Former clients of thieving conservator face new troubles in court

In the 29 years since Keith Adams came under court protection as a vulnerable adult, the mishandling of his assets is an "outrage," according to his sister.

"My family has legitimate concerns that it could happen again," says Cindy Coffin of Rosemount.

The trouble began in 2005 when a professional conservator who was appointed by the court to manage Adams' finances stole $30,000 from him. Then he was left in limbo after the next professional conservator was sent to federal prison for stealing from other clients.

Now his latest conservator has been accused by federal authorities and state auditors of charging clients improper or unreasonably high fees for many routine tasks.

For years judges turned to Stephen Grisham and his now-defunct firm, Alternate Decision Makers Inc. (ADMI), to take on complicated cases, including those mishandled by previous conservators. That ended in late 2013, after Grisham admitted to stealing $160,000 from some clients to fund his gambling habit.

ADMI collapsed, leaving the courts scrambling for replacement conservators and guardians for scores of its former clients. The continuing concerns with the companies that replaced ADMI demonstrate the difficulties the court system faces supervising professionals and then repairing problems when things go wrong — problems that threaten to swamp the court as it braces for a predicted tsunami of dementia cases among aging baby boomers.

"Our system is sorely lacking," said Jill Adkins, an attorney specializing in elder law with Gries, Lenhardt, Allen in St. Michael. "I tell all of my clients that the last thing you ever want is to end up in a court guardianship or conservatorship. There are things that can go wrong at every step."

Judges appoint guardians to manage the daily lives of vulnerable adults, and conservators to manage their money. They prefer to find family members for the job, but when none are available or the family is at odds, they must hire professionals who are paid from the vulnerable adults' estates.

After Adams left the Air Force in the 1980s with a diagnosis of schizophrenia, the commissioner of Veterans Affairs acted as his conservator until 2005. The court then appointed Connie Marie Hanson, a professional conservator in St. Paul, to manage his finances.

Hanson was replaced four years later when a VA investigation found that she'd embezzled $1.25 million from her clients. She pleaded guilty to filing a false fiduciary statement and was sentenced to 55 months in prison.

The court then appointed ADMI. That conservatorship was terminated abruptly in 2014 after a Department of Veterans Affairs (VA) investigation led to Grisham's prosecution. He's serving a year at the federal prison camp in Duluth.

Jacob Kamenir, a lawyer and former executive of ADMI, and the firm's former on-call accountant, Douglas Meldrum, launched a company called Phoenix Fiduciary Services to pick up the pieces. After they got their first client, however, Kamenir abruptly dropped out of sight. (A relative said he moved out of state; he did not respond to a request for comment.)

Meldrum and his wife, Tracee, a former ADMI case worker, changed the name of Phoenix to Integrity Fiduciary Services Inc., and were assigned the Adams conservatorship and many other former ADMI accounts.

Court auditors soon began raising concerns about Integrity's fees — $110 an hour, regardless of whether it was conducting routine filing tasks, opening e-mails, or conducting a forensic accounting analysis.

Among the charges the auditor questioned was $440 that Tracee Meldrum had billed to meet with guardianship and conservatorship client Charles Schreier about a pending birthday celebration, and $242 to deliver pop to his residence in St. Cloud.

Hennepin County Judge Jamie Anderson wrote in a court order that she was concerned that the Meldrums had charged $110 an hour for accounting, conservatorship and guardianship work, which don't all require the same levels of expertise. She reduced Integrity's annual fees in Schreier's case from $11,528 to $6,000, and ordered Integrity to repay the balance.

Although Anderson has raised concerns about Integrity's fee structure, she also frequently has approved its bills.

"In the transition from ADMI, many fees were approved but some were not. Each was reviewed on a case-by-case basis," she wrote in an e-mail.

The VA also complained about what it called Integrity's "excessive fees."

"It has also been previously mentioned that you are charging Veterans start-up costs associated with changing the Guardian, Conservator and VA fiduciary [from ADMI to Integrity]. Please note that no other company [charges] these types of fees," Molly Kosbab, a VA fiduciary coach in Milwaukee, wrote the firm in August 2014.

Paul Stark, a VA regional counsel in Milwaukee, said in an e-mail to the Star Tribune that his staff tried to get Integrity to lower its fees to comply with regulations that limit them to 4 percent of the client's federal funds.

"Integrity declined to meet the fee criteria outlined by this regulation. We then proceeded to appoint a successor payee for VA benefit purposes," Stark wrote.

Tracee Meldrum tells a different story in a thick binder of documents that she has submitted to U.S. Sen. Al Franken's office seeking an investigation of the VA. She says the agency trumped up the fee dispute as "retribution" after she complained that VA representatives had falsified budget information for her clients and falsely claimed to have met with Integrity to reach an agreement on their clients' budgets.

She said as a result of the retribution, her firm resigned as federal fiduciary on 30 accounts in September 2014, though the firm still holds court-appointed conservatorships and guardianships for many of them.

In an interview, Tracee Meldrum defended the company's flat-fee structure, calling it a "blended rate." She said the company recently conducted an informal survey of comparable firms' rates, "and we are right smack in the middle." She added that Integrity's rate is the same rate charged by ADMI.

However, ADMI's fees struck the court as "unusually high" as well. In a case involving a ward named Patricia Annette Wallace, Judge Anderson slashed ADMI's annual fees from $20,609 to $3,500, and cut Douglas Meldrum's accounting fees from $15,086 to $1,200.

Adkins, Wallace's attorney, had objected to what she called ADMI's practice of hiring Meldrum at $165 an hour for forensic accounting when nothing indicated it was needed.

The Minnesota Court of Appeals found that while Judge Anderson had the authority to cut the conservatorship and accounting fees, she departed from standard evidentiary procedures in reaching that decision, and so it sent the case back for further proceedings.

Coffin said that while she thought the Meldrums generally did a good job handling her brother's money, she had no idea how much they were charging him until a reporter told her.

Coffin wants "transparency" from the Meldrums, especially because Tracee Meldrum is pushing to become Adams' guardian as well as his conservator, Coffin said.

"Both my mom and I have red flags about them doing it … given all that's happened," she said.

Court auditors have raised a few red flags of their own as they followed up on ADMI's old accounts.

In one case, an auditor found that Integrity had used $1,140 from client Bradley Wright's estate to pay for the firm's own legal bills, and that it used his money to pay some expenses related to ADMI's discharge — including a $1,617 payment to Douglas Meldrum for accounting and $1,012 for both of the Meldrums to attend a court hearing related to the termination of the ADMI conservatorship.

Tracee Meldrum acknowledged making some "honest errors," which she said have been corrected.

Dan Browning • 612-673-4493