RI financial elder exploitation

Honest deal or an elderly man exploited?
Tracy Breton
November 28, 2009
The Providence Journal
http://www.projo.com/news/content/ELDER_COURT_CASE_11-28-09_HMGJS6T_v22.39876af.html?ocp=2
PROVIDENCE — Calling the case “a troubling scenario of money, deceit and financial abuse of an elderly person,” the state Supreme Court has refused to disturb a lower court decision that blocks a Warwick woman from doing much of anything with her assets until a civil fraud trial is held.

The restraining order was issued by Superior Court Judge Jeffrey A. Lanphear in May 2008, two months before Vartan Baligian died at age 98. It prohibits his “friend” Carel Callahan Bainum from transferring, selling, concealing, disposing of or encumbering any real estate, cash, bank accounts, mortgage proceeds, bonds, personal property or other items of value — other than to pay her “normal and usual personal living expenses” — until the lawsuit against her is resolved. Bainum, identified in court papers as “a real estate investor and businesswoman,” must seek court approval before making any financial transactions of more than $2,000.

At issue is repayment of the remainder of a $120,000 loan Baligian made to Bainum in 2002.

Baligian’s daughter, Sona Stevens, of West Warwick, claims her father was a victim of elder financial exploitation.

Bainum, 61, denies those allegations. In a court filing, she asserts that it was Baligian’s idea to loan her money so he could make higher interest and “sustain his home and pay his monthly expenses.”

According to the lawsuit that lawyer David J. Strachman filed in the case, Baligian met Bainum several years ago “when she identified him as a vulnerable senior citizen who could be lured into loaning her money on unreasonable and unbusinesslike terms.”

Bainum, in her answer to the suit, claims she met Baligian over 30 years ago when he was introduced to her by a mutual friend as a “private lender.”

The lawsuit alleges that “Baligian was induced by Bainum to loan her money as part of a scheme to defraud and exploit him.”

On June 6, 2002, when Baligian was 92, Bainum got him to loan her the $120,000 –– virtually all of his life savings, Strachman says. The loan was unsecured and had an interest rate of 8 percent. It was supposed to be repaid in early June 2007.

On Sept. 12, 2002, Bainum received another unsecured loan from Baligian, this one for $20,000. She repaid it three months later.

But she didn’t pay off the bigger loan when it was due. Baligian and his daughter, Sona Stevens, attempted to collect the money, the court papers say, but Bainum didn’t pay up, claiming that if she was forced to do so, she’d be “bankrupt,” the court papers say. After that conversation, Stevens, who was her father’s primary caregiver, traveled to Florida for several weeks. She instructed Bainum not to have any financial discussions with Baligian in her absence. But the Supreme Court said that while Stevens was away, in October 2007, Bainum went to Baligian’s home, “purportedly” to take him out for ice cream, but then drove him to her lawyer’s office where they executed a “loan modification agreement.” It allowed Bainum to hold off repaying Baligian until 2018 and made the loan interest-free. If Baligian “had lived to finally collect this long overdue debt, [he] would have been 107 years old,” the Supreme Court noted.

Bainum still owes about $115,000 on the loan.

Baligian was a self-made man. He loved classical music and toiling in his flower and vegetable gardens. He came to the United States from Armenia in 1928. He never graduated from high school; English was his second language. A survivor of the Armenian genocide, he and his late wife, Varsenig, settled in Warwick. They had two children. When he died in July 2008, he was living alone on Gaspee Point in Warwick, in the house where he’d lived since 1955.

Bainum is the owner of Bainum Fundraising Inc. and New Hope Spay/Neuter Clinic in Warwick. Court papers indicate that she is the owner of at least 10 pieces of real estate in Rhode Island and Oregon, but Strachman said Friday that it appears that she’s lost some of those properties at tax sale or foreclosure.

In issuing the restraining order against Bainum — who represented herself in Superior Court but is now represented by lawyer Robert J. Healey Jr. — Lanphear found that the defendant had “hoodwinked” the old man into signing the new loan documents and that it was her intention “to encumber all of her properties in the hope [of creating] highly speculative businesses” and that court intervention was necessary. The judge said financial exploitation “is one of the most important crises affecting our society and our elderly population,” and that Baligian and the public as a whole need to be protected.

In his decision, Lanphear said that Baligian was once a “good businessman,” but was “not thinking clearly” when he modified the loan to Bainum in October 2007. The judge said the elderly man had been hospitalized in August of that year and his mental abilities deteriorated after that. “The court has tremendous doubts as to whether Mr. Baligian knew what he was signing, freely agreed, or that it was a competent free act or deed,” Lanphear said.

Bainum claimed that she signed a mortgage for the new loan but Lanphear said “the buildings are currently in the midst of a four-year rehabilitation effort, are unoccupied and are already mortgaged.”

Lanphear also characterized Bainum testimony as “guarded and self-serving.” Bainum, he said, was “well aware that Mr. Baligian’s children disagreed with the prior debt and wanted to collect, and not extend the terms. She knew they were working with their father to collect the debt when she arrived at the refinancing. She did not tell them in advance that she would ask Mr. Baligian to refinance, or even take him out.” And, the judge said, “Ms. Bainum has refused to refinance the debt or post additional security.”

Lanphear noted in his 2008 ruling that while Bainum owns several properties, “she claims they are heavily financed as she is attempting to develop the one property as an animal spaying/neutering clinic and thrift store. She testified that she is incurring more and more debt … she has borrowed against most of her other property and admits that no bank will now extend her further credit,” the judge said.

In testimony she gave in the case, Lanphear pointed out, Bainum described her situation as “drowning.”

“When you’re drowning, you grab any branch,” she said.