A Checklist for Financial Elder Abuse and Undue Influence – Angelina Alhadi v. Commissioner of Internal Revenue

Alhadi is a United States Tax Court decision rendered in April 2016 (T.C. Memo. 2016-74) in which the petitioner, Angelina Alhadi, was found to have acquired over $1 million from her employer through undue influence and financial elder abuse over the two-year period she worked for him. Towards the end of his life Dr. Marsh had amassed an estate valued at over $3 million.  Following a diagnosis of dementia, loss of hearing, and vision problems and in general being unable to care for himself, he needed the assistance of a caregiver. His closest relative lived too far away to offer assistance or even to visit him on a regular basis to evaluate his living conditions.

Financial Elder Abuse and Undue Influence

Dr. Marsh’s situation provided the perfect opportunity for the caregiver he hired, Mrs. Alhadi, to take advantage of him by overcharging him for the care given and services she purported to give him. The money wrongfully acquired was used to make the down payment on a $1 million home in Gilroy, pay her mortgage payments, remodel the home, construct a swimming pool, purchase furniture, do landscaping and pay off her husband’s interest in their home in Hollister as part of their divorce settlement.  Mrs. Alhadi’s demands of Dr. Marsh were unending – among other things she wanted to be named in his will, wanted a separate trust for her benefit, and money for her and her family to take a cruise. Mrs. Alhadi prevented relatives from making contact with Dr. Marsh and she kept mail requiring his attention from him.  She not only isolated him from his family and the outside world but she also preyed on his loneliness by professing her love and affection for him.  She sought to appeal to his generous but forgetful nature by reminding him that she struggled financially and could not adequately support her family even though she charged Dr. Marsh twice the going rate paid for in home care services.

When the Santa Clara County Adult Protective Services was alerted to Dr. Marsh’s situation through his financial advisor, they found the living conditions Dr. Marsh was forced to live in to be deplorable.  Food was found rotting in the refrigerator and the apartment was filthy, among other things.  The advisor’s suspicion had been raised by the frequency with which large amounts of money were being withdrawn from his account and the fact that Mrs. Alhadi’s directives and cajoling could be heard in the background of telephone conversations he had with Dr. Marsh.

Conclusion

The tax court noted that this case against the caregiver was clearly a “lopsided” case because she presented no evidence or witnesses on her behalf to contradict the government’s evidence for unpaid taxes and filing fraudulent returns.  The Court applied California law to make the determination of financial elder abuse and undue influence (California Civil Code §1575 and California Welfare and Institutions Code §15610.70).  All the elements of undue influence were found to exist in the Alhadi case – Mrs. Alhadi used the authority she had to gain an unfair advantage, she exploited the fact Dr. Marsh suffered from dementia and she took a grossly oppressive and unfair advantage of the needs and vulnerability of Dr. Marsh by isolating him from the outside world.  The circumstances were clearly inequitable.  The tax court ruled that the $1 million plus in money Mrs. Alhadi garnered from Dr. Marsh was taxable to her as an independent contractor and that the returns she filed for the two years under consideration were fraudulent.

 

 


 

Chiles and Prochnow, LLP offers a free one hour consultation for cases involving questions about probate and estate litigation, trust administration and elder financial abuse in the following cities and surrounding areas: Palo Alto, Redwood City, Hillsborough, San Francisco, and San Jose

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