Rondos known as non-compliant

Indicted Guardian Always Had Excuses for Filing Late, Examiners Say
Vesselin Mitev
February 11, 2009
New York Law Journal
http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202428177805
Obtaining regular reports from Steven T. Rondos, the Brooklyn attorney accused of fleecing guardianship accounts of $4 million, was like “pulling teeth,” said one of the court-appointed examiners charged with monitoring Rondos’ performance.

Albert E. Spencer, a Manhattan attorney, inherited two cases from prior court examiners in early 2006. He said that Rondos had not provided the required reports for 2004, 2005 and 2006.

After Rondos’ indictment last month, the Office of Court Administration acknowledged that court examiners who monitored Rondos’ accounts should have detected sooner at least some of the alleged thefts that occurred between 2001 and 2008.

At least 16 examiners had signed off on the accounts that gave rise to the investigation of Rondos.

David Bookstaver, an OCA spokesman, said that five examiners, who monitored accounts from which $2.4 million allegedly was stolen, have resigned in the wake of the investigation of Rondos’ conduct, which began last year. Another has been suspended pending further inquiry.

Court officials are continuing to go through “thick files” to determine to what extent examiners failed to conduct due diligence, Bookstaver said.

Spencer has not been asked to resign. And he said in an interview that he had performed his duties as an examiner conscientiously “without a doubt.”

Rondos is charged with stealing $45,000 during April 10 to June 12, 2008 from one of the accounts Spencer served as examiner.

Spencer said that Rondos engaged in “stringing us along” by requesting repeated delays and offering excuses for tardy filings. On one occasion, Spencer recalled that the guardian claimed that he could not work for a month because he had suffered several broken limbs in an accident.

Spencer said he gave Rondos the benefit of the doubt and at first tried to be patient.

“Usually when we go at this we don’t try to act in a hostile manner because ultimately that results in more delay and we had no indication that Steven Rondos [would] be accused of bad acts,” Spencer said, pointing to Rondos’ position as vice-chair of the guardianship committee of the state bar’s Elder Law section as evidence of his prominence in the field.

“My letters to him began to get more hostile as time continued,” Spencer said, and in July 2008, after two compliance conferences, he said he moved to permanently remove Rondos.

Such a move usually is viewed as a last resort, Spencer said.

“One of the difficult factors in making that call is that there aren’t that many people around who want to take [the guardianship] job,” he said, adding that often times the guardian is a relative of the ward and may not be an attorney.

By the time Spencer moved against Rondos, the guardian already was under investigation.

According to the indictment, Rondos, 44, of Ridgewood, N.J., allegedly stole from 23 living victims including mentally and physically impaired elderly people as well as children, and one estate. Rondos and his firm, Raia & Rondos in Brooklyn, were both named in the indictment.

His wife, Camille Raia, the firm’s other named partner, has not been charged, but she was the named guardian of Andrea Spagnoletti, whose account was fleeced of more than $1 million, according to the prosecutor.

Rondos was extradited from New Jersey and arraigned before Manhattan Supreme Court Justice Michael H. Melkonian last week. He pleaded not guilty and was remanded on $2 million bail. His attorney, David Frankel, has not responded to requests for comment.

EXAMINER REACTION

Court examiners contacted bristled at the suggestion that their lack of supervision contributed to the alleged thefts.

Brooklyn attorney Paul I. Krohn, who has been suspended from the list of court examiners, said that his suspension “had nothing to do with Rondos as far as I’m concerned,” but declined to comment further.

According to Bookstaver, Manhattan attorney Seymour Ostrow was one of the five people who resigned from the examiner list. Ostrow disputes that.

“I sure as hell never resigned,” although he said that he had agreed not to take new cases after he broke his hip about a year ago.

Ostrow insisted that he had “kept after [Mr. Rondos] … even with a broken hip.”

Ostrow said his reviews of Rondos’ accounting turned up “nothing untoward.” And he said that he had gone above and beyond the call of duty as an examiner.

“My reports are 50 to 100 pages where others turn in five and 10 pages, I analyze the law, I visit homes,” he said, adding that he had even trained himself in accounting in order to do a better job.

Lewis E. Alperin, a Mount Vernon attorney who was the court examiner in one of Rondos’ cases said he felt “lucky” that there had been no theft under his watch, although the district attorney has asked Rondos to forfeit $36,090 in earnings from the account.

Alperin said that reflected commissions taken by Rondos before they were due, an issue the two had argued about.

“One of my issues with him was how he should take commissions — we disagreed strongly on how to compute commissions. What he wanted was double the amount,” Alperin said.

Alperin, who has not been suspended or asked to resign, said that as an examiner, he said, one can only do so much.

“If your intent as a lawyer is to steal then you are going to get away with it for a while,” Alperin said.

He noted that a guardian who is appointed in January 2008 has until May 2009 to file a report and then “you can say ‘Oh, I’m a little behind, I’m just waiting for some bank statements,’ so the examiner gets the report in June or July.”

Court examiners are not court employees and are appointed from a list compiled by each Appellate Division department of lawyers and others who have met specific educational and training requirements. They are compensated annually based on the size of the estate they are monitoring.

In a 2005 report, a state commission on court fiduciaries concluded that court examiners are “key to guardian oversight in New York” but found significant problems with the process, including cursory examinations of financial records, rare face-to-face interviews with guardians and poor lines of communication.

According to the report, the average court examiner in New York handles “well over 100 examinations annually” for relatively low fees. They rely on volume to turn a profit.

The commission issued a number of recommendations, including increasing the annual compensation limit of court examiners to $75,000 and creating the position of a court examiner specialist to help oversee examiners and deal with problematic cases.

Chief Administrative Judge Ann Pfau said that oversight would be further tightened in the wake of the alleged thefts, including immediately implementing an electronic tracking system to warn officials of potential problems with the filing of guardians’ reports and mandatory compliance conferences.

The commission’s chair, Sheila L. Birnbaum, said that the reforms had resulted in “many fewer complaints” about the system but cautioned that a theft-proof system could be unrealistic.

“You can’t stop people from fraud and being crooks,” said Birnbaum, a partner in Skadden, Arps, Slate, Meagher & Flom.

Oversight Tightened After Guardian Thefts
Vesselin Mitev and Joel Stashenko
January 30, 2009
New York Law Journal
http://www.law.com/jsp/article.jsp?id=1202427864099
The former Brooklyn judge who appointed Steven T. Rondos to oversee at least seven of the guardianship accounts Rondos is charged with fleecing expressed dismay at the news in a phone interview Thursday.

“I must say I am disappointed — I just thought he was really one of the good guys,” said former Brooklyn Supreme Court Justice Leonard Scholnick, who was reached at his Florida home. But, he added, “nothing shocks me anymore.”

Rondos, who is booked under the alias Stavras Rontoyiannis, is at the Bergen County Jail in New Jersey awaiting extradition.

A spokesman for the Office of Court Administration acknowledged Thursday that there had been some “inherent flaws” in the system for overseeing the work of guardians but said those flaws had now been corrected.

“It should eliminate the possibility of anything like this happening in the future,” David Bookstaver said.

Scholnick, who retired in 2002, said he knew both Rondos and Camille Raia, his wife and law firm partner, as both had appeared before him. He said he was not aware of any improprieties involving the two.

Rondos and the Brooklyn-based law firm Raia & Rondos have been indicted on charges of money laundering, grand larceny, a scheme to defraud and offering a false instrument for filing, according to Manhattan District Attorney Robert M. Morgenthau. Raia has not been charged.

Rondos is accused of stealing from 23 victims, including mentally and physically impaired elderly people as well as children suffering from cerebral palsy due to medical malpractice at birth. On at least three occasions, Morgenthau said Wednesday, when Rondos was confronted with the thefts, he stole funds from other victims to pay back his prior victim.

The attorney allegedly used the money to pay his mortgage and make extensive improvements to his Ridgewood, N.J., home.

Scholnick, who spent 29 years on the bench, said he relied on observations of a prospective guardian’s conduct in court, as well as the manner in which he related to the incapacitated person before making an appointment.

Scholnick said he appointed Rondos in one case involving a “family feud” because he felt Rondos’ Greek heritage could help resolve the dispute. His intent was not to be “politically correct” but to apply common sense to fix a real-world situation.

Attorney Andrew G. Sfouggatakis, of counsel to Manhattan’s Krez & Peisner, said in an interview that Rondos had been appointed to represent three family members, including his grandfather, Andrew, and grandmother, Olga, in a dispute involving the family real estate business.

Sfouggatakis declined to comment on whether he or his family knew about the alleged theft, citing the pending investigation, but said the dispute had ultimately been resolved.

COURT EXAMINERS’ ROLE

According to court officials, a lapse in the oversight provided by court examiners, who are appointed by judges from a list compiled by each Appellate Division department, may have contributed to the alleged thefts.

Examiners are not court employees and are compensated annually based on the size of the estates they monitor. They are required to examine reports and bills provided by the guardians.

So far, five court examiners have resigned from the state list of court-approved examiners and one has been suspended pending further investigation. Sixteen different examiners signed off on cases involved in the indictment, including a Manhattan surrogate’s court attorney.

Scholnick said that judges did not rely solely on court examiners to keep them informed as to how a guardian was performing. He referred to the examiners as “basically number crunchers.”

But a 2005 report by a state commission on court fiduciaries concluded that court examiners are “key to guardian oversight in New York.” One witness described examiners as the “eyes and ears” of the court.

However, the commission found significant problems.

“We heard repeated testimony that examinations of financial records are often cursory, confirmation of the guardian’s report with backup documents is not common, face-to-face interviews with guardians are rarely conducted, many key issues are delegated to secretarial staff, and lines of communication between examiners and guardians are frequently so poor or nonexistent that many examiners learn about the deaths of [incapacitated persons] only by reading obituary columns.”

Chief Administrative Judge Ann Pfau said in an interview Thursday that the position of court examiner specialist has been created in the last few years to add another layer oversight to the guardianship system, although one has not been named in Manhattan.

Of the cases cited by Morgenthau, 14 were in Brooklyn, two in Manhattan, one in the Bronx, one on Staten Island and three in an undetermined location.

Pfau said the Office of Court Administration would make sure the computerized warnings of potential problems with the filing of guardians’ reports are directed to the right people in the courts. In that case, a mandatory compliance conference would be held either with a examiner specialist or a judicial hearing officer.

“The statutory system isn’t a perfect system where you have two people outside the court monitoring these cases with annual accounting,” she said. “These cases don’t often come back before a judge unless there is something a judge actively has to do, change the order, approve something, things like that.”

Morgenthau suggested in an interview with the New York Post that the court system has to do a better job of monitoring guardian activities.

“I think that’s a little bit of an overstatement,” Pfau said. “The system in many, many, many cases works fine. These are human beings and when you have this statutory system of one lawyer sort of overseeing another lawyer, we can make it better by doing what we’re doing, by really getting this engaged with the court, which the statute doesn’t require.”

That will make a “huge difference in the system,” she said, adding, “It is very much an anomaly where this kind of thing happens.”

Bookstaver, the OCA spokesman, said, “Obviously, there were some inherent flaws in our process. These have now been addressed to ensure accountability. The responsibility for tracking accounts will now be done in a centralized way through the Office of Court Administration and hearings will be ordered whenever an accounting is overdue.”

Bookstaver said the new electronic tracking system was introduced on Wednesday, the same day Morgenthau announced his indictment.

“It should eliminate the possibility of anything like this happening in the future,” Bookstaver said. “We now have a solid triggering mechanism.”

Bookstaver said county clerks, not guardians or examiners, will provide to the OCA information about the status of the reports required of the guardians.

PROBE’S GENESIS

Pfau said the OCA cooperated with Morgenthau’s office in the investigation of the thefts, which occurred between 2001 and 2008.

Court documents show the probe began when co-guardians of 12 incapacitated persons contacted account representatives at Smith Barney about large withdrawals made from the accounts by either Raia or Rondos.

One of those guardians was Ralph Spagnoletti. According to the prosecutor, Raia was the guardian of Andrea Spagnoletti, Mr. Spagnoletti’s sister from whom Rondos allegedly stole property in excess of $1 million. Mr. Spagnoletti contacted Raia & Rondos to inquire about $200,000 withdrawn from the account between 2007 and 2008, court documents show.

Rondos allegedly told Mr. Spagnoletti the withdrawal was “a mistake and that he meant to withdraw the money from two other accounts, where Rondos was entitled to commissions on estates.”

It was Mr. Spagnoletti and an attorney from Louisiana who was a friend of one of the incapacitated persons Rondos served as guardian who went to the district attorney.

Morgenthau’s office is suing Raia & Rondos for approximately $4.7 million, which includes the total amount allegedly stolen and the value of the law firm. In court documents, the prosecutor charged that Raia “allowed her husband to act as guardian on cases to which she was appointed” without formal court permission and allowed Rondos to make “unauthorized withdrawals” from those accounts.

According to the prosecutor’s suit, Rondos admitted making withdrawals without court approval after being interviewed by an investigator from the district attorney’s office.

Raia, on the other hand, attempted to “disclaim all knowledge of the fraud,” saying she knew very little about the finances and allowed her husband to “do and handle everything.”

Rondos faces one count of money laundering in the first degree, one count of grand larceny in the first degree, nine counts of grand larceny in the second degree, five counts of grand larceny in the third degree and one count of scheme to defraud in the first degree. The most serious charges are punishable by up to 25 years in prison.

He also may face charges in New Jersey, where he already has consented to disbarment.

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  • Nicholas A. Sfouggatakis

    I was the one who made the motion to get Rondos and Peter Nakos guardians for my parents, Andrew and Olga Sfouggatakis and brother John. Their estate was worth over $6,000,000 in real estate and was generally over $100,000 per month in rents. In addition Rondos took two corporations that belonged to me, Sevas Realty Corp and Transglobal Brokers,Inc with over $1,500,000 in assets that he apparently sold and hasnt given an accounting for.

    The reason my nephew, Andrew Sfouggatakis, an attorney has not filed a complaint against was that Rondos gave tthe attorneys parents a house, 2120 East 14 St. Brooklyn worth over $800,00 free and clear and also gave my sister 2124 and 14 st. ,also free and clear, to appease them so would overlook his other actions. He also distributed my mothers estate without notifying me.

    I am a CPA, MBA, retired professor of accounting and finance and author. Mr Nakos and Rondos had posted bonds from Lincoln Brokerage with the court for $6’000,000. This would be the source for my recovery