Beware of Fraudulent Transfers

In September of 2011, the Oregon Court of Appeals pointed out the types of problems that can occur when a parent entrusts funds to a child without any controls in place.

Claryce El-Tobgy inherited some $500,000.00 from her husband.  She moved in with her son Sami and his then-wife Mona El-Tobgy.  Claryce entrusted Sami with her money, which he transferred to a joint bank account in his and her names.  Then he moved $250,000.00 from this account to an investment account in his name only.  He began spending money from the joint account and within a year it was gone.  He used the money for his own benefit and failed to pay his mother’s medical and other expenses.

Sami and Mona agreed to a separation, transferred their joint account and other properties into Mona’s name as the sole owner, and filed for divorce.  The divorce decree awarded all the property to Mona.

During the trial Mona admitted she knew of Sami’s wrongful use of his mother’s money and worried he would misuse their joint funds in the same way.  It isn’t clear why Sami agreed to transfer all the assets to her and relinquish his claim to them.

Claryce died and Sami’s sister filed an elder abuse claim against Sami and Mona, arguing that Sami had exploited his mother’s Trust and assets for his own purposes and had fraudulently transferred his marital assets to Mona to put them beyond the reach of the court.  The trial court ruled in favor of the sister and Mona appealed.  The appellate court ruled that Sami transferred the marital assets to Mona to hide those assets from Claryce and her estate.  It held that whether the divorce was brought in good faith or not was irrelevant since the asset transfer was for a fraudulent purpose.

In our practice, we often encounter cases of spouses, children and even siblings taking advantage of the elderly, frail or disabled.  There are remedies to address these situations if it can be shown the other party acted solely or primarily for personal benefit and not for the good of the disabled party.  If you need assistance with a similar situation, please contact Vikki at 405-843-6100 to schedule your free (remember, always free for our valued clients!) consultation.

Jerry Shiles
Author, Attorney
Parman & Easterday