State Veterans Agency Accused Of Mishandling Fiduciary Unit


In 1974, Arizona’s legislature took the unusually progressive step of creating a public agency to act as guardian and conservator for disabled residents who have no family or friends to take over their personal and financial decision-making. In the nearly quarter-century since, Arizona’s Public Fiduciary offices have developed into a valuable resource for social service workers, hospital discharge planners, adult protective service workers and others charged with caring for the elderly and disabled.

Even long-time advocates may be unfamiliar, however, with a state agency nearly twice as old, which currently serves as guardian and/or conservator for about 450 Arizonans. The fiduciary unit of the Arizona Veteran’s Service Commission (the AVSC) acts as guardian, conservator, personal representative or representative payee for veterans and their family members. The office has operated in quiet anonymity out of Phoenix (with a small branch office in the Tucson area for the past few years) for nearly five decades.

The anonymity of the AVSC, however, may now be a thing of the past. In recent months, the agency has been subjected to uncommon scrutiny in both Pima County (Tucson) and Maricopa County (Phoenix) courts. The presiding probate judge in each of those counties has challenged the AVSC to document its handling of money and personal decisions, and has determined in individual cases that the agency can not explain itself. Last week, the agency’s long-time director announced his early retirement amid allegations of mismanagement and problems with the AVSC.

The agency’s problems first became public knowledge with a report in the Phoenix New Times in 1996. In a story about the tragic death of veteran Donald Ellison, the Phoenix newspaper described a mental health treatment system ill-equipped to deal with Ellison’s care. According to the New Times, the AVSC, while acting as Ellison’s guardian and conservator, failed to monitor his living arrangements or medical care. In fact, alleged the newspaper, the AVSC used Ellison’s money to pay for months of rent at a series of boarding homes, even as Ellison spent nearly the entire time in jails or mental hospitals.

Earlier this year the Phoenix probate judge denied AVSC any fees in another case because she found that the agency “horribly mismanaged” the estate of a deceased veteran. The AVSC apparently paid monthly mortgage payments and automobile loan payments in the case of William Cousino for months after his 1996 death. Because the loans in both cases were more than the value of the property, both house and car were ultimately lost to repossession, and the AVSC wasted about $9,000. Even more damning: the Cousino estate was empty, and so AVSC was effectively paying his bills with the money of other wards it managed.

In Tucson, the AVSC had been held in contempt by the court on at lest one occasion in recent months. Of concern to the judges in both counties was the agency’s apparent inability to promptly and properly account for the money and status of the veterans in its care.

Before Director Gallion’s retirement three other high-level AVSC employees had left the agency, each protesting its slipshod practices. Fiduciary Services chief Barbara Valdez resigned in 1997, complaining that “the waste of our wards’ assets is staggering.” AVSC accountant Dawn Miller left the agency in January of this year, and took the unusual step of sending a copy of resignation letter to Arizona Governor Jane Dee Hull, Senator John McCain and the Phoenix-area probate judge. In her letter, Miller cited “unethical practices” by the agency, in which she declined to participate. AVSC lawyer Harold Merkow resigned in July, complaining that “the credibility of the Arizona Veterans Service Commission has fallen to zero.”

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