NSW Trustee and Guardian Client Abuse - Abuse Around Australia 

Two officers of the A.C.T. Public Trustee and Guardian (PTG), Timothy Stewart McLeod and Donald Tawanda Savanhu, along with two contractors, Stephen Phillip Evans and Joshua Dean Leighton, engaged in a fraudulent scheme between 2009 and 2014 where they raided the accounts of PTG’s most vulnerable clients. The scheme mostly involved the contractors preparing numerous invoices for services which were never actually provided and which the PTG officers then authorised for payment from the clients’ trust accounts. The contractors would split the proceeds of their crimes with the PTG officers after the money had been paid into the contractors’ accounts. However, there were also variations where debit cards were used to withdraw clients’ funds from cash machines to pay for their purported personal needs or holidays, when the clients were confined to nursing homes and unable to go on holidays.

The fraudulent payments were discovered by a fellow employee at PTG who was filling in for McLeod while he was overseas on holidays. The matter was reported to the police and audit firm KPMG was brought in to establish the full extent of the scam. PTG reimbursed their clients over $1.7 million for their losses, made up of approximately $1.4 million in stolen funds and a further $300,000.00 in lost interest payments. McLeod, the architect and main beneficiary of the racket, received approximately half of the money stolen. He was sentenced to 7 years and 10 months gaol with a minimum non-parole period of four years to be served, while Evans and Leighton were given shorter gaol terms. Savanhu received a suspended gaol sentence, as his role had been much smaller and he had already paid back half of the $28,654.00 he had made from the scam by the time of his sentencing in 2017. 

The A.C.T. Public Trustee and Guardian is to be commended for the strong action it took on its own initiative, as it knew full well the extent of the bad publicity it would receive in reporting the thefts to the police and having its employees prosecuted. However, it recognised the seriousness of what had happened and was determined to put an end to it. It has used KPMG’s services to tighten its practices and procedures, and to train staff in better understanding and identifying fraudulent activities. It has also contacted the Public Trustees in other States to draw wider attention to the problem and at the same time try and address the general apathy that exists within these agencies towards defrauding their elderly and mentally challenged clients of their funds. 

A very similar racket to the one that occurred in the A.C.T. was also taking place in NSW around the same period, where payments were being made to an alleged contractor for services that were never provided. The key difference was that NSW Trustee and Guardian (NSWTG) was making payments from its clients’ accounts to a non-existent contractor using false names for the bogus business and its phoney owners. The contractors involved in the A.C.T. scam, on the other hand, were running legitimate businesses and were therefore easily identifiable, as the rules and regulations at the A.C.T. Public Trustee and Guardian prevented payments from being made to unknown or non-existent businesses. 

The true identity of the person to whom NSWTG was making the payments for the fraudulent charges was established by hiring a private investigator to identify the holder of the bank account into which NSWTG was paying the funds, as NSWTG refused to disclose this information. The account was held in the name of Christmas Cove Caravan Park, a tourist and holiday park resort located in Laurieton in northern NSW. Its owner turned out to be Ms Debbie Albert, who had been selling properties on behalf of NSWTG under her Elders Real Estate franchise at Killarney Vale prior to her franchise being terminated. The extent of the fraud is difficult to establish without obtaining access to Ms Albert’s or NSWTG’s bank records. Both the Ombudsman and the Independent Commission Against Corruption (ICAC) have refused to investigate complaints on the matter and the Attorney General has been happy to have it remain that way. 

Documentary evidence obtained established that Mr Michael Gill, a former senior property manager with NSWTG, authorised payment of at least several of these fraudulent charges. This does not prove that he was authorising the payments knowing the charges were fraudulent, as was pointed out by the Ombudsman, but at the very least he was negligent in authorising payments to a non-existent business for services which it never provided, and this has been acknowledged by NSWTG. However, unlike what happened in the A.C.T., NSWTG never reported Ms Albert’s fraudulent conduct to the police and the clients were never reimbursed for their losses. 

NSWTG has stated it cannot be held accountable for the conduct of an agent that it hired in good faith but this ignores the fact that it has a responsibility, as financial manager, to make every effort to recover those losses on behalf of its clients and have Ms Albert reported to the police. No doubt NSWTG’s reasons for not doing this had everything to do with what Ms Albert had to say about Mr Gill’s role in the matter and it did not want the bad publicity that would have ensued. Both the Ombudsman and the Attorney General must stand condemned for allowing the cover up. It is likely that NSWTG’s clients who were affected by the scam are not even aware that they have been defrauded. 

There have also been concerns raised over NSWTG’s practice of refusing to report thefts from clients’ unoccupied properties to the police, even when this has been requested by the clients and their families. In most other States it is mandatory for the Public Trustee to report thefts to the police under these circumstances but this is not the case in NSW. As a result, incidents of thefts are more prevalent in NSW, with clients and their families being told that the thefts must be reported to the police by NSWTG because the properties had been placed under financial management orders. Most of the complaints allege the direct involvement of NSWTG’s staff in the thefts, rather than through contractors or other outside parties. 

Haserota Time, a senior estates officer with State Trustees Ltd (the Victorian Public Trustee), stole $173,000.00 from deceased estates between July 2004 and April 2010. He did this by depositing cheques into his own accounts which had been issued through State Trustees’ systems to supposedly clear the debts of the deceased estates. The offences were only discovered when the bank notified State Trustees’ after Time had twice unsuccessfully attempted to deposit two cheques into his account. Time was sentenced to three years and three months gaol in the County Court in August 2011 with a minimum of two years to be served. 

State Trustees received considerable bad publicity between 2012 and 2015 after it became known that it had lost large sums of clients’ funds in high risk investments which collapsed during the Global Financial Crisis. State Trustees cited privacy laws in refusing to disclose the amounts involved but sources speculated it may have run into millions of dollars. The clients had been told their funds were invested in secure, low risk products which would provide them with a reliable source of income. Instead, they had been placed in high risk investments, apparently so State Trustees’ financial planners could take advantage of the lucrative commissions which are typically offered for placing clients’ funds in risky products. These products were totally unsuitable for meeting the needs of the types of clients that State Trustees were managing. 

The Victorian Auditor General issued a damning report into State Trustees’ administration in February 2012. The audit assessed whether State Trustees was managing the financial and legal affairs of its vulnerable clients with their best interests in mind and came to the firm conclusion that it was not doing this.It noted State Trustees’ direct engagement with its clients with disabilities was not sufficient for it to be assured that their needs and wishes were being properly understood. “Flawed implementation, ineffective oversight, and a failure to regularly and systematically test how effective controls are in practice, limit the assurance it can provide about organisational compliance and performance” the report said. 

In July 2018 the Victorian Ombudsman advised she would be investigating whether State Trustees was acting in the best interests of its clients who had been placed under financial management orders. She said the investigation was prompted by a sustained increase in people complaining that State Trustees did not consult them about decisions or take their wishes into account. Other concerns included State Trustees’ failure to pay bills in a timely way and difficulties in having any form of communication with staff. It seems little has changed since the Auditor General’s report in 2012. 

Perhaps this is not surprising in view of the example that was being set by its former head, Mr Craig Dent. Mr Dent was sacked from his position as CEO of State Trustees in July 2018 after forensic accounting firm RSM Australia found he had misused public funds. The offences related to his arrangements in writing and publishing a book about Public Trustee agencies generally and using State Trustees’ funds to do this. He was also alleged to have improperly claimed credit for writing the book and again used State Trustees’ funds for a function to launch it at Parliament House. The board of State Trustees has referred the allegations against Mr Dent to the Independent Broad-Based Anti-Corruption Commission, Victoria’s corruption watchdog. There are no allegations of clients’ funds having been involved or that clients were in any way adversely affected.

Alana Marie Bartels worked as an estates manager for the Public Trustee in Adelaide when she stole valuables worth more than $32,000.00 from deceased estates between 2013 and 2016. She pleaded guilty to seven counts of abuse of public office in the District Court in September 2017. The items stolen consisted mostly of cash and jewellery but also included two cars, one of which she sold for $9,000.00 and the other she kept for her own use. She falsified the Trustee’s records to conceal what had been taken and kept jewellery she intended to steal in a shoe box under her desk until she could remove it from her office without being detected. She was originally sentenced to more than five years gaol but had her sentence reduced on appeal in May 2018 to a maximum of three years and 10 months gaol with a minimum of 21 months to be served. 

Bartels’ prosecution and conviction resulted from an investigation by the Independent Commission Against Corruption (ICAC) following a number of complaints which were made against her and other staff members. Whilst no other employees were prosecuted, a subsequent evaluation by ICAC which was released to the public in September 2017, recommended major changes to the Public Trustees’ practices, policies and procedures. More than half of the staff interviewed acknowledged that many officers did not follow the processes prescribed in the policy documents and that cultural change was necessary. 

Previously, a parliamentary inquiry into the Public Trustee in South Australia back in 2008 and 2009 had revealed a culture of maladministration and bullying. Mr John Oliver, a former supervisor with the Public Trustee, told the inquiry there was a lack of accountability within the department, significant errors were being made in managing clients’ funds, and that he became the target of abuse and bullying because he attempted to manage the work and performance of his employees by ensuring that the tasks set them were carried out and the reports and audits were completed correctly. 

Among cases Mr Oliver referred to at the inquiry included one where an elderly man missed out on his aged pension for 15 months because the Public Trustee did not forward his birth certificate on to Centrelink, while in a second case the son of another elderly client continued to drain his father’s bank account for four months after the Public Trustee had been instructed to have the pension payments redirected. One client awarded $280,000.00 had his assets reduced to just $80,000.00 cash and a $7,000.00 used car after just four years as a consequence of the Trustee’s mismanagement, Mr Oliver advised. Clearly little had changed between 2008 and when ICAC released its evaluation report in 2017. 

One person who has campaigned tirelessly against the Public Trustee in South Australia over the past 15 years has been Chris Jenkinson who appeared on the South Australian edition of Channel 7’s Today Tonight programme on 6 October 2014. Chris presented copies of a client’s financial statements issued by the Public Trustee on set dates with figures showing balances for specific amounts. He then presented copies of the same client’s statements for the same dates but which the Public Trustee had re-issued at a later date. The balances on the re-issued statements differed from those on the original statements, sometimes by many thousands of dollars. Chris Jenkinson claimed this was occurring because the Public Trustee had been altering the figures from those shown on the original statements and then reconstructed them so that the balances matched up with the altered figures on the re-issued statements. This was being done without any reference to the clients or their families whose accounts were affected by the alterations. 

The Public Trustee in South Australia holds more than $1 billion in clients’ money in its seven common funds. The money in the common funds is invested through the purchasing of units in one or more of five standard investment strategies. The problem is that the clients are not kept informed as to the prices of those units and there is a lack of detail provided on the clients’ financial statements. Separate Items are added together and shown on the statements as one entry, making it difficult to determine what the items actually represent, while other items are left out altogether. This failure to adhere to basic account keeping procedures has the potential to alter the stated positions of clients’ accounts by millions of dollars over time.

Concerns are frequently raised over the exorbitant management fees charged by the Public Trustee of Queensland (PTQ) and for charging for services which were never provided. In one particular case, PTQ had been making regular charges against a 95 year old client’s trust account to have his property in Tweed Heads cleared and his lawns mown while he was in hospital. It was only after neighbours complained to the local council about the state of the property and of it looking like a jungle that the client’s daughter discovered that the work had never been done. The matter was never properly investigated to establish who was responsible for the deception. 

In another case, Clinton VanDenBerg was awarded $807,000.00 in compensation by the Supreme Court in 1996 after he became the victim of a road accident in 1988 which caused a fracture to his skull and left him with a permanent brain injury. PTQ was appointed to manage his finances and did so for more than 16 years, up until the time he was successful in having the financial management order lifted in March 2013. PTQ lost approximately $95,000.00 of Clinton’s funds through its poor investment strategies over the period it managed his money and charged him $77,500.00 in management fees for doing so. 

By 2012 Clinton only had $15,000.00 in cash assets remaining and was being charged $4,400.00 per annum by PTQ to manage them. PTQ’s explanation for its extraordinarily high charging rates was that the value of the home in which he was living was being included in assessing his assets that it was actively managing. Clinton can only be identified in telling his story because he was successful in having his financial management order lifted. There are many other stories similar to Clinton’s, both in Queensland and across Australia, where the clients are being stripped of their assets by the Public Trustees but the victims cannot be identified as they remain under financial management orders. 

Attwood Marshall Lawyers have reported on their website how they have acted in matters where there was theft of assets of deceased persons by PTQ staff, either during the management of their affairs while alive, or after they had died. They referred to reported incidents of PTQ employees rifling through the houses of deceased clients just after they had passed away and taking valuable items before the family could get into the house. Attwood Marshall Lawyers pointed out that certain employees of the Southport branch of PTQ had been prosecuted and gaoled for stealing from deceased estates and that there were times where it had been necessary for beneficiaries to sue PTQ to recover damages for valuables which had been misplaced or stolen under their management. 

Numerous complaints have also been made to the Queensland Ombudsman and the Crime and Corruption Commission (CCC) regarding thefts from the properties of PTQ’s clients or from deceased estates where PTQ was the executor. These complaints seem to be almost always invariably dismissed and neither the Ombudsman nor the CCC will acknowledge the seriousness and extent of the problem that exists at PTQ. In fact, if you were to believe the reports released by the CCC you would think that the problem of dishonest conduct at PTQ was confined to the well publicised case involving Robert Myers. 

Robert Edward Leslie Myers, a former PTQ official, had been given a two year gaol sentence which was wholly suspended for three years after pleading guilty to one count of fraud and one count of uttering a forged document when he appeared in the District Court in Brisbane in July 2017. Myers admitted to using his position to dishonestly obtain $42,000.00 following a CCC investigation into his conduct. The money was the result of a payment Myers received for passing on information that advantaged a Sydney based construction company in a tender process worth $254,000.00. The CCC was quick to emphasise that none of the funds misappropriated were funds held on behalf of PTQ’s clients and that there was no cause for concern over the security of clients’ funds which PTQ was holding. 

The CCC used its investigation and prosecution of Myers as an opportunity to let it be known that, contrary to public perception, it does pursue complaints made against PTQ officials and that there will be consequences if the officials are found to have committed offences. However, the complaint to the CCC against Myers was actually made by PTQ’s bosses and had nothing to do with the numerous complaints made by clients and their families which had instead been related to the theft of clients’ assets or the misappropriation of their funds.