A new estate fraud case is center-stage in South Carolina’s courts.
The Palmetto state has been a hotbed of probate, trust and conservator fraud cases dating back more than half a decade: In March 2023, attorney Alex Murdaugh was convicted of murdering his wife and son. But years before the high-profile attorney was tried for murder, Murdaugh was tied to the disappearance of $4.2 million of his client’s insurance money, of which he was a trustee. Months before the Murdaugh trial, Russell Laffitte, the CEO of Palmetto State Bank, was convicted of fraud in federal court for using the money of his trust clients to make loans that were hidden from and did not benefit his trust clients.
COURT AUTHORIZED FRAUD
Probate, estate and conservatorship fraud presents unique challenges to fraud investigators. Estate investigations are cross-disciplinary and often involve the language of the law colliding with the numbers of finance and accounting.
The new South Carolina case rises out of the estate of Carlos Hanna, who died in 2010. The estate has bounced around South Carolina’s courts for more than a decade, but it jumped into the headlines about six weeks ago when the family noticed that the court appointed conservator, Jeffrey Robinson, tried to sell the home of Georgia “Jo” Hanna out of Jo’s conservatorship— Jo is a dementia patient living in a memory-care facility.
Robinson is the treasurer of Darlington County, South Carolina. On the side, he works as a financial advisor and fiduciary. In the Hanna case, Robinson had been appointed as the conservator of Jo by Darlington County probate judge Marvin Lawson.
On April 18, 2023, attorney Charles E. Ipock wrote a letter to Judge Lawson. Ipock is a member of Haynesworth-Sinkler-Boyd, a law firm with more than 100 attorneys and multiple offices in South Carolina. On behalf of Robinson, Ipock asked Judge Lawson to issue an order to Robinson, as conservator, that gave the court’s approval to sell the house in which Jo Hanna lived before needing memory care. Ipock’s letter to Judge Lawson contained just two paragraphs. In it, Ipock writes:
“As you will note, I request an Order of the Court without notice as allowed under South Carolina Probate Code.”
Ipock then cited the section of South Carolina legal code that allows a conservator to do things “without notice.” In short, Ipock and Robinson wanted Judge Lawson to issue a court order without telling the family. Days later, on April 24, Judge Lawson issued the order as Ipock had requested: Judge Lawson approved Robinson’s request to sell Jo’s house “without notice.”
ATTORNEY FINDS THE FRAUD
Darlington County South Carolina has fewer than 70,000 people. It did not take long for the Hanna family to learn that Robinson, Ipock and Lawson had secretly agreed to sell Jo Hanna’s home and conceal the sale from the Hanna family. One of Jo’s children, Craig Hanna, and his wife Dana, contacted attorney Tucker Player in Columbia, South Carolina. Tucker Player’s keen eye for detail stopped the sale of the home “without notice.” Here’s how he did it:
Fraud is a unique type of theft because it is theft based on deception. In the Hanna case, the deception was unique: It wasn’t found in a brokerage statement, inflated invoice or a deflated appraisal. In this case, attorney Player found a subtle and sophisticated deception used by Ipock that twisted the language of South Carolina’s law.
Player found that in Ipock’s motion to Judge Lawson, Ipock cited a specific statute in the code of South Carolina to support his request for an order “without notice.” The statute cited by Ipock deals with the actions of trustees and conservators (SC § 62-5-428). Clear as day, the South Carolina code says that conservators can ask a judge to issue orders “without notice” for a list of things. At first glance, attorney Ipock’s request appears to comply with the law.
But Player drilled into the details of the legal code. He found that all of the things that can be done in a South Carolina conservatorship “without notice” are clerical or administrative events (e.g., Increase the bond, ask for an accounting; pay funeral expenses, etc.). As Player cited in his May 18 filing with the South Carolina Supreme Court:
“Nowhere in this statute does it allow any court to dispose of property without notice. The only actions that can be taken without notice are those actions specifically enumerated….”
Player’s granular dive into the legal code uncovered the deception in the real estate sale and his work delivered powerful results: Within days of filing his written complaint to the court, the sale was halted, and both Judge Lawson and conservator Jeffrey Robinson resigned from the case. Attorney Charles Ipock at Haynesworth-Sinkler-Boyd has not replied to emails seeking comment on the case, nor has Jeffrey Robinson.
The Hanna estate has been open in South Carolina’s courts for more than a decade. Now that the forensic efforts have begun in earnest, the case will provide insights into the legal and accounting tricks used by financial predators to target their victims. It also will show how families and fraud fighters can defend themselves against fraud, embezzlement, theft and racketeering in their estates.
Brett Darken writes about fraud and rackets in probates, trusts and conservatorships. He has been licensed as an insurance, real estate and securities broker and serves as a trustee and fiduciary. He has been an ACFE member since 2017.
SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners