Citation Nr: 21069606 Decision Date: 11/19/21 Archive Date: 11/19/21 DOCKET NO. 19-36 617 DATE: November 19, 2021 ORDER The appeal of Department of Veterans Affairs (VA) Agency of Original Jurisdiction (AOJ) reconsideration decision finding misuse of the Veteran's VA benefits in the amount of $20,207.76 by the Veteran's former fiduciary, G.G. is denied. FINDING OF FACT The Veteran's former fiduciary, G.G. misappropriated a portion of the Veteran's VA benefits using them for purposes other than the use and benefit of the Veteran and also engaged in willful refusal to make and file proper accountings such that VA was unaware of these actions. CONCLUSION OF LAW The criteria to support a conclusion that the Veteran's former fiduciary, G.G., did not misuse VA benefits received on behalf of the Veteran, in the amount totaling $20,207.76 are not met. 38 U.S.C. §§ 501, 5502, 6101, 6106; 38 C.F.R. §§ 13.400, 13.600. REASONS AND BASES FOR FINDING AND CONCLUSION The VA AOJ determined that the Veteran is incompetent and requires a fiduciary. That matter is not in dispute. In March 2015, the AOJ named G.G. as the Veteran's first fiduciary. The AOJ later removed G.G. and replaced him with his current fiduciary, D.M., notifying the Veteran of this action in July 2017. Although the Veteran initiated an appeal to that determination, he did not perfect an appeal. Th current appeal arises from an April 2018 Misuse Determination by the Fiduciary Hub Manager. The Veteran appealed to the Board of Veterans' Appeals (Board) that determination as well as an October 2018 Misuse Determination Reconsideration which was signed by the Regional Office Director in November 2018. In December 2019, the Executive Director of Pension and Fiduciary Service applied the negligence criteria in 38 U.S.C. § 6107 to the facts of this case and determined that VA was not negligent in its appointment and oversight of G.G. as the Veteran's fiduciary. That determination was not appealed by the Veteran. In regard to the current appeal, the Board notes that per an October 2017 Memorandum, a Field Examiner for the Milwaukee Fiduciary Hub, alleged in June 2017 that there was possible misuse by G.G., of the Veteran's VA benefits on several bases: (1) There was a secondary account that G.G. was electronically transferring VA funds (belonging to the Veteran) of more than $866.00 per month. (2) G.G. refused to provide any information about this account to the Field Examiner or the VA Accounting Team. It was noted that in the Memorandum that the Veteran verified that he received his personal spending/allowance money (titled as weekly operating funds in the fiduciary (G.G.'s) accountings and on the ledgers/bank statements) from the time G.G. was appointed his fiduciary until he was replaced by D.M. The Veteran stated that these funds were transferred to his personal savings account of which only he has control. This is the secondary account that G.G. referred to per (1) above. The Field Examiner contacted the relevant bank and confirmed that there was another fiduciary account that G.G. was listed as payee. Thus, the Board notes, the Veteran was not the only one in control of this account. This account was closed when the other fiduciary account was closed (when G.G. was replaced as fiduciary). (3) The Field Examiner found questionable expenses on the accounting for the period of April 1, 2016 through March 31, 2017 for excessive tithing, airfare, baggage, and transportation. (4) The Field Examiner indicated that that the Veteran and G.G. flew to Florida for vacation and the Veteran paid the travel expenses for himself and Mr. and Mrs. G.G. It was reported that they went to Florida to visit the Veteran's mother. The Veteran and his mother verified that he did go to Florida to visit her in December 2016 and that he required both Mr. and Mrs. G.G. to accompany him for his own safety. (5) The Veteran reported to the Field Examiner that he was unaware of the excessive tithes being paid and informed the Field Examiner that he would pay the tithes out of his Social Security Administration (SSA) benefits. (6) The Field Examiner reported that G.G. stated he is controlling the Veteran's SSA benefits even though the Veteran is his own payee for SSA benefits. Budget letters completed on April 14, 2015, February 24, 2016, and June 15, 2016, as well as the letter dated April 14, 2015, show that the Veteran does tithe, and that this expense was budgeted and to be paid by his VA benefit. The October 2017 Memorandum notes that a review of the Bank/Financial statements submitted by the fiduciary on May 3, 2016, show that the checks for this expense were made out to each organization, Freeway Ministries and Crossway Baptist Church, with the Veteran's address listed on each check. The religious tithing to the religious establishments (which G.G. is also affiliated with) was in excess of the Veteran's authorized donation limit. The Board notes that ultimately, this spending was not included in the misuse amount. An SSA inquiry confirms that the Veteran is the payee for his own SSA benefits and these benefits are being deposited into a savings account. The VA benefits were being deposited into a checking account. In the consideration of whether there was misuse, 38 C.F.R. § 13.400 provides guidance for addressing the misuse of benefits by a fiduciary. The definition of misuse is as follows: the misuse of benefits by a fiduciary occurs in any case in which the fiduciary receives payment of benefits for the use and benefit of a beneficiary and the beneficiary's dependents, if any, and uses any part of such payment for a use other than the use and benefit of the beneficiary or the beneficiary's dependents. For the purpose of this section, use and benefit means any expenditure reasonably intended for the care, support, or maintenance of the beneficiary or the beneficiary's dependents. Such expenditures may include the fiduciary's efforts to improve the beneficiary's standard of living under rules prescribed in this part. Determinations of misuse are also addressed as follows: upon receipt of information from any source regarding possible misuse of VA benefits by a fiduciary, the Hub Manager may, upon his or her discretion, investigate the matter and issue a misuse determination in writing. This decision will: (1) Identify the beneficiary, (2) Identify the fiduciary, (3) State whether the fiduciary is an individual fiduciary serving 10 or more beneficiaries or a corporation or other entity serving one or more beneficiaries, (4) Identify the source of the information, (5) Describe in detail the facts found as a result of the investigation, (6) State the reasons for the Hub Manager's determination regarding whether the fiduciary misused any part of the beneficiary's benefit paid to the fiduciary, and (7) If the Hub Manager determines that the fiduciary did misuse any part of the beneficiary's benefit, identify the months in which such misuse occurred. The provisions also address the appropriate notice and the procedure for requesting a reconsideration and an appeal (an appeal under 38 C.F.R. § 13.600). See also 38 U.S.C. §§ 501, 5502, 6106. The October 2017 Memorandum concluded that based on the facts and evidence, it was decided there was a need to investigate the allegation of misuse. The investigation was then assigned to the Field Examiner. A Field Examination then followed in January 2018 per 38 C.F.R. § 13.120 (b)(6). That provision provides for investigating, when necessary, allegations that a beneficiary's fiduciary has engaged in misconduct or misused VA benefits to include, but not limited to allegations regarding: (i) Theft or misappropriation of funds, (ii) Failure to comply with the responsibilities of a fiduciary as prescribed in § 13.140, (iii) Other allegations of inappropriate fund management by a fiduciary, and (iv) Other special circumstances which require a visit with or onsite review of the fiduciary, such as a change in an award of benefits or benefit status, or non-fiduciary program matters. The Field Examination report noted that a successor fiduciary was appointed in June 2017. The Field Examiner informed the Veteran that the former fiduciary, G.G. had misappropriated $5,000.00 of the Veteran's VA funds by using the money to purchase himself a car. The Board notes that this allegation was previously not pursued for misuse. See August 2017 Misuse Allegation Memorandum. That being noted, the Board notes that the record reflects that the bank personnel indicated that G.G. moved money between the Veteran's accounts and that he was paying the fiduciary account back $5,000.00 with the Veteran's own funds due to a series of transactions. The Field Examiner also discussed excessive tithing and the Veteran reported he had no knowledge of this and wanted the tithing to stop so he could give his own tithes from his SSA funds. The Field Examiner then contacted G.G. in June and July 2017. In July 2017, G.G. informed the Field Examiner that he controlled all of the Veteran's funds including the Veteran's SSA funds, the Veteran's personal savings account, and reported he had a secondary fiduciary account that he was transferring $866.67 per month into. The Field Examiner informed G.G. that he would have to furnish the bank statements to that account and account for the spending from that account. G.G. "vehemently refused" to provide the bank statements and told the Field Examiner that if the Fiduciary Hub requested them, he would refuse them to the Fiduciary Hub as well. G.G. reportedly became verbally abusive on the telephone call. The Field Examiner then contacted the accounting team and the Field Examiner's supervisor. After much dialogue, the Field Examiner notified the Misuse Mailbox regarding the secondary account and that G.G. refused to furnish the bank statements and documented this information on a VA Form 27-0820, Report of General Information, dated July 11, 2017. There was already a "570" (a misuse case) pending at this time, but it was set to close due to a non-select (the August 2017 Misuse Allegation Memorandum). The Field Examiner then continued to notify the Misuse Team and Accounting Team regarding this information over the next couple months. The Field Examiner was then assigned the 570 Misuse Case in October 2017 (per the aforementioned Memorandum). The Field Examiner then went to the relevant bank in question and provided bank personnel with a copy of the VA 21P-4703, Fiduciary Agreement, that G.G. had signed. The VA 21P-4703 then contacted G.G. and informed him that the Field Examiner requested the statements from the bank and, if for any reason the Field Examiner was unable to obtain the statements, G.G. would be responsible for providing them to the Field Examiner. The Field Examiner followed up with the bank. The bank statements were provided including a later furnishing of check imaging in December 2017. The Field Examiner contacted G.G. for an explanation regarding the expenditures on the account. G.G reported he did not have access to any records on the account since the account was closed. He reported he never kept any receipts and did not keep a check book ledger. He said he had no evidence to submit to the VA. He further reported that the multiple $125.00 checks were written to his daughter-in-law for managing the Veteran's apartment (cleaning and laundry.) The Field Examiner Budget Letter in February 2016 allowed $400.00 per month for housecleaning. When asked about the $5,000.00 he took in June 2017 to pay back the other fiduciary account, he said it was a "bank error." He confirmed he moved the remaining funds of $8,652.76 into a joint checking with just his and the Veteran's names. G.G. refused in July 2017 to provide any account information on the secondary fiduciary account. In December 2017, he again refused to provide any documentation on the account and refused to provide any evidence as to how he spent the funds. The Field Examiner informed him that the Fiduciary Hub would be in contact with him regarding that account. In April 2018, a Misuse Determination by the Hub Manager concluded that G.G. had engaged in misuse totaling $22,148.35. The case was then referred to the VA's Office of Inspector General (OIG) per 38 C.F.R. § 13.400(e)(1). The Veteran appealed the Misuse Determination as permitted by 38 C.F.R. § 13.600 and, per 38 C.F.R. § 13.400(d)(1), which requires the Regional Office Director to provide a Misuse Determination on Reconsideration. Per 38 C.F.R. § 13.400(d)(4), the Misuse Determination on Reconsideration will: (i) Identify the beneficiary, (ii) Identify the fiduciary, (iii) Identify if the fiduciary is also the beneficiary's court-appointed guardian or conservator, (iv) Identify the date of the Hub Manager's prior decision, (v) Describe in detail the facts found as a result of the Director's review of the Hub Manager's decision and any new information submitted with the reconsideration request, and (vi) State the reasons for the Director's final decision, which may affirm, modify, or overturn the Hub Manager's decision. On October 11, 2018, the Misuse Determination on Reconsideration was completed. It was noted that in June 2017, the Milwaukee Fiduciary Hub Field Examiner discovered during an on-site visit with the fiduciary, G.G., that he had a secondary fiduciary account that he had been transferring a minimum of $866.67 of the Veteran's VA funds into that account each month. Upon being questioned by the Field Examiner, G.G. refused to cooperate. Further discovery revealed G.G. had not disclosed the secondary account during his annual accounting requirement. A 570-misuse work item was established on July 10, 2017. The decision then addressed items (i)-(v). The evidence of record was identified, including the Fiduciary Agreement, the accountings (including those rejected), bank information, correspondence, field examination findings, VA Memorandum, the Misuse Determination, and the Reconsideration Determination, as well as other relevant evidence. It was noted that the April 2018 Misuse Determination determined the former fiduciary, G.G., misused VA benefits received on behalf of the Veteran, in the amount $22,148.35 during the period February 12, 2016 through December 11, 2017. Notifications were sent to OIG, SSA, and the Missouri Department of Health and Human Services. The record reflects that the Milwaukee Fiduciary Hub received a Notice of Disagreement (NOD) from the Veteran in April 2018. He asserted that G.G. had always followed through with his duties and responsibilities in his fiduciary capacity and had not misused his VA funds. He requested reconsideration. The Milwaukee Fiduciary Hub received a Reconsideration Response from G.G. in April 2018 in which he maintained that the Veteran's responses throughout the misuse investigation were incomplete due to short-term memory loss from Traumatic Brain Injury (TBI), as shown when he made repetitive statements throughout his request for reconsideration which reflected his inability to make decisions to include effectively communicating to the Field Examiner that his care and needs were being met, and asserted against the Field Examiner's comprehension of the full scope of the fiduciary relationship which included the questionable financial arrangement between the fiduciary and beneficiary. G.G. indicated that the opening and closing of bank accounts was in the best interests of the Veteran. G.G. said he opened the secondary fiduciary account with the intention of using it for a spending account. G.G. continued to communicate repetitively non-supporting details of his actions as fiduciary, but he did not submit any supporting evidence to authenticate his claims discrediting the Field Examiner's investigation. The Veteran submitted a statement with his NOD stating that G.G. gave him spending money; however, there is no evidence showing this amount totals the misuse amount. The Director concluded that there was no supporting documentation or evidence of record to justify a modification or overturning of the previous Misuse Determination, thus the previous decision was confirmed, and a change in the decision was not warranted. The subsequent Statement of the Case continued to find misuse based on the Misuse Determination on Reconsideration. It was noted that the Veteran indicated that G.G. did not misuse his VA funds. He said he had wanted to purchase G.G. a new car because he provided for the Veteran's transportation, but G.G. would not accept the $5,000.00. He also stated that G.G. always gave him spending money consisting of $60.00 every Sunday morning; took him grocery shopping almost every week and gave him money to pay for his groceries; refilled his Starbucks card; gave him money to buy things as needed like for cat food and litter; and otherwise gave him as much money as he wanted. A review of the electronic records showed that G.G. took $5,000.00 to purchase a new vehicle and attempted to pay this back with money from the other account he jointly kept with the Veteran. The VA rejected this accounting until documentation was received in December 2017 showing that this was paid back with money from G.G.'s account. The $5,000.00 that was given and paid back was not considered in the $22,148.35 that was considered to be misused by the fiduciary. The AOJ noted that even though gifts are not allowed as part of the VA Form 21-4703, Federal Fiduciary Agreement, dated March 12, 2015 that G.G. signed, this it was not considered misuse as it was paid back although as previously noted by the Board, that $5,000.00 repayment transaction was questionable per the statements of the bank employee. With regard to the assertion that G.G. gave him as much money as he wanted, the evidence received and reviewed showed that G.G. was unable to provide the VA with evidence such as bank documents or receipts to support this. Further, the evidence shows that G.G. had multiple accounts with the Veteran and the bank statements show that G.G. wrote checks out to "Cash" to himself totaling $15,890.00 with no receipts to support that this was given to the Veteran. The Veteran was budgeted to received $433.86 per month in spending money, however, the bank documents show this amount to be almost double that amount, at about $866.67. G.G. indicated that all of this was for the Veteran's spending allowance, however, the amount exceeds the budget and receipts could not be provided. G.G. opened a secondary fiduciary account in February 2016, but failed to disclose this to the Fiduciary Hub. VA approved fiduciary accountings during this period because VA remained unaware of the other accounts. G.G. transferred a total of $17,333.35 from the primary fiduciary account (the one VA knew of) into this secondary account. Upon closing the account, G.G. transferred the remaining $8,652.76 into a joint checking account between him and the Veteran. Statements show every debit on the secondary fiduciary account was done by check or electronic transfer. Every check was written to G.G.'s daughter-in-law or to G.G. himself. G.G. did not disclose those paid out funds to the Fiduciary Hub nor were those funds authorized or agreed upon during any field examination or on any budget agreement. G.G. transferred a total of $17,333.35 of VA funds into the secondary Fiduciary account and $4,000.00 of the Veteran's SSA funds into the secondary Fiduciary account. The joint account was opened with $8,652.76 ($4,000 was from the Veteran's personal savings account). There was also $3,000.00 from the Veteran's savings account which was his SSA account, which was also joint account with G.G. Of the $17,333.35 of VA funds transferred to the secondary Fiduciary account, $8,015.59 was paid to G.G.'s daughter-in-law. That leaves $9,317.76 in checks that G.G. wrote himself, totaling $15,890.00 from the joint account. G.G. also wrote checks to his daughter-in-law totaling $1,125.00 from the joint account. A 'housecleaning' expense was authorized in the amount of $400.00 per month ($7,200.00 annually) per the budget agreement from February 2016 through July 2017. However, his daughter-in-law was paid in excess of that amount (she was paid $9,140.59) during this time period. A total of $1,940.59 was being included in the misuse amount as this is the amount above the authorized $7,200.00. Therefore $9,317.76 in checks G.G. wrote to himself; plus $15,890.00 from the joint account G.G. wrote to himself; plus $1,940.59 (the amount over the agreed upon housekeeping budget) minus $5,000.00 (amount G.G. had repaid for the car) totals $22,148.35. The AOJ indicated that G.G. repeatedly wrote checks and was unable to provide receipts to back up any of the statements given regarding what the money was used for. G.G. did not provide credible information showing that he was acting in the best interest of the Veteran or the Veteran's needs. While G.G. asserted that he acted in the best interest of the Veteran, the evidence shows excessive spending and noncompliance with the agreed upon amounts established in the budget agreement. Therefore, G.G. did not adhere to the laws and parameters he agreed to, he was unable to provide evidence to support that funds were not misused; thus, the AOJ confirmed and continued the determination that G.G. misused the Veteran's VA benefits. Moreover, during the investigation process G.G. was uncooperative with the Field Examiner. Additionally, the fiduciary did not make the VA aware of all accounts. He impermissibly comingled funds. G.G. also failed to maintain proper documentation and receipts for all income and expenses of the beneficiary as required and stated on VA Form 21-4703, Federal Fiduciary Agreement. The AOJ concluded that G.G. misused the Veteran's VA funds because the evidence of record (bank documents and receipts) cannot properly account for $20,207.76 in VA Funds. The evidence shows receipts showing $1,940.59 was paid to G.G.'s daughter in law that was above the agreed upon amount in the budget and $20,207.76 of the $22,148.35, written out to cash to G.G. cannot be justified with receipts. Pursuant to 38 U.S.C. § 6101, failure of a fiduciary to properly account demonstrates prima facie evidence of embezzlement, misappropriations and/or misuse. Additionally, 38 U.S.C. § 6101 defines misuse as any case in which the fiduciary receives payment, under any of laws administered by the Secretary, for the use and benefit of a beneficiary and uses such payment, or any part of the payment, for a use other than for the use and benefit of such beneficiary or beneficiary's dependents. Retention by a fiduciary of an amount of a benefit payment as a fiduciary fee or commission, or as attorney's fees (including expenses) and court costs, if authorized by the Secretary or a court of competent jurisdiction, shall be considered to be for the use or benefit of such beneficiary. Thereafter, in December 2019, the AOJ completed a negligence determination regarding the Veteran's VA benefit payments made to G.G. It was noted that on November 6, 2018, the Milwaukee Fiduciary Hub determined that G.G misused $22,148.35 of the Veteran's VA benefits (this amount was later reduced to $20,207.76). As required by 38 C.F.R. § 13.410, Pension and Fiduciary Service reviewed the case to determine if VA was negligent in its appointment and oversight of G.G., noting that if VA was negligent and such negligence resulted in misuse of the VA benefits, VA may reissue benefits to the Veteran or his successor fiduciary in an amount equal to the amount of VA benefits misused by G.G. However, the AOJ determined that VA was not negligent in its appointment or oversight of G.G. as the Veteran's VA fiduciary. Accordingly, under 38 U.S.C. § 6107(a), the AOJ indicated that the misused benefits would not be reissued. This determination has not been appealed. In the subsequent supplemental statement of the case, the AOJ continued to find misuse by the former fiduciary, G.G., despite additional evidence submitted by the Veteran consisting of a handwritten ledger of his expenditures. It was noted that this evidence reflected the Veteran's own estimations without supporting bank statement and/or receipts. Additionally, the ledger does not contain a beginning balance or how much was given or showed what was left. The Board herein agrees with the findings of the Hub Manager, the Director of the Regional Office, and the other adjudicatory actions of the AOJ. The former fiduciary of the Veteran, G.G. did not comply with his fiduciary agreement in multiple ways. He did not maintain separate accounts for the Veteran, comingled funds, and he did not maintain receipts. In fact, it is apparent that he deliberately concealed a second fiduciary account. He wrote checks to himself out of joint accounts, paid his daughter-in-law amounts in excess of the authorized amount for housekeeping, engaged in excessive spending, and was uncooperative with the Field Examiner and the AOJ. There is simply no credible evidence that G.G. acted in the best interest of the Veteran or the Veteran's needs. VA law provides the following for misappropriation by fiduciaries under 38 U.S.C. § 6101: (a) Whoever, being a fiduciary (as defined in section 5506 of this title) for the benefit of a minor, incompetent, or other beneficiary under laws administered by the Secretary, shall lend, borrow, pledge, hypothecate, use, or exchange for other funds or property, except as authorized by law, or embezzle or in any manner misappropriate any such money or property derived therefrom in whole or in part and coming into such fiduciary's control in any manner whatever in the execution of such fiduciary's trust, or under color of such fiduciary's office or service as such fiduciary, shall be fined in accordance with title 18, or imprisoned not more than five years, or both; and (b) Any willful neglect or refusal to make and file proper accountings or reports concerning such money or property as required by law shall be taken to be sufficient evidence prima facie of such embezzlement or misappropriation. In this case, G.G. as the fiduciary for the benefit of the Veteran, who has been deemed incompetent by VA, misappropriated a portion of the Veteran's VA benefits using them for purposes other than the use and benefit of the Veteran and also engaged in willful refusal to make and file proper accountings so VA was unaware of these actions. He repeatedly failed to report and provide documentation for a secondary fiduciary account, comingled funds, transferred funds to himself, overpaid funds to his family member beyond what was authorized, and engaged in excessive spending. In sum, the former fiduciary, G.G. misused the Veteran's VA benefits in the amount of $20,207.76. and, the appeal is therefore, denied. S. L. Kennedy Veterans Law Judge Board of Veterans' Appeals Attorney for the Board J. Connolly, Counsel The Board's decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.