Audit of Conservator Alleges Kickbacks, Financial Abuses

Responding to a state auditor’s allegations of kickbacks and double-dealing, a Superior Court judge on Monday ordered the Los Angeles County public guardian’s office to temporarily assume control of Planned Protective Services Inc. of Los Angeles, one of California’s largest conservatorship firms.

“I have never seen such overreaching,” Assistant County Counsel Wilcox R. Stoddard told Judge Martha Goldin. “We have economic abuse of the elderly and the incapacitated.”

Marshal A. Oldman, an attorney for Planned Protective Services, said after the hearing that the judge’s decision may spell doom for the firm. “If it doesn’t go out of business, it will be a considerably smaller company than it is today,” he said.

Earlier, Oldman told the court that the firm’s dilemma resulted from “problems of management.”

Statement Disputed

But Oldman’s explanation was sharply disputed by Delia Salinas, 53, of Encino, who told a reporter after the hearing that the firm could not account for the $100,000 estate of her late mother, who had been a Planned Protective Services conservatee.

Salinas was not able to testify before Goldin, who said that she would get an opportunity if the case goes to trial.

Planned Protective Services is one of the state’s few nonprofit firms engaged in the conservatorship business--most are privately held, for-profit operations. The firm has managed 134 conservatorships.

Such companies are, in effect, caretakers for the estates of the elderly or the infirm. The companies may have court-approved control over an individual’s entire personal finances, medical care, or both. They are supervised by the state attorney general’s Office of Charitable Trusts.

A charitable trust auditor, Harold G. Statz, alleged in a sworn declaration that an audit covering the years 1986-88 had shown that Planned Protective Services had engaged in a variety of wrongful acts.

The allegations included:

- Kickbacks: “PPS has received substantial donations from banks and real estate agents that do business with PPS,” Statz said. “The largest such donations, totaling $223,809 . . . came from Western Bank, where PPS keeps a large amount of client funds in non-interest-bearing checking accounts.”

Western Bank’s chief executive, Hugh Smith, confirmed that Planned Protective Services was one of his bank’s accounts, but said that he had not read Statz’s allegations. “We make donations to a lot of organizations who bank with us,” he said.

- Double billing: Statz said that according to the county’s probate commissioner, Ann Stodden, the conservator firm receives fees from both conservatorship estates and hospitals covering the same expenses. “Therefore, PPS may be paid twice for the same cost, once by a hospital and again out of the patient’s conservatorship estate,” Statz alleged.

- Murky accounting and records: Planned Protective Services’ accounting records “do not provide any audit trail” breaking out how conservatorship funds are used, Statz alleged, nor do the firm’s records give “a true statement” of its financial condition.

To all of these allegations, Planned Protective Services’ attorney Oldman said there was “nothing evil” about the 20-year-old company’s operations. “It is a charity,” he said.

The firm’s officials, including its chief executive, John M. Mills, urged the court to appoint a receiver who could reorganize the firm and put it on its feet again.

But Judge Goldin rejected the proposal, declaring that the attorney general’s auditor had made “very serious allegations.”

Another hearing on the case was set for next month.