Lawmaker: Guardian system ‘turned ugly’

Copyright © 2017 Albuquerque Journal

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• Federal authorities allege that the now-defunct Ayudando Guardians Inc. was “permeated’ with criminal activity and stole millions of dollars from client accounts, yet the Albuquerque-based guardianship company survived a state compliance review just last year.

• Ayudando Guardians filed financial audits with the state Attorney General’s Office revealing that company employees “borrowed” money from client funds. But the state Office of Guardianship, which awarded Ayudando more than $6 million in contracts since 2010, says it never saw those audits.

• More than 900 incapaciated low-income people receive guardianship services through the state Office of Guardianship, but the agency gets only “two or three” grievances a year about problem guardians, according to John Block III, executive director of the agency that oversees the guardianship office.

Block was on the hot seat this week, testifying before a state legislative panel considering next year’s budget request by the state-funded guardianship office, which provides more than $4 million a year in corporate guardianship services for vulnerable, indigent New Mexicans.

“It’s very concerning what’s happening this past year,” said Sen. James White, R-Albuquerque, a Legislative Finance Committee member who lamented how the guardianship system in New Mexico has “turned ugly.”

“… A lot of the companies are abusing the system, taking advantage of the system that was set up … Unfortunately, they feel if the government can’t keep a finger on their pulse, they can get away with it.”

As to Block’s comment about “two or three” complaints a year, White said he’s just one of more than 100 state legislators, “and I have had more than two grievances (about guardianships) by constituents of mine. I would have to believe there’s a lot more grievances out there than two.”

Senate President Pro Tem Mary Kay Papen, D-Las Cruces, added, “I’ve had some very serious complaints brought to me about a company that does guardianships.” She asked if she could refer the complaints to Block, who on Thursday said he would look into them.

Several people in recent months have contacted the Journal to complain that their loved one is being neglected by state-paid guardians, and, in one case, a ward had to wade through Dumpsters to get a pair of shoes and has waited months to see a dentist after a front tooth fell out.

The family members say they are afraid to go public with their complaints for fear their loved one will be retaliated against.

‘More resources’

As the provider of such services for low-income clients, Block’s agency has become a lightening rod for criticism.

White on Thursday pressed Block for answers as to the oversight of Ayudando and other companies. He asked Block whether he knows “if there’s another one (guardianship company) out there that needs to be identified right now? Other than throwing money at it or more people at it, what can be done?”

“We do need more resources,” Block said. He said his agency is seeking an increase of about $70,500 next year to add a third compliance officer.

Should guardians be licensed? White asked.

“That’s an excellent idea,” Block said, “to tighten up some of the controls out there.” Most often, family members are appointed as guardians or conservators of their incapacitated loved ones to make decisions about their living arrangements or finances. But if families can’t or won’t assume those duties, corporate guardians and conservators are appointed by state district judges in New Mexico.

Risk advisory

On Sept. 21, the office of State Auditor Tim Keller issued an emergency risk advisory for the Office of Guardianship, urging Gov. Susana Martinez and the legislature to devote more resources to the agency and ensure policies and procedures are in place for adequate oversight of 20 corporate guardianship companies.

The alternative is to transfer the guardianship function to another agency, Keller’s advisory stated.

Block testified that his six-employee agency, which has a $5.1 million yearly budget, has been busy transferring about 166 clients of Ayduando’s to other guardianship firms.

Federal authorities began their investigation of Ayudando in June 2016 after several employees alleged their bosses were stealing money from client accounts. A 28-count federal indictment in July focused mostly on missing federal benefits from clients. Two top Ayudando executives allegedly spent more than $4 million in clients’ savings and other funds to support lavish lifestyles for themselves and their families.

Asked by White what his agency was doing to recoup missing client funds, Block said a claim has been filed on a $1.5 million liability insurance policy required by Ayudando’s state contract. But Block said the insurance company involved has said that “until such time as they’re convicted, we will not pay.”

“Why weren’t you all able to identify this problem?” White asked at one point during the budget hearing.

Block responded that the majority of Ayudando clients affected were “private pay,” and not receiving guardianship services through the state.

However, the Journal earlier this month interviewed one former client on a state-funded guardianship who contends that his $100,000 inheritance that Ayudando managed is now missing.

Block said that, of the 20 state guardianship contractors, only two underwent a compliance review by the Office of Guardianship in the past year. Ayudando was one of the two, and the review occurred before the federal indictment. On Friday, Block said he didn’t immediately know whether his agency found problems during the review that required corrective action from Ayudando.

Such reviews check non-financial issues, such as whether the company is keeping adequate records and making the required monthly visits to the incapaciated person.

Block told the legislative panel he didn’t have a copy of Ayudando’s yearly audits. Such audits of nonprofits are required to be filed with the AG’s office and are posted online.

“Unless we had authority and resources we could not go in there and do our own audit,” he added.