If you think that acting as an agent under a financial power of attorney is easy, then you should consider the criminal case of Ronnie Lee Natho Sr. v. The State of Texas.
It was all a misunderstanding, according to Mr. Natho. He was helping his former grandmother-in-law, Rosie Shelton, qualify for Medicaid when he sold her car, cashed in her life insurance and deeded her house to himself. After all, she had given him her Power of Attorney that specifically authorized him to act on her behalf regarding Medicaid issues. Mr. Natho had consulted with an attorney on Medicaid requirements, and that attorney testified on his behalf at trial.
The jury disagreed and found Natho guilty of misapplication of fiduciary property. The Judge sentenced Natho to 25 years in prison.
On February 6, 2014, the Court of Appeals affirmed the conviction. It noted that Mr. Natho sold the car before he spoke with the attorney. It also noted that the house, the car and most of the cash value of the life insurance would have been excluded from Medicaid calculations, so the transfers had not been necessary.
Most significantly, the Court noted that Mrs. Shelton had not initialed the paragraph in the financial power of attorney that would have allowed Natho to “gift” assets. Since Natho only had the powers expressly granted to him, his “gifting” of assets to himself was improper.
Texas recently changed the statutory form for the financial power of attorney. The new form contains a strong warning that the agent may face civil and criminal liability if he violates his fiduciary duties. If you have any remaining doubts, read Natho v. State (Tex. Ct. App., 3rd Dist., No. 03-11-00498-CR, Feb. 6, 2014).