Checks & Imbalances

Some rob you with a gun, some rob you with a fountain pen.

-- Woody Guthrie

Greg Maruda doesn't know who Nancy Elliston is. Nor does he realize that, in her capacity as his court-appointed financial conservator, Elliston stole more than $40,000 from him by signing her name to a few pieces of paper.

The 51-year-old Maruda was born with Down syndrome, which left him with mental and physical handicaps, and a sweet, guileless nature. Maruda lives with 25 other developmentally disabled men and women at a west Phoenix assisted-care facility. He works part-time putting boxes together at the Gompers Center for the Handicapped.

Maruda shares a cozy apartment with three other men. In his bedroom is a TV set and a VCR. Maruda has a collection of horror movies. "The scary kind, like [A Nightmare on Elm Street's] Freddy," he says. He also adores Elvis Presley, whose visage adorns the bedroom walls.

He points to a framed, slightly faded color photograph on a wall near his pillow. "That's my mother," Maruda says proudly. "She's passed away now."

Greg Maruda fits Arizona's legal definition of a "vulnerable adult." He is incapable of doing things most people take for granted, such as balancing a checkbook or driving a car. He trusts just about everyone, and is susceptible to all manner of abuse.

A county Probate Court judge in September 1978 appointed Nancy Elliston as Greg Maruda's trustee/conservator. That put her in control of his estate, supposedly subject to the court's supervision. The Maruda Estate was then worth about $100,000, most of it from a trust that his mother had funded before her death.

Three years later, Maruda moved into his current residence. It feels like a real home, largely because director Joyce Ridge and her staff are compassionate and attentive to their residents' needs. The home is what mental-health activists envisioned in the 1970s when they won the fight to free the mentally infirm from the shackles of warehouselike institutional living.

"Greg and the rest of the people here are our family," Ridge says.

Maruda was one of hundreds of Arizonans released to the "community" during that deinstitutionalization phase -- in his case, after a long stint at the state's infamous asylum in Coolidge. Many in his shoes had to fend for themselves, after it turned out the "community" didn't have anywhere to put them. Maruda, however, was lucky in that he had money. The $800 monthly payment for room and board and other amenities was eminently fair. Maruda's physical safety there seemed reasonably assured, as did his finances under Elliston's watchful eye.

In the late 1970s, Elliston pioneered Maricopa County's private fiduciary industry, which emerged as Arizona's retirement population exploded. Her now-defunct firm, Fiduciary Services Incorporated, grew as Arizona became the state with the nation's highest percentage of incapacitated "wards."

Private fiduciaries get paid to serve as guardians and/or financial conservators for incapacitated adults and children who have no family or friends to properly care for them. The Public Fiduciary, on the other hand, takes on cases where little money is involved, the circumstances are complex, or when nobody else is qualified or willing to serve.

Both public and private fiduciaries are overseen by the Probate Court, which is the last line of defense in this area for those who can't help themselves. The law allows fiduciaries to hold almost absolute sway over every aspect of their wards' lives, a daunting and often thankless task. The dictionary defines the "fiduciary relationship" as one of "trust and confidence," and law books call it the most sacred of all legal duties.

Nancy Elliston won a reputation at Probate Court as a paragon of friendly professionalism who gave all appearances of being fiscally prudent and empathetic toward her clients. Elliston and her now-deceased husband, Fred, never lived lavishly or demonstrated abnormal spending habits. In hindsight, however, it's apparent their personal finances were in tatters.

Records show the Internal Revenue Service issued tax liens against Elliston as early as 1984. In ensuing years, the feds lodged more liens against Elliston and Fiduciary Services that totaled about $150,000 in unpaid taxes. Elliston also faced foreclosure seven times on her Glendale home and/or her office from 1995 to 1999.

Court documents indicate she staved off the government and creditors with money illegally drawn from her wards' estates.

On November 12, 1998, for example, Elliston took $9,782 from the bank account of Edward Black, an Ahwatukee man who died in May 1996, but whose estate still was being litigated. That day, she converted that exact amount into a cashier's check that saved her home from foreclosure.

It's unknown exactly when Elliston started stealing money from her unsuspecting wards and/or their beneficiaries. What is known is that, on December 19, 1990, she wired $39,566 from Greg Maruda's account at Valley National Bank into Fiduciary Services' account. The bank charged Maruda's estate $417 in penalties for the early withdrawal. Elliston referred to the transaction in her business ledger as a "personal loan."

The theft came a few months after then-Probate Court commissioner Ken Reeves approved Elliston's annual accounting of the Maruda Estate. That proved to be the last time she filed anything with the court regarding Maruda until resigning as his trustee/conservator in October 1999.

In 1995, Elliston quietly started to "repay" the Maruda Estate -- $1,000 here, $2,000 there -- a total of about $28,000 until her final remittance in January 1998. Records suggest she repaid the Maruda Estate with money taken from other estates entrusted to her. She never paid the estate any interest on the original amount. If it had been a conventional loan, Elliston's principal and interest debt to the Maruda Estate would have exceeded $80,000 by the end of last year.

Elliston's dereliction in filing her required paperwork in the Maruda case finally came to the Probate Court's attention in September 1997, when court accountants wrote Elliston and instructed her to file the delinquent paperwork by the end of January 1998. She didn't respond.

The next entry in Maruda's court file came exactly one year later, in September 1998. Get your paperwork in by January 1999, a form letter read, or the commissioner reviewing the case probably won't allow you to pay yourself from Maruda's estate.

Again, Elliston didn't respond.

Thankfully, all isn't lost financially for Greg Maruda. Judge Donald Daughton, who presides over the Probate/Mental Health division, has indicated that he'll order Elliston and Fiduciary Services to pay the Maruda Estate $80,000 -- a bit less than the interest and principal on the original so-called "loan." That sum, however, undoubtedly will come from a bonding company which insured Maruda against precisely what happened to him with Elliston.

The Arizona Supreme Court has revoked Elliston's license to serve as a public fiduciary, though she's yet to be charged with any crime. In January, she served two days in the county jail, after Judge Daughton sentenced her on a contempt charge involving another of her estate cases ("Nancy Drew," January 20).

Elliston has declined to speak publicly about her legal woes, and has invoked her Fifth Amendment right against self-incrimination at recent court hearings. She has hired noted criminal-defense attorney Craig Mehrens to represent her.

"This situation is tragic," Mehrens says, "but I'm delighted that the bonding companies will cover the losses. We're hoping to resolve this with as little loss of dignity to Nancy as possible." He adds, however, that "I'm aware that prison certainly is a possibility if the county attorney pursues the case."

Elliston reportedly has told several Probate Court denizens she'd become overwhelmed by personal and business woes, which clouded her judgment. However, a New Times analysis of 200-plus Probate Court cases in which Elliston was involved reveals a long-standing pattern of duplicity.

Elliston effectively stole from the estates of at least 14 people over whom she had financial control, victimizing each on the Probate Court's not-so-vigilant watch. Details in some of those cases and others are still unfolding, as concurrent investigations by New Times, the Maricopa County Attorney and the Maricopa County Public Fiduciary continue.

"Those of us in this small, close-knit community of probate attorneys and fiduciaries knew that Nancy had difficulties with her late husband's illness and then his death from the mid-'90s on," says Alisa Gray, a private attorney who is representing the Public Fiduciary in several cases against Elliston. "When I heard there were problems with her estates, I assumed they may have arisen during that time. But when I looked at the Maruda file and I saw that the transfer had occurred in 1990, I was shocked. I mean, Nancy . . . had continued to hold herself out as the standard to which everyone else was compared for so many years. But the reality was far different."

Nancy Elliston's modus operandi was a curious mix of cunning and bumbling.

At times, the 49-year-old woman likely was guilty of nothing more than mismanagement and unethical behavior. But court records also are rife with examples of what appears to be criminal behavior -- theft, embezzlement, elder abuse.

In several instances, she simply took money that wasn't hers from the estates of incapacitated wards. It's impossible to say precisely how much she took, but it's more than $100,000, before interest. Arizona law calls that theft.

Other times, she took money from one estate and "lent" it to another that needed a cash infusion for a variety of reasons -- often because she'd taken money from it for herself.

"She had all of these little "banks' available to her which she could draw on at any time -- and she did," says Paul Harter, an attorney for Southwest Fiduciary, a reputable Sun City firm that has taken over much of Elliston's former caseload. "There were no promissory notes, no independent third party looking at the transactions. Everything was unsecured. She was using other people's money for her own purposes, and covering it with other people's money."

Elliston's scheme caught up to her late last year: She lagged so badly on routine court filings, and made so many errors in paperwork that she did file, Probate Court officials finally decided to look more closely at her cases. In October, Judge Daughton booted Elliston off all of her cases.

Many new details about the extent of Elliston's damaging deceptions have come to light since then, and since publication of New Times' first story about Elliston.

One recurring theme revolves around Elliston's currying of favor at Probate Court for more than two decades. She forged longtime friendships with many county court commissioners, who oversee more than $300 million in conservatorship assets each year.

Perhaps that explains the leniency shown by jurists time and again when Elliston and her attorneys -- most often Charles J. Dyer, a past co-chair of the Arizona State Bar Probate/Mental Health Committee -- filed annual accountings and estate management plans late or inaccurately.

Judge Daughton, a veteran jurist who has been in charge at the Probate/Mental Health Court since May 1998, declined to comment publicly, citing the "pending" nature of several Elliston cases. So did Probate Court commissioners contacted by New Times.

But former commissioner Ken Reeves -- now an official at Northern Trust Bank of Arizona -- bristles at the notion that his erstwhile colleagues cut Elliston special slack. "The Probate Court is not usually a cutthroat organization," he says, "but I really disagree with the notion that it's a clubby little place where commissioners are showing favoritism to their friends. That's just not the case."

As for Nancy Elliston's deceptions, Reeves adds, "I have been absolutely willing all along to believe that people might be careless or not professional. But the idea that you just rob Peter to pay Paul, or pay yourself, is just shocking."

Ironically, Elliston testified as an expert witness many times about her competitors' allegedly excessive billing practices, even as commissioners habitually let her charge her wards' estates far more than the fee schedule she herself had helped standardize in the early 1990s.

The lack of court oversight went beyond the judiciary's inability to deal with Elliston's misdeeds until too late in the game. For example, only three of seven slots on the Probate Court's accounting team currently are filled. Those staffers basically search for clerical errors in paperwork submitted by fiduciaries and others, and don't conduct audits.

Official lassitude gave Elliston free rein.

"The system depends for its success on people being honorable," says Charles Arnold, a former public fiduciary who occasionally served as an attorney for Fiduciary Services over the years. "But when people aren't honorable . . ."

Investigators from the County Attorney's Office late last year raided Elliston's Phoenix office on North 16th Street. They confiscated computer disks, paperwork and other items, according to law enforcement and other sources.

The investigators also made a bizarre discovery during their search of the office -- boxes containing cremains of six of Elliston's onetime wards, dating back to 1985. Attorney Paul Harter says the deceased wards had no known survivors, which should have meant the ashes' interment at the county potter's field.

During the search, authorities also discovered jewelry, watches and other valuables belonging to still-unidentified wards. "Nobody knows who owned those items, so we're really at a loss for what to do," says Harter. "It's a shame. What happened in these cases is almost indescribable."

Norah Brinkerhoff had lived a full life by the time she needed a guardian/conservator in the mid-1990s. A native of Liverpool, England, she was born in 1910, and grew up cultivating a love of show tunes and classical music.

Brinkerhoff migrated to the United States with her third husband, Howard, an American soldier she'd met during World War II. She had no children or any known relatives in the States. Years after Howard's death, she lived with a Scottsdale man named Al Kunkel until he died in December 1994.

Kunkel left his entire $400,000 estate to Brinkerhoff, who by then was deteriorating mentally and physically. In early 1995, bank officials alerted authorities that a man who was renting a room at Brinkerhoff's home had deposited hefty checks signed by Brinkerhoff into his account.

The bank employees knew Brinkerhoff wasn't well. Then in her mid-80s, she was suffering from a heart ailment and Alzheimer's. The boarder's check-writing escapades led to the May 1995 court appointment of Nancy Elliston as Brinkerhoff's guardian/conservator. For a time, the boarder -- an assistant manager at a Circle K -- contested Elliston's omnipotent new role in Brinkerhoff's life. "I hope that an internal investigation is done of all of Ms. Elliston's work soon," the man wrote to a court commissioner, "before all of Norah's estate is dissipated."

The commissioner disregarded the unsubstantiated allegations, which turned out to have some merit.

In 1997, Elliston took financial advantage of Norah Brinkerhoff's incapacitation.

Brinkerhoff had been moved by then into a nursing home. That May, according to court records, Elliston wrote a check for $2,200 to Fiduciary Services on her wards' account. A notation below the check read, "Payment to FSI [Fiduciary Services] for loan FSI made to the Swanson Estate."

The Swanson Estate?

Anne Swanson was another of Nancy Elliston's clients. She was an elderly Phoenix widow who suffered from dementia, and didn't have anyone to care for her.

Swanson's estate was about the same size as Brinkerhoff's, but bad financial planning had left her strapped for liquid funds. Elliston could have asked a court commissioner to release some of Swanson's "restricted" funds, a customary practice of fiduciaries that takes weeks to complete. Instead, she saved the hassle by withdrawing $17,000 from Brinkerhoff's bank account between May 1997 and January 1998, and "lending" it to Swanson -- again without interest.

Elliston later would reimburse the Brinkerhoff Estate -- minus interest -- for the $17,000. But she repaid nothing of the $12,200 she grabbed for herself during that time, from what one probate attorney dubs "the bank of Norah Brinkerhoff."

In July 1998, Commissioner Gary Donahoe set a hearing to learn why Elliston and attorney Larry Schafer had failed to obey his earlier order to file an estate management plan and annual guardian's report. (The paperwork already was five months late.) Just before the August 26 hearing, however, attorney Schafer finally filed the paperwork on Elliston's behalf. Not surprisingly, it didn't show the "loan" to Fiduciary Services.

Neither Elliston nor Schafer -- who didn't respond to a call from New Times -- got a slap on the wrist from Commissioner Donahoe for their tardiness in this case. To the contrary, Donahoe in early 1999 approved Elliston's bill of $8,180 for services rendered from March 1997 to February 1998. Schafer collected $1,104. (Fiduciary Services had earned $9,635 for its previous year's labors.)

Norah Brinkerhoff is now living in a skilled nursing home in Youngtown. In February, she had $199,000 left in her estate, almost all of it in a restricted account. Her finances and well-being are being overseen by Southwest Fiduciary.

Born in 1896, Mazie Franklin moved to Mesa from her native Philadelphia in the 1940s, where she retired after a career as a grade-school teacher. She never married, and had no known survivors.

By 1977, Franklin was unable to care for herself, and a dear friend petitioned the Probate Court for help. A court-appointed psychologist noted in a report, "[Franklin] is suffering from a major mental illness, as a result of which she is gravely disabled."

That May, the court appointed Nancy Elliston to serve as Franklin's guardian/conservator. Franklin's estate at the time was about $21,000. Franklin eventually moved into a nursing home, where she died in 1987 at the age of 91. She left half of the $6,000 that remained in her modest estate to her friend -- who by then also had died -- and half to the Philadelphia Home for Incurables/Inglis House.

But court documents indicate that no one except Nancy Elliston would benefit by the remainder of the Franklin estate. (That money, by the way, doesn't include almost $7,000 in court-approved fees Elliston collected from the estate during the four years up to Franklin's 1987 death.)

Somehow, the Mazie Franklin case slipped through the proverbial cracks at Probate Court, as her court file shows no entries from 1988 until October 1999. But Elliston's woes caused authorities and others to revisit the files of even the least financially significant of her wards, including the Franklin Estate.

Court papers in the revitalized case show that Elliston moved $6,356 from Franklin's bank account into the "Nancy Elliston trust account" in August 1988, then drew $2,286 from that for a portion of her court-sanctioned fees. But, the documents add ominously, "the disposition of the balance of $4,070 . . . is unknown."

For certain, however, is that the Philadelphia Home for Incurables/Inglis House never got its share.

Kathleen Gannon's case made headlines in July 1987, after the deranged woman killed her aged parents at their Tempe home. In July 1989, a county judge acquitted Gannon of her mother's slaying by reason of insanity, but convicted her of murdering her father. She was sentenced to 25 years in prison, but spent almost five years at the Arizona State Hospital before authorities deemed her well enough to transfer her there. Nancy Elliston got connected with Kathy Gannon through a series of unusual legal circumstances.

Gannon's parents executed their will in March 1987, just four months before she killed them. They left equal shares of their estate to their four daughters, but asked that Kathleen's funds be placed in a "trust" because of her chronic mental problems.

The Gannon Estate totaled about $100,000, which left about $25,000 for each sibling. (Remarkably, Gannon circumvented Arizona's "Slayer Statute" -- which blocks murderers from inheriting the estates or insurance proceeds of their victims -- because she never was convicted of her mother's murder.)

Gannon's attorney suggested to Probate Court that the imprisoned woman needed someone to supervise the trust. Nancy Elliston got the job -- and power-of-attorney status over Gannon -- in August 1994. This case differs from that of others in this story in that a trust does not legally require annual accountings, nor any court supervision, for that matter.

Elliston opened a Bank One account totaling $22,300 on Gannon's behalf in late December 1994. Court records show Fiduciary Services regularly sent the prisoner small sums of money for sundries and other goods.

But it wasn't known until recently that, without alerting anyone, Elliston in July and August 1995 transferred $17,000 of Gannon's money into Fiduciary Services' own trust account. As was her custom, Elliston referred to the transactions in her own ledger as "loan(s) to Fiduciary Services." Two years elapsed before Elliston "repaid" the Gannon trust $1,200 in two checks, without interest, on the purported loan, leaving an unpaid balance of $15,800.

She continued to get away with the scheme, even as Gannon's bank account shriveled by the end of last year to almost zero. But in light of revelations in other Elliston cases, Judge Daughton asked the Public Fiduciary to examine the Gannon files, among many others.

Kathy Gannon may have caught a break in her otherwise gloomy existence. Attorneys involved in the Elliston matters say she's likely to get reimbursed for the thefts by the bonding company that insured her trust.

But, cautions attorney Alisa Gray, "Without excusing anything that Nancy may have done, I'm concerned that if there's an overreaction to her situation at Probate Court or at the Legislature, that we could see matters like these driven underground. With the use of non-court-supervised people, or people who just have powers of attorney, you have no oversight at all, no bonding. Nine times out of 10, the victims are just out of luck."

Josephine Jellie and her husband moved to Sun City in the 1970s, after selling their costume jewelry shop in their native Kansas. They had no children. Her husband's death in the early 1990s left her an estate worth about $500,000. Jellie's only immediate surviving family member was a brother who lived in California.

Like Norah Brinkerhoff, Jellie's plight came to the Probate Court's attention when someone told authorities that a caregiver seemed to be spending too much of her money. The court asked Elliston to take over as Jellie's guardian/conservator in March 1993.

And, again, Elliston breached her fiduciary duty -- putting it politely -- by stealing at least $14,500 from Jellie's estate in a period from November 1997 until March 1998. That didn't stop Elliston in August 1998 from asking a commissioner to allow her to reimburse herself for a few things.

From the Probate Court files:

"Food -- $11.76."

"A doll -- $33.36."

The commissioner had no reason to deny Elliston's request.

Josephine Jellie died in March 1999.

Read Paul Rubin's related story "As Helpless As Children," from September 8, 1993.

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