A CalMatters investigation found that many of the safeguards designed to protect against fiduciary abuse have been abandoned or ignored.
For over six years, a Los Angeles-area fiduciary altered bank statements and fudged court reports to steal more than $6 million from his clients, the California Attorney General’s Office claims, setting up what it called a “Ponzi-style” scheme to rob people who can’t take care of themselves.
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In May, state prosecutors filed grand theft charges against Gregory Oveross and his accountant, Faranita L. Corvalan, alleging what would be one of the largest fiduciary thefts in California history. Oveross and Corvalan pleaded not guilty and have been released on bond, awaiting trial.
Prosecutors say Oveross misled his clients and the probate court. But court and other public records reviewed by CalMatters show that court officials and the state Professional Fiduciaries Bureau missed red flags years before Oveross was charged, highlighting our ongoing reporting into the state’s weak oversight of fiduciaries, who have the power to control people’s finances and basic aspects of their lives.
For example, in one case, Oveross allegedly wrote himself 19 checks totaling $670,000 over the course of a year from one client’s accounts. Even though the state accounting form asks for check numbers for every expense, Oveross left that column blank. Still, Judge Deborah L. Christian approved the financial report.
“Not having check numbers would be a big red flag,” said Judge Sandra Bean, the supervising judge for probate court in Alameda County. “It’s all very practical. If something smells bad, it probably is.”
In response to past abuses, lawmakers in 2006 passed a law that required fiduciaries to turn in more detailed documentation to account for how they spent their clients’ money. By forcing fiduciaries to list check numbers, the courts would ostensibly be able to spot if check numbers were missing and stop fiduciaries from writing hidden checks.
In a separate case, the AG’s office said that Oveross never paid a $1.7 million inheritance to beneficiaries after the court appointed him to manage a deceased person’s estate.
Records do not indicate that Los Angeles Superior Court ordered a hearing to ensure the money had been distributed. State law does not require courts to automatically schedule such a review, creating a hodgepodge of rules across California counties.
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