomplished and respected conservator, and includes expert witness status, college level teaching experience (at California State University at Fullerton) a stint as president of the Professional Conservators of Southern California, as well as serving as a board member for Redlands Family Service. Like her attorney, Horspool, she has also run for public office.

However, behind the tasteful, expensive exterior at 25 E. State Street, an entirely different picture has emerged, revealing a reality both shocking and disturbing to those who have placed blind confidence in the court and conservatorship systems. The “C.A.R.E. Group” is, in fact, preying on the life-savings of its helpless and vulnerable clients, many of whom have died very quickly as C.A.R.E. has sucked the lifeblood out of their estates.

According to Jerry Villanueva, an investigator with the San Bernardino County district attorney’s office, five separate counties have received complaints alleging criminal activity by Melodie Scott and her crew. Villanueva recently revealed that all incoming reports concerning Scott are being referred to the California Attorney General’s office, which has so far
not filed criminal charges against Scott’s group. According to Ron Smetana, acting senior assistant attorney general for the state of California, a lack of resources to investigate issues such as conservatorship fraud and malfeasance has hampered the potential prosecution of individuals such as Melodie Scott. Smetana refused to discuss specifics with regard to certain embezzlement allegations or to which other departments or divisions in the attorney general’s office those
allegations may have been referred. Smetana grew particularly tight lipped with regard to inquiries about felony murder allegations touching upon Scott and her actions.

Inappropriate End-of-Life Decisions

“I don’t ‘do’ families,” Melodie Scott brusquely stated, in response to a query as to the services offered by C.A.R.E.

A review of the court files in Redlands Superior Court largely substantiates this. On numerous occasions, C.A.R.E. has filed for conservatorship of elderly women, left vulnerable after the death of a spouse, with offspring or other fam-ily members either out of state or otherwise absent from the picture. When there are family members present to witness the actions taken by Melodie Scott, in concert with other members of the C.A.R.E. Group, they generally end up quite upset.
Case in point is the Elizabeth Fairbanks case, on file in the Redlands Court. Mary Beth Fairbanks, the daughter of deceased conservatee Elizabeth Fairbanks, first contacted a reporter for the Sentinel in the Fall of 2006. Following what Mary Beth repeatedly referred to as the murder of her mother at the direction of Melodie Z. Scott, the younger Fairbanks organized a demonstration in front of the San Bernardino County Courthouse, timed with her appearance in court on October 13, 2006, to lodge her protest with Superior Court Judge Frank Gafkowski. A number of family members, conservatorship victims and others impacted by Melodie Z. Scott, showed up at the demonstration, which was covered on the local ABC affiliate and by local
press.

A review of the medical records prior to Fairbanks’ death substantiates Mary Beth’s allegation that directives by Melodie Z. Scott, conservator of person and estate for Elizabeth Fairbanks, were instrumental in the elderly woman’s death.

Unbeknownst to the family, Melodie Scott had signed a “do not resuscitate” order (DNR) shortly after achieving conservatorship over Fairbanks. This DNR is on file with the court and Fairbanks’ signature does not appear on this document.

In 2006, Fairbanks fell ill with pneumonia, and at the apparent direction of Scott, received only two doses of antibiotics during the entire course of the illness, according to medical records. At a critical moment in her increasing respiratory distress, she was administered two doses of the opiate, Roxanol, which put Fairbanks into respiratory arrest. Two hours following the administration of the second, more powerful dose of Roxanol, Fairbanks died. Roxanol is contraindicated for patients with respiratory problems. Dr. Victoria Rains supervised her care.

It was later revealed in the accountings that Elizabeth Fairbanks had no money left to fund the conservatorship.The following statement was filed by Mary Beth Fairbanks in San Bernardino Court: “I have attempted since 2003 to find an attorney to help me with stopping what Ms. Scott was doing. No attorney would help me due to Ms. Scott’s power in the San Bernardino area....My mother died of pneumonia, which has a good success rate if treated aggressively and correctly. Why would Ms. Scott think if my mother was hospitalized and aggressively treated that she could end up a vegetable? If my mother had a stroke I could understand what Ms. Scott did but not to give my mother a chance is incomprehensible to me.”

Judge Michael Welch wrote a decision in the Fairbanks case, and diligently avoided any questions of possible criminal behavior by Melodie Scott. He took a quick detour around the issue of whether Fairbanks herself actually requested or even knew of the “do not resuscitate” order. He wrote: “Apparently, shortly after Ms. Scott became the conservator, the conservatee had requested a “do not resuscitate” (DNR) order. Ms. Scott’s notes reflect that the conservatee had the capacity to make such a decision....The children all testified that they did not know their mother had made such a request.

In fact, they were adamant that their mother had expressed to them just the opposite….”

The statement that “Apparently” Fairbanks had requested the DNR does not resolve the issue that there is no indication, other than the statement by her conservator, that Fairbanks did so. Moreover, Fairbanks was under an LPS conservatorship, which was initiated because of her lack of capacity. She had a medical diagnosis of substantial mental illness. To state that a person who has been deemed incompetent has capacity to make a decision of this magnitude is a contradiction in terms. In this way, Welch, while transparently attempting to exonerate Melodie Scott from any liability in the events that led to the elder Fairbanks’ death, encountered an equally transparent absurdity in the circle of logic he had constructed.

Welch then quickly moved on, seeking to paper over the logical absurdity by making a seemingly heartfelt but ultimately empty summation of the Fairbanks family’s loss of their mother. Welch wrote, “The last few days and, later, the last few hours before (Fairbanks’) death were very painful for her children. I could not help but note their grief and sorrow at the news of her passing.”

That being said, Judge Welch summarily approved all accountings and actions by the conservator, Melodie Scott, and closed the case.

In an email to a family member, which was forwarded to the Sentinel, one of Scott’s attorneys, J. David Horspool, attempted to exonerate the withholding of antibiotics from Elizabeth Fairbanks. Providing an interpretation of the treatment choices made for Elizabeth Fairbanks during her final, fatal bout with pneumonia that clashed with the interpretation of Fairbanks’ daughter, Horspool wrote: “Mary Beth is upset because Melodie let her mother die peacefully (as was Elizabeth’s expressed wish) rather than have her hooked up to machines just to keep 4her alive. Right now I think she is trying to set up a complaint for elder abuse/neglect or medical malpractice. As I said, she is just looking for money.”

Dr. Rains is one of the doctors generally used by Melodie Scott, to care for her elderly clients. A review of death certificates reveals that Dr. Rains has listed “pneumonia” as cause of death for a number of other C.A.R.E. conservatees.

Calls to Dr. Rains requesting input as to whether she regularly withholds life-saving antibiotics from her elderly patients went unreturned.

“Just Do It!”

After gaining conservatorship over an elderly or disabled individual, Scott, as a matter of course, applies to the court for a “Power of Health Care.” Armed with this legal sanction to make life and death decisions, Scott routinely signs a DNR order, thus cementing her power to withhold medical care at the point when her client is no longer of financial use to her.In the case of Stevie Price, Scott used this “Power of Health Care” both to limit medical care and to issue directives for medical procedures which proved unnecessary and life-threatening for her disabled client.

At age nine, Stevie Price was critically injured in an emergency room foul-up, which left him with a permanent brain injury. His parents, Steve and Fae, sued Loma Linda University Medical Center and prevailed.

in 1997, in San Bernardino, when the elder Steve Price noticed an attorney sitting in the back of the courtroom, taking notes. The attorney, he later discovered, was Walter Moore (now a partner in Hartnell, Lister and Moore), one of the attorneys who regularly appears as counsel for Melodie Scott.Before the Prices knew it, the court had determined that an ‘impartial’ third party was needed to represent Stevie. Judge Kathleen Bryant appointed Walter Moore as Stevie’s attorney, who immediately nominated Melodie Z. Scott as guardian of Stevie’s person.

Scott soon gained control over Stevie’s trust, as well. After being appointed temporary guardian, Ms. Scott used $300,000 of Stevie’s trust, in attorney’s fees, expert witness fees, etc., to achieve the status of permanent guardian in a trial inexplicably held in a different city, before a traffic court judge, Judge Frank Heene of Chino Municipal court.

It should be noted that Heene was subsequently brought up on nine counts of misconduct, and retired from the bench.According to Steve Price, the “C.A.R.E. Team” manipulated Fae in order to gain control of the trust, promising her standing in the case, which never materialized. Steve Price ended up in a protracted legal battle with Scott, in an attempt to protect his son’s life and the funds so necessary to care for the child.

On the very same day that Melodie Scott was finally removed from the A couple of years after the incident, Steve and Fae separated. It was during a custody hearing case, Stevie Price died. The elder Price was then to discover, to his further horror, that Scott had run through the entire multi-million trust.

“The trust should have been banking, not losing money,” states Steve Price. Prior to Melodie Scott’s appointment, Price had carefully researched his son’s options, and had made decisions which would guarantee excellent medical care, while protecting the trust, which was anticipated to last Stevie’s lifetime. Price saw no reason that his son should not live to a ripe old age, if given appropriate care.

He had enrolled Stevie in a medical insurance plan which was funded by state tobacco taxes-- MR/MIP (Major Risk Medical Insurance Program) with Medi-Cal as a secondary insurance.
A chunk of Stevie’s malpractice settlement had gone to settle his Medi-Cal bill, and to enable his enrollment with MR/MIP as his primary. With less than $100 as a monthly premium and no pay-back requirement on death, MR/MIP also provided a far higher standard of care than the bare bones, minimal coverage provided by Medi-Cal. Upon achieving guardianship, Melodie
Scott voluntarily removed Stevie from this program, thus severely restricting his medical care to what the limited Medi-Cal program would cover. This also unnecessarily incurred a Medi-Cal claim of $532,607.39 at Stevie’s death. What remained in Stevie’s trust at that point was inadequate to cover this claim.

Steve Price claims that this action by Melodie Scott “seem(s) to have intentionally defrauded Medi-Cal into paying Stevie’s medical expenses and exposed both him and his estate to harm.” In a report to the California Attorney General’s office, Price also states that “we believe that this was a major factor in his death.” In another aggressive move, which Price believes was an effort to remove Stevie from his father’s watchful eye and to place him further under Scott’s control, she ordered that Stevie undergo a tracheotomy in 2000. Most institutional facilities which would be appropriate for someone with Stevie’s injuries generally only accept patients with tracheotomies. Scott failed to provide any diagnostic proof of the necessity of this procedure, and in defiance of the opinion of Stevie’s long term pulmonary specialist and home-health nurses, applied for and received court permission to have the tracheotomy performed.

Perched on the corner of a pleasant Yucaipa street, Steve Price’s sprawling, ranch-style home is a virtual shrine to personal tragedy. The walls are bedecked with photographs of his young son, surrounded by family and friends. A framed poem, by Stevie’s former nurse and now Price’s fiancée, Tammy Hull, urges those on this side of the grave to remain strong and loving, even in the face of such wrenching loss. But for Steve Price, justice has become elusive. The California
Attorney General’s office expressed disinterest in his meticulously documented complaint, which included evidence of Scott’s attempt to further pad her pocket by taking out two burial plots on young Stevie, one of which went unreported to the court, and was to be cashed in by Scott on the death of her client.

Equal Protection Under the Law?

The California AG’s office received another bundle of complaints in March of 2007. The carefully documented complaints alleged embezzlement, property theft, perjury, denial of due process by judges in C.A.R.E. cases, attempted murder and continued suppression of reports received by lower level justice agencies, including the Redlands and Temecula Police Departments and a local district attorney’s offices. These reports powerfully buttress the perception that the “C.A.R.E.

Group” is wielding undue influence all the way up the California justice system.

These reports were received by senior assistant attorney general Mark Geiger on March 6, 2007 and put back into the mail to the senders the same day. Casting around for a plausible explanation to explain his office’s unwillingness to take up the case, Geiger stated, “....these are matters beyond my area of developed criminal expertise.”Further, Geiger said of the alleged criminal activity that had been brought to his attention, “.... the statute of limitations has run on many of the alleged offenses.” This was in direct contradiction to the evidence and time lines

supplied in the March reports that the alleged crimes were reported well within the statutory time limits to local law enforcement agencies, which had also failed to act. Most tellingly, Geiger also neglected to assign a complaint number to the March reports.

As a matter of course, and for tracking purposes, an incoming complaint to the Department of Justice is always assigned a complaint number. By first omitting and then refusing to assign a number, Geiger tacitly revealed that he buried the reports.

Scott’s influence appears to go all the way up to the federal level. The head of the Civil Rights Division for the Riverside F.B.I. told one complainant that there were “massive civil rights violations” substantiated by the complainant, but that agency “took no action.” An agent in the Los Angeles office of the F.B.I. stated, with brazen inaccuracy, that conservatorships were a “civil” matter and that the F.B.I did not investigate civil matters. When that complainant provided evidence that crimes were being committed under the mantle of “civil” court procedures, she was funneled into a telephonic “black hole,” and was refused any more access to a duty agent.

Keep It in the Family

Melodie Scott’s business dealings have regularly benefitted members of her family. Her mother, Jo Williams, also known as Anna Williams, works out of the 25 E. State Street offices as a “client care” specialist. Williams’ name also appeared on the property at 26735 Redlands Blvd, which was formerly the site of Orange Blossom, an unlicensed assisted living center, previously owned by Melodie Scott. The property, which burned to the ground recently, was subsequently sold to Loma Linda Hospital for a cool seven figures. Scott’s sister, Dona Zinck, has appeared on accountings as being reimbursed for grocery shopping services. Another family member, Alvin Zinck, has been the recipient of at least one property transfer, which he apparently received free of charge. In 1994, Alvin and Lois Zinck were the recipients of a 1958 Terry Trailer, which had
previously belonged to one Lois B. Nightingale, who was under conservatorship with Melodie Scott. The bill of sale, signed by Melodie Scott as conservator for Lois Nightingale, notes that “This trailer traded for yard clean-up services and labor.”

The Family Home

Under the laws governing conservatorships of estate, Scott has total access to all the conservatee’s bank accounts and may, with the court’s approval, sell the conservatee’s property, in order to further pay for her services. An unusual pattern has emerged concerning the sale of real property, which is always approved by Scott’s judges. Probate property, as it is called, be it under a conservatorship case or under the estate administration of the “C.A.R.E. Group,” is generally substantially under-appraised and sold at a still deeper discount from the initially low appraisal.

Here is a short list of such transactions, garnered from the Redlands probate files and matched up with the San

Bernardino’s tax assessor’s office:

Elmer Archie Heath 23538 Court St, San Bernardino
Appraised at $60,000
Sold at $28,600
Heath’s vacant lot on Joshua Road, Palm Desert
Appraised at $8,000
Sold at $1,000
Mary Titus 49888 Senilis Ave, Morongo Valley
Appraised at $35,000
Half interest sold at $3000
Evelyn Townsend 1244 Ramona Drive, Redlands
Appraised at $140,000
Sold at $110,000
Mattie Kirby 1028 W. 9th, San Bernardino
Appraised at $65,000
Sold at $43,000

After being sold off at bargain basement prices, many of these properties suddenly and without explanation dramatically increase in assessed value. For example, the “C.A.R.E. Group” handled the estate administration for Rachel Norris, whose single family home in Victorville, California, was appraised at $2,788 - that is, $212 less than $3,000. The home was then sold to a Gary Salonsin, in November of 2004, at that price.

Incomprehensibly, the assessed value then jumped to $76,000, and Salonsin quickly sold it in a “flip” to Ilona Winegarden, where it was re-assessed at $96,900. Conservatee Arthur Gurley’s vacant Victorville lot jumped in assessed value from $7,273 to $44,880 when it passed into the hands of Eagle Assets & Management LLC in 2005, and his Victorville cabin also skyrocketed in value from $8,312 to over $57,000 when Eagle acquired this property, also in 2005.

The list goes on and on. Lena Peden’s retail business, appraised at $15,392, jumped in appraisal to over $81,000 as soon as it was acquired in 2006. The jumps and flips are too numerous to list here; however, it should be noted that former San Bernardino County assessor Bill Postmus is also being investigated by the San Bernardino County grand jury. He was arrested on drug charges this past January and resigned his office.

As the sole heir of the estate of conservatee Una Haley, Sheryl Morgan received absolutely nothing. Morgan, who was Haley’s granddaughter, had applied to be her conservator, only to have this strong-armed away from her by the “C.A.R.E. Group.”

Morgan has stated that this group outright stole the proceeds from the sale of Haley’s home. The court file reveals that

conservator Lawrence Dean and his attorney Craig Parker (of Hartnell, Horspool and Fox) did an even divvy of the remains of Haley’s estate. In the final distribution, Dean and Parker declared to the court on August 26, 2003 that they each received $4,775.15. This poses some alarming questions. Parker’s per hour fees as an attorney are roughly in the $200-$250 range, while Dean’s services are generally in the neighborhood of $40.00 an hour. There is simply no probable mathematical equation which could have resulted in the even divide of the remaining money.

Missing Checks

Another source of potential fraud involves the issue of skipped check numbers in Melodie Scott’s general ledgers. The Sentinel has unearthed partial general ledger reports on two C.A.R.E. conservatorships-- Dora Pakuts, in San Bernardino and one from a Riverside case. In both ledgers, there are numerous skipped check numbers, with no explanation provided, such as
a “void” notation, should a check be cancelled out. One of these checks, written by Melodie Scott on a conservatee’s account for over $4,000, a copy of which has been obtained by the Sentinel, was never reported to the court or noted in the general ledger.

Of grave concern is the fact that the bank and brokerage statements of the conservatees’s assets, which are filed as “confidential” with the courts, are unavailable for oversight by the conservatee or her attorney, a family member, or any member of the public. Recent bank records leaked to the Sentinel by an informant in Riverside court points to tens of
thousands of dollars siphoned off by Melodie Scott in at least one case, right after the conservatee passed on. These five figure withdrawals, listed as “miscellaneous debits” in the Redlands Community Bank statement,were never recorded or in any manner accounted for in the “official” and public accountings of the trust assets.

A critical shortcoming allowing abuses in the conservatorship process consists of the failure of governmental agencies working in conjunction with and overseeing the conservators to exercise the full range of their authority.

One of the duties of a court- employed “probate examiner” is to examine the financial records for indications of possible malfeasance or error. However, in a conversation with a Sentinel reporter two months ago, attorney David Bowker, who serves as a “probate examiner” for Riverside Court, bolted from the generic question as to whether the probate examiners had
access to the “confidential bank and brokerage” statements. He refused to answer the question as to his job description, and terminated the interview shortly thereafter. Attorney Mike Capelli, who supervises the probate examiners in Riverside Court, grew demonstrably uneasy over questions about the duties of those functioning under him. He refused to answer the
job description query previously posed to Bowker and then characterized the question as “nutty.”Capelli went on to say that he personally bore “no responsibility” for the actions of the probate examiners he supervised.

Deborah Stapleton, who also serves in a supervisory capacity at that court, however, later acknowledged that probate examiners do have access to confidential bank and brokerage statements and other financial records.

Melodie Scott did not return calls requesting input about skipped check numbers and other financial irregularities. On June 10, someone from her office, in response to repeated calls to her place of business seeking Scott’s input for this article, phoned the Sentinel to inquire about the newspaper’s circulation.

Scott is appealing the denial of license. In May, several days of hearings on her appeal took place in Oakland, and the hearings are planned to resume shortly.