Anyone who has been to Southeast LA County and has driven through Bell will find a city with a population of 36,657 (2008), approximately 90 percent of whom are Latin American. One of six residents are reportedly living below the poverty line.  The community is mostly residential and has little industry.

The scandal that came to light in the past few weeks involves senior city officials, including the mayor and city council members who reportedly approved annual salaries of $787,647 for the City Manager (up from $72,000 when he was hired in 1993) and $376,288 per year for his Assistant City Manager.  Is the Manager seven times more valuable than Kirk Caldwell (before Mufi resigned)?  The Police Chief’s salary of $457,000 is fifty percent higher than LAPD’s Chief, who runs a Department that is 25 times as large as Bell’s.  Is the Chief worth three times HPD Chief Kealoha’s?

The council members themselves were paid $90,000 to $100,000 for part-time work.  All that appears about to change.

One wonders, however, how anyone in senior management of a small city could think that no one would find out what was going on and that the officials would never be held accountable for what amounts to misuse of the small city’s funds.

What are people in power thinking?  Do they care?  Hopefully, Hawaii lawmakers have seen this and learn something.

The caller wanted to know who these people were.  Unfortunately, attorney-client considerations prevent me from discussing any specifics.  The friend could not believe that people would take from their own relatives, in particular, parents or uncles and aunts.

Sadly, the persons involved in victimizing others, in particular, the elderly, are often relatively well-to-do.  It seems that the richer they are, the more likely they are to handle larger amounts of money.

Some of those involved are established business-people.  Their involvement, and conduct, has frankly, shocked me.  In some cases, it is too late to recover funds, as the person who have the money now claim that it has been spent, and they do not have the funds to repay it.

The best solution is, to simply avoid the problem entirely.  If you don’t trust the relatives to take title, and thus, have access to your assets, you will not have to worry about losing them.  For bank accounts, do not put a relative on as a co-account holder, particularly one a one-signature withdrawal basis, where no countersignature is required.  “Joint tenant” accounts, where the survivor of the account holders after the death of one, allows any account holder, unless restrictions are imposed, to withdraw any part (including the whole thing) of the account at any time.

Jointly held real estate is harder to transfer.  However, any interest in property may be transferred, even though half of a property, does not necessarily give the half-owner control over it.  Thus, many people will not buy partial interests.  In any case, again, why take the risk?

The easiest and safest way, don’t put a relative on title to any asset unless you have a good estate planning reason and you can otherwise protect yourself so that the asset or the support it will provide you is not lost.

All of us would like to think that we can.

Very few think they can’t.

But no matter how much you would like to believe in them, DON’T.

Too many people have been victimized by relatives, when they misplaced their trust, and allowed the relative to hold an ownership interest in property with or without the original owner/potential victim.

Stories abound about a son or daughter taking title to property and promising to share it with siblings, even though nothing is put in writing.  After the former owner’s death, the son or daughter who had title conveniently forgets about any promises to share the property or proceeds of a sale.

In the last three months, I’ve seen one or two potential clients a week who have been victimized in same or similar general circumstances.  The cases seem to be involving more and larger amounts of money.  It could be that the size of the claims are correlative to the decline in the economy and the need of more people to have access to funds for survival.

So in answer to the question posed in the title to this post, the first rule of asset protection is not to trust anyone, no matter how close, particularly relatives.  Your relatives may prove you wrong, but why take the chance?

All of us would like to think so.

Many of us do.

But what if we were wrong?

Even the closest relatives may be placed in situations where assets that were entrusted to relatives were lost.  The typical example, and one I saw today, involved a elderly woman who had never married, and who accumulated a substantial amount of money and several properties.  She placed the funds in two joint accounts with two nieces, with the proviso that they could have the money when she passed on.  The real properties somehow turned up titled only in the nieces’ names.

The typical situation:

1. The relative used the money.
2. The relative’s reason for using the really doesn’t matter.  True, the relative who removed the funds without consent may be guilty of a criminal offense of theft, but oftentimes because the funds were jointly held, the police will not charge the case due to the fact that the person who converted the funds had the legal (although not moral) right to withdraw the entire account.
3. Sometimes, the relative acted innocently at first, as in, I will borrow the money and return it within two weeks.  Two weeks later, the relative doesn’t have the money, and cannot ever seem to catch up enough to repay the “loan.”
4. Sometimes, another entity, like the IRS has seized the funds due to a tax lien owed by the relative.  While the relative did not intend to lose the money, the fact remains the funds are gone and no longer usable by the victim or recoverable from the relative.

In each of the these situations, the relative has varying degrees of culpability.  But the results are the same for the victim.  She is the loser in any case.

The lesson: Play it safe.  Don’t trust a relative.  For the relative: Don’t put yourself in the position of causing a loved one to lose.  Don’t take title to the money.

The President of the closely held MGA company thanked the Court publicly for allowing the American Dream to continue, in the form of continued ownership by MGA of the Bratz brand.  This is the same case that we reported a week ago that resulted in a $10.2 million lawsuit by O’Melveny & Meyers, Los Angeles’ largest firm against for MGA for collection of unpaid legal fees and costs incurred in defending the Bratz case up to a point.  The world’s largest law firm, Skadden Arps, represented MGA at trial.

Wonder what the appeal cost?

The “Bratz” case and Celador v. Disney and ABC, which was just reported a few days ago, show that even where popular children’s toys and entertainment are concerned, the fighting can be intense and the outlay of resources outrageous.

The world’s biggest law firm, Skadden Arps Slate Meagher and Flom, represented MGA at trial, which resulted in a $100 million dollar jury verdict in 2008, against MGA in favor of Mattel.  Two months ago, a United States District Judge in Riverside County, California, denied MGA’s motions for a new trial and upheld the jury verdict.

Comments by MGA’s current attorney question the quality of O’Melveny & Meyers work on the case.  O’Melveny’s comment, “We are very proud of O’Melveny’s high-quality work and extraordinary efforts on behalf of MGA…”

I suppose that beauty is in the eye of the beholder.

Four years ago I let my guard down and got ripped off big.  The losses hurt, but we are thankfully still all in one piece financially, and moving forward.  It was, however, a grim reminder that you cannot trust people these days, especially when warning signs are flashing brightly.

With that in mind, I want to issue a warning for a new rip-off that just came through the mail.  It is from “Mrs. Emiliana M. Francisco,” with no post office address.  It came in an envelope with no return address, post-marked from Portugal.

The letter says that Mrs. Francisco is from Spain and works at a bank.  She has a “business

proposal,” which arises because an unidentified American individual deposited $28 million in an

account, but died in a car crash that also killed his immediate family and all heirs.  As a result, the $28 million is available for distribution (oh please).  Mrs. Francisco offers to pay an American this amount, without explaining how one would qualify.  In return, Francisco will receive forty percent of the total.

She asks that I provide a phone and fax so that “I can always reach you.”

Last year we filed a guardianship on behalf of the children of an 88 year old woman who was constantly being called  by Nigerians, and who would send whatever money she had to whoever called.   Somehow, I think that if I give Mr. Francisco my telephone and fax number that I will never hear the end of it.  I also think that somehow, and sooner or later, she will get around to asking me to send money to help her process my application for the money.

I wonder how many times this has worked on unsuspecting Americans?

In any case, I gave her 541-2850 as my phone number.  This is really the number for the United States Attorney’s Office.  I gave my name as Florence Nakakuni, who is really the United States Attorney for the District of Hawaii, and hope that Mrs. Francisco actually does call her.  I also gave the U.S. Attorney’s Office’s fax number.  Hopefully, Francisco does get to talk to our U.S. Attorney and Florence reads her the riot act.  Maybe she’ll indict her.

Or was this just another one of Pastor Wayne Cordeiro’s Portuguese jokes?

Celador is a British game show producer that agreed to license “Who Wants to Be a Millionaire,” to ABC. Beginning in 1999, the game show ran for several years, originally with Regis Philibin as host. But according to ABC’s accounting, the show was not making money, such that there was little, if any to distribute to Celador every year. Celador sought otherwise, and filed suit in 2004 which sought an accounting and proper compensation. The case did not settle. After the dust cleared in a Riverside County Federal courthouse last week, the jury found in favor of Celador on virtually all of its claims and awarded the British company a $269 million dollar verdict. The verdict was a major coup for the Los Angeles office of Robins, Kaplan, Miller & Cilesi, and lead counsel and trial attorney Roman Silberfield, a Loyola Law School graduate.

Disney’s well crafted image has taken hits in recent years, which was probably inevitable given its growth and emergence as a corporate heavy hitter. The company has not been Uncle Walt’s film shop and the amusement park built in an orange grove for many years. Disneyland may be “The Happiest Place on Earth,” but it’s also one of, if not, the most expensive. With an all-day pass for both parks priced at one hundred dollars per person, the number of children who will be made happy by a trip to the park is limited to those kids whose parents have enough money to afford the steep admission. The shareholder disputes and Chairman Michael Eisner’s demise demonstrated that Disney had entered the ranks of the corporate heavy hitters for good.

The Celador verdict probably had Uncle Walt turning over in his grave when the news reached the Magic Kingdom in the sky. Maybe God will let Uncle Walt reach the powers that be so things like this don’t happen again.

The MCCP legislation was enacted to deal with what several years ago was identified as a potential crisis situation involving medical malpractice claims, with insurance costs going through the roof due to increasing numbers of lawsuits.  The MCCP process offers the potential parties a non-binding, short-form, dry-run of a case before a panel of members, made up of medical professionals, attorneys and lay-persons.  The process involves what normally amounts to an abbreviated presentation of both sides of a case, with the decision giving the parties an idea about whether a case should be settled and for what amount.

The injured claimant did not think that a claim of assault and battery needed to be submitted to the MCCP process, since the case did not involve medical malpractice.  The defense convinced the Circuit Judge to dismiss the case, due to the failure of the Plaintiff to proceed to MCCP.  By the time the case was dismissed, however, the two-year statute of limitations in which to file another suit had already expired.  The injured party, thus, had no remedy.  The case is presently on appeal to the Hawaii Intermediate Court of Appeals.

The moral: If you have any kind of claim against a care home operator, make sure that your attorney considers whether the claim needs to be presented to the MCCP.

For further information, contact the Hawaii Senior Care Hotline at hawaiisrcarehotline@gmail.com.

The qualification and vetting process also leaves a lot to be desired.  Reports indicate that applicants are not subjected to interviews or investigation designed to screen out persons who may not have the requisite commitment to Hawaii’s elderly.  This might have helped avoid incidences of sexual misconduct against elder, defenseless female residents.

More often than not, decisions on licensing of operators are made without personal contact or assessment of the applicant, or investigation of the individual’s background.  Enforcement of the law after an individual is licensed is often spotty, as budget constraints have resulted in under-staffing at the agencies charged with enforcement, and lack of funding necessary to provide full-scale policing of the industry.

For further information, contact the Hawaii Senior Care Hotline at hawaiisrcarehotline@gmail.com.