By Stephen Lemons
By Weston Phippen
By New Times Staff
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Two middle-aged people sat at respective tables facing the judge. Cook was there because Daughton -- who presides over the Superior Court's Probate and Mental Health Department -- needed him to take someone into custody.
The deputy, a fixture at the Maricopa County courthouse, recognized one of the participants as Jack Cox. Cox, too, has been a familiar face around the courthouse for years, first as a criminal defendant and more recently as a litigant in a protracted war over a trust fund that his late mother created for Cox's two minor sons.
A few years ago, the fiery Cox served six days in jail on a contempt of court charge that stemmed from the battle. He also pleaded guilty to a misdemeanor charge after he left a threatening phone message to the court commissioner who ruled against him in that case.
The woman sitting across from Cox had been one of his chief antagonists in the trust-fund case. Nancy Elliston was dressed conservatively, her blond hair pulled back in a tight bun. She kept her hands folded on the table, but couldn't stop them from shaking.
For more than two decades, the 49-year-old Glendale woman had been known as the undisputed godmother of Maricopa County's private fiduciary industry.
Private fiduciaries are professional guardians and/or conservators -- the legal equivalent of parents for the incapacitated. By law, they are supposed to protect the welfare of society's most vulnerable adults. The Probate Court judiciary are supposed to serve as watchdogs to ensure that the fiduciaries do just that.
Elliston's business, Fiduciary Services Incorporated (FSI), dominated the local market, mostly because of Elliston's sterling reputation as a compassionate and competent guardian/conservator.
Judge Daughton gestured to Deputy Cook to come forward.
"Hi, Jack," Cook said, smiling as he moved toward Cox, thinking he was about to take the onetime owner of the Great Alaskan Bush Company to jail again.
Cox returned the smile, then quickly pointed over to Elliston.
"Not me," he said cheerfully. "Her."
Cook looked at the judge quizzically. Daughton nodded.
Elliston started to sob.
Minutes earlier, Daughton had sentenced Elliston to 90 days in the county jail for paying herself $6,500 from the Cox trust fund. She had served for years as the trust's court-appointed conservator, but Daughton had ordered her not to collect any more money without his approval. Elliston also had failed to provide a long-demanded accounting of what she'd done to collect more than $70,000 in fees from that estate.
Daughton told Cook to wait until Elliston testified in another case, this one concerning her late husband's estate. She took the witness stand and, in a barely audible voice, answered several questions from Alisa Gray, a private attorney representing the county Public Fiduciary.
"I was embarrassed and ashamed," she whispered.
"She's embarrassed and ashamed because she's in some big-time trouble," Charles Elliston said later.
The hearing ended, and Judge Daughton returned to his chambers. Cook and another deputy met Elliston as she left the stand and put her in handcuffs. Within seconds, however, she wobbled, then collapsed.
Elliston never lost consciousness, and -- still stretched out on the floor -- told the deputies that she was okay. Paramedics arrived within minutes anyway, checked her vital signs, asked her some questions, then left.
Cook found a wheelchair and pushed Elliston out of the Old Courthouse onto the bustling Washington Street sidewalk, the start of the two-block trip to the Madison Street Jail. She'd spend the next two evenings there before Judge Daughton ordered her conditional release during a January 13 hearing that Elliston attended in handcuffs, shackles, and clad in a black-and-white-striped jail suit.
She has until January 26 to repay the Cox estate $6,500, and to provide documentation to justify the $70,000-plus in fees she already collected with the approval of court commissioner Gary Donahoe. If she doesn't, Daughton told Elliston at the most recent hearing, she'll be going back to jail.
"Unfortunately, our business needs to be regulated because of the few bad apples out there who take advantage of people who can't help themselves."
-- Nancy Elliston, in aNew Times interview, 1994
Nancy Elliston's fall from grace has shaken the Maricopa County Probate Court to its roots. Most of those interviewed for this story said Elliston was the last person they'd ever have suspected of any kind of wrongdoing.
But investigators from the County Attorney's Office suspect that Elliston stole untold sums of money from the estates of people with whom the court entrusted her. The investigators now are poring over paperwork and computer discs seized late last year from FSI's central Phoenix office.
Elliston isn't talking publicly, and her attorney, Joe Romley, didn't return calls seeking comment.
Before the police raid, the Arizona Supreme Court last October 22 issued an emergency order that suspended the private fiduciary licenses of both Elliston and her business. The order became permanent January 4.
The orders describe how Elliston -- while serving as a conservator -- illegally took $9,782 on November 12, 1998, from the estate of Edward Black, an Ahwatukee man who died in May 1996 at the age of 78. Court records suggest that, with that money, Elliston caught up with her own delinquent house payments, barely forestalling foreclosure. (FSI was serving as the estate's court-appointed conservator because of a legal dispute among Black's heirs.)
On January 7, 1999, court documents indicate, Elliston illegally took another $11,026 from the Black estate, and paid an attorney for fees owed in an unrelated estate case.
Finally, last February 5, Elliston took another $7,000 from the Black estate, and deposited it into her company's bank account.
"This constituted dishonesty and fraud by Elliston and FSI," the court's order read, "and constituted a source of injury and loss to the public."
Says Fred Gamble, a Tempe attorney for Black's sister-in-law, Doreen Black: "If I were to be stealing from an estate, I wouldn't be stealing from one that had $1 million in diamonds. I'd steal from an estate that had money, cash, and that's all Mr. Black's estate had. What she did is called theft by embezzlement under [Arizona's] criminal code."
The Black estate isn't the only one Elliston may have pilfered, documents obtained by New Timessuggest. Those documents indicate that at least 30 estates are missing thousands of dollars each.
Court officials agree that the Elliston affair has similarities to the mid-1990s scandal that landed powerful Mesa attorney Wayne Legg in prison for stealing from his aged clients ("As Helpless As Children," September 8, 1993). And, like the saga of Legg -- who pillaged estates from right under the noses of court commissioners -- the Elliston case raises troubling questions beyond the apparent thefts.
A New Timesexamination of more than 200 court files indicates that:
Probate Court officials learned as early as February 1997 that the Internal Revenue Service had placed a lien on FSI, claiming the firm owed more than $50,000 in federal taxes. This alone should have raised red flags about a company handling the money of its incapacitated and vulnerable clients. County Recorder's records also reveal a decadelong history of other IRS liens, and that, since 1992, Elliston narrowly had avoided foreclosure three times on her own home. One of those occasions came in November 1998, when she took money from the Black estate to pay her debts.
Despite that, the Probate Court -- with the exception of a brief moratorium in early 1998 -- kept feeding Elliston dozens of new cases, in addition to her slew of ongoing cases.
County court commissioners allowed Elliston and the attorneys with whom she worked great leeway to file annual reports late (sometimes by more than a year) and inaccurately. Even then, the commissioners with rare exception would approve the accountings and okay the requested fees. In one 1998 case, a commissioner approved Elliston's fees even after she submitted a plan for a client who was dead. "What are the anticipated care and services to be provided to the ward during the upcoming accounting period?" a written form asked Elliston. "Skilled care in a lockdown unit," she replied about her deceased client.
The Probate Court was derelict in the case of Gregory Maruda -- a developmentally disabled 50-year-old who lives at a Phoenix group home and is a ward of the court. Elliston, who was Maruda's guardian/conservator, didn't file annual accountings for nine years, and the court seemingly never noticed. An attorney for the home says Elliston continued to pay herself from Maruda's estate -- once valued at at least $100,000 -- during that time. That came to light last summer only after the attorney, Lawrence Marks, complained that Elliston hadn't been paying Maruda's rent for months, and wasn't returning phone calls about releasing funds so Maruda could be treated for a gum infection.
"We don't know at this moment how much he has left in the account," says Marks. "It certainly isn't what it should be."
Probate attorney Paul Harter -- who also has been analyzing Elliston's files -- told Probate Court officials in writing last October that between $10,000 and $40,000 from Maruda's estate is unaccounted for.
Apparently all but one estate for which Elliston and FSI were responsible was bonded. That means that the Public Fiduciary will ask the bonding companies to replenish the lost money, assuming the losses don't surpass the bond limits -- $105,000 in Maruda's case, for example.
The process, however, is time-consuming, and no one is likely to be reimbursed soon. If and when that does happen, the bonding companies would have the option of trying to collect money from Nancy Elliston and FSI.
Though almost everyone at the Probate Court seems stunned by Elliston's demise, insiders wonder how the attorneys with whom she worked for years knew nothing of her financial woes. (Private fiduciaries like Elliston who aren't lawyers must hire attorneys to file legal paperwork and to represent them in court.)
Elliston and FSI generated about two-thirds of attorney Charles Dyer's business, those insiders say, and the pair also are good friends. As an officer of the court, Dyer, among others, had a legal duty to inform judges and commissioners if he had known about Elliston's problems.
How, asks an attorney for one estate from which Elliston allegedly embezzled thousands of dollars, could anyone expect her to guard others' assets when she apparently couldn't guard her own?
Dyer declined to comment.
Nancy Elliston's motive seems to be obvious: She was broke, had ready access to someone else's money, and couldn't resist temptation.
It's not that the recently widowed woman was living lavishly. She drives an older car and lives in a modest home. And no one interviewed for this story -- many of whom have known Elliston for years -- could name a vice such as gambling or drugs that may have corrupted her.
"She was the industry's queen, the voice of reason," says presiding Maricopa County Judge Bob Myers, who headed the Probate/Mental Health Department before assuming the Superior Court's top slot. "She was very interested in educating the public about her business, and informing everyone that things could be done correctly. What's happened is a tragedy."
Adds attorney Paul Blunt, who worked for Elliston in many cases, "When she was in her game, there wasn't anybody better. She never seemed to want to get whatever she could out of the system. I still think Nancy is a good person, but if she did all of these things, she'll have to account for it."
"In recent years, the Probate and Mental Health Department of the Court has made significant strides and improvements in its quality, efficiency and monitoring capabilities to better serve and protect people unable to care for themselves, including the elderly, minors, mentally ill and wards of the court."
-- from the Maricopa County Superior Court Web site
Maricopa County's Probate Court is a clubby world, one that feels more like court in the hinterlands than one of the nation's largest cities. The attorneys who sat in at Elliston's recent contempt hearings chatted about their holidays and gossiped freely. It's not so collegial across Jefferson Street at the central courthouse, where prosecutors and defense attorneys often barely know each other.
Until recent years, Probate was the Superior Court's almost forgotten stepchild, where older judges marked time until they could retire. That changed during the reign from 1993-95 of Bob Myers, who dragged -- some would say bullied -- the Probate Court into modern times. One of Myers' legacies was how he handled the infamous Wayne Legg case.
In the wake of Legg, Myers personally lobbied state legislators to enact a law that mandated the regulation and registration of private fiduciaries.
Joining Myers in that winning fight was an articulate woman who seemed to represent the good side of the private fiduciary business. Nancy Elliston would take on the toughest cases as a guardian/conservator, and do whatever it took to make things work.
"She was trusted by everyone," Judge Myers recalls.
Pam Franks succeeded Myers as Probate/Mental Health presiding judge in May 1995. Franks is a humane jurist, but is known for being very tough when necessary. Her work in exposing the ineptitude of the Arizona Veterans' Service Commission as a guardian/conservator was instrumental in fomenting change at that agency.
It's not as if Franks ignored the problems she was hearing about FSI before she left Probate/Mental Health in May 1998 for an assignment in Juvenile Court. But she intentionally did ignore Elliston's financial personal woes after she became aware of them in early 1997.
In March 1997, a Probate Court investigator had sent Franks a memo that detailed the February 13, 1997, IRS tax levy against Elliston for $52,964. The investigator explained that the feds use such levies -- a forced collection of money -- as a last resort.
Franks tells New Timesshe recalls the memo, but says Elliston's precarious financial condition wouldn't have swayed her.
"The court does not ask about a fiduciary's own assets when we are appointing them," she says. "It's only relevant that some bonding company is going to insure them. As long as a legitimate bonding company comes forward and tells me, 'Judge I'm going to insure this fiduciary, and it will cover all the unrestricted assets and the income for one year,' that's all I care about."
Charles Arnold, a veteran Phoenix Probate/Mental Health attorney who represented FSI in some cases, disagrees with Franks.
"I have the greatest respect for Pam as a judge," he says, "but I think there's a higher calling here, a higher responsibility, because it's a fiduciary responsibility. Judges are the last line of defense -- and if the court's not there for the wards, who will be?"
Adds Fred Gamble, the attorney involved in the Black estate case: "I'd like to ask why the courts aren't doing background checks and audits to see if someone is financially irresponsible. Typically, an embezzler is someone who is having financial problems."
In early 1998, Franks placed a moratorium against appointing Elliston to any new guardian/conservator cases. Her action came shortly after she'd ordered Elliston to "personally appear and show cause why Fiduciary Services Inc. should not be removed as conservator, held in contempt of court, and/or have other sanctions imposed against it" in the case of an aged, incapacitated Phoenix woman named Anne Swanson.
Elliston hadn't been paying Swanson's bills because the judge wouldn't release certain funds until FSI proved it had increased the surety bond to cover any potential losses. FSI had failed to increase the bond -- usually a simple task -- for months. Franks held a contempt hearing on the matter January 6, 1998.
Franks told Elliston and the attorney in the case, Paul Blunt, to submit proof of the increased bond within a day, or she'd kick FSI off the case. Finally, they complied.
"At the December 19, 1997, hearing, Ms. Elliston advised the court that FSI was in violation of bonding orders in three cases," Franks wrote after the hearing. "Counsel advise the court that they have reviewed FSI's cases and have determined that FSI is, in fact, in violation of bonding orders in seven cases. . . . Counsel avow they will perform internal reviews . . . to ensure that FSI is, in fact, in compliance with all existing orders, not only for obtaining bonds, but for restricting accounts, records restrictions of real estate, and filing inventories and accountings."
Shortly before Franks left the Probate/Mental Health bench, she also scheduled new hearings before her successor, Judge Daughton, on several other Elliston cases in which estate accountings were late and incomplete. Those hearings ended without sanctions being imposed against Elliston, FSI or her attorneys.
Judge Franks also ended her moratorium against appointing Elliston to any new cases.
"The private fiduciary acting as conservator for the estate shall provide competent management of the property and income of the estate. In the discharge of this duty, the private fiduciary shall exercise intelligence, prudence and diligence and avoid any self-interest."
-- from the Arizona Supreme Court Code of Conduct for private fiduciaries
FSI was falling apart by early 1999, but it was business as usual for the firm at Probate Court. Only Jack Cox -- the courthouse gadfly who watched with undisguised glee a few weeks ago when Nancy Elliston got hauled off to jail -- was saying anything bad about her.
Though FSI's accountings were coming in even later than usual, the court commissioners continued to rubber-stamp almost every application for fee approval that she and her attorneys submitted.
"I am writing to make you aware of a recent situation," Buchanan wrote. "Several attempts have been made by the family to reach Nancy Elliston from Fiduciary Services regarding failure [to pay Clark's bills]. She has not responded. . . . We would like to make you aware of the court-appointed fiduciary's inaction on this case."
Elliston resigned as Clark's guardian/conservator a week later.
Donahoe ordered Elliston to file her final accounting of her work within two months, or by May 18. That date came and went without Elliston doing as ordered, but Donahoe didn't react until August 4 -- two and a half months late -- when he set a September 7 hearing to discuss things.
What happened at that hearing is a secret; Donahoe sealed the file and wouldn't comment for this story.
Last September 13, shortly before Elliston's license was suspended, a seriously mentally ill woman wrote Judge Daughton a letter from Madison Street Jail. Nancy Elliston had been Noelle Chase's guardian/conservator for a few years, and Chase was convinced that Elliston had been ripping her off.
Though it's uncertain whether Chase is right about her case, her handwritten note seems prescient.
"I beg, Your Honor, please don't let this all be swept under the rug," wrote Chase, who was serving a term for violating probation on a drug charge. "The behavior of FSI is so appalling that my probation officer was overwhelmed by their business practices. . . . I hope and pray two things from you -- that you will look into the accountings FSI has been submitting and that, two, that this can't ever happen again to another person. FSI is not what they appear to be."
With the courts' blessings, a firm called Southwest Fiduciary Services has taken over many of FSI's cases. Several of Nancy Elliston's onetime employees have gone to work for Southwest, though she apparently has no financial interest in the firm.
Contact Paul Rubin at his online address: email@example.com