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SENIOR ADVOCATE

By Liza Horvath

 

BE DILIGENT WHEN PLACING TRUST

 

Driving home on an extremely foggy evening – probably June in Monterey – visibility was awful so I began to follow the taillights of the car in front of me in an attempt to stay on the road and within the lane. Following closely, I felt comforted that we together – my unknown fellow driver and I – would arrive safely at our respective destinations. Suddenly my faithful guide – owner of the taillights that had become my Sherpa on this murky path – abruptly stopped. With no time to brake, I ran right into him. Not hurt but certainly panicked, I jumped out of my car and confronted the other driver who was now standing beside his vehicle, “Why did you stop so suddenly?” I asked. The other driver seemed slightly amused and responded, “I’m in my garage.”

 

This, I would assume, is an excellent example of blind faith. Neither of us was injured but the scenario brought home the fact that we may easily place confidence in something that later reveals itself to be unreliable. We find something or someone that we believe is doing “it” the way it should be done; we trust our beliefs and we follow them.

 

Barbara Alexander, Monterey-based talk show host and supposed financial advisor was sentenced to nine years in federal prison Wednesday for bilking investors out of $6.3 million in a Ponzi scheme that she and associates ran from 2006 to 2009. People liked Alexander and trusted her – and there was, of course, the lure of exceptionally high interest on money they invested.

 

Carmel resident, Jay Zubick, a supposed financial genius embezzled some $16 million from friends turned investors in a Ponzi scheme he perpetrated from 2000 to 2007. Zubick was liked – he drove great cars, lived in a lovely Monterra home and his children attended a well-respected, private school. Many of his victims cried at his sentencing – visibly displaying their deep and painful feelings of betrayal.

 

Monterey County seems to have a colorful past – hopefully past – of opportunists turned embezzlers or Ponzi schemers. David Nielsen had taken in some $100 million of investor dollars when his Ponzi cloaked in a mortgage lending scheme, Cedar Funding, came crashing down. Local attorney Dennis Fox diverted more than $1 million from the estate of a deceased client and another local attorney, Richard Wilsdon, diverted funds from clients’ estates not once but twice during his legal career.

 

In truth, as humans we must trust others or we simply could not survive. Additionally, having faith in our fellow man is in our nature and many say that without this, life itself would be meaningless. I agree. However, as we age and become more dependent on others what can be done to protect ourselves from the unscrupulous or illegal acts of others?

 

First, assume full responsibility of all aspects of your life – medical, financial, legal – and stay in charge to the greatest extent possible. Get referrals from friends or trusted advisors and check out potential legal or financial consultants using the various agencies that oversee professionals. Governing agencies like state bar associations report complaints and substantiated complaints can serve as a bell weather for problems. Finally, when it comes to investments that seem too good to be true – they probably are. We have to trust and have faith in our friends and advisors, but it is wise to consider the Sufi saying, “Trust in Allah, but tie up your camel.”

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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