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Local Charity Claims It’s the Victim of Manipulation of Donor by Financial Advisor

April 04, 2016

Posted in Civil Litigation

photo - elder abuseFinancial abuse of the elderly not only harms the older person but also harms those who aren’t getting the financial support they’re entitled to. A lawsuit filed in December alleges an elderly woman with good intentions was manipulated by a financial advisor. A charity that at one point was the beneficiary of a trust created by a wealthy, elderly woman found itself out in the cold. The financial advisor allegedly found a $2.4 million windfall, according to mynewsLA.

Seal Beach based charity Los Angeles Thoracic and Cardiovascular Foundation claims Juanita Earley’s investment adviser, James Schaedler, took money meant for the organization. The defendants are Schaedler, Merrill Lynch (the wealth management arm of Bank of America) and Banc of America Investment Services Inc. (BAIS, Merrill’s predecessor). Financial elder abuse and negligent supervision are the causes of action.

A Merrill Lynch representative stated it hadn’t reviewed the lawsuit and had no comment, other than Schaedler last worked for Bank of America in 2010. According to the lawsuit,

  • The legal action stems from a trust created by Earley and her husband, John Earley, who lived in Santa Ana and were longtime clients of the Bank of America. Juanita Earley died in January 2012 at age 96.
  • The two created a trust in 1990 in which they stated a desire to leave their estate to charities after their deaths. In 2005 Juanita Earley changed the beneficiaries in the trust so only the Los Angeles Thoracic and Cardiovascular Foundation was named.
  • Schaedler entered the scene in 2008 and capitalized on his position as Earley’s money manager.
  • He allegedly seized on her vulnerability and “systematically insinuated himself into Mrs. Earley’s personal life” with periodic visits to her home that became a routine.
  • Schaedler became her part-time chauffeur, brought her groceries, drove her to church and convinced her to make him her agent in a health-care directive. He’s accused of then changing her doctor against her wishes.
  • He isolated Earley from her family and friends, had her placed in a nursing home, claimed to be her conservator and ordered the facility not allow her to take calls or have visitors.
  • Earley is believed to have executed new trust documents in Schaedler’s favor and eliminating the charity in or around 2009. About a month after changing the trust Earley was declared incompetent by a nursing home physician.
  • Before she died, Earley “expressed to at least two disinterested witnesses her fear of Mr. Schaedler and her distress at having been pressured to change key documents.”
  • Schaedler received about $2.4 million from the woman’s trust after Earley’s death. It’s alleged he spent hundreds of thousands of dollars on a spending spree after obtaining the funds.
  • He “knew he could get away with his self-serving methods” because BAIS failed to hold Schaedler accountable for his actions and failed to subject him to any meaningful oversight about his client relationships.

The California Department of Justice has a guide to preventing and reporting elder abuse, including financial abuse and it states,

  • Those at risk are those who are isolated or lonely with no visitors or relatives. Potential abusers isolate the individual, restricting the person’s contact with others. The elder can’t speak freely or have contact with others without the abuser being present.
  • Undue influence is one way to win over an elderly person and manipulate him or her. It’s present when someone is isolated and convinced to execute estate planning documents (like a trust) in the abuser’s favor.

People who take advantage of the most vulnerable in our society may not only face a civil lawsuit but criminal charges as well. If you believe that you or a loved one are the victim of financial abuse or fraud, contact our office so we can discuss what’s going on, how the situation can be brought to an end and how money can be recovered.