Seniors Sue Fraud Compensation Fund, Saying It Has Made Them Victims a Second Time

Wednesday, July 04, 2012


The Secretary of State’s website for the Victims of Corporate Fraud Compensation Fund prominently warns of scams being perpetrated on unsuspecting Californians who think they will be getting a cash award.

Some critics think it’s Secretary of State Debra Bowen who is doing the scamming.

Nearly 500 seniors sued Bowen in May for denying payments of between $10,000 and $15,000 to compensate for losses they sustained when they took the advice of former attorney and radio talk show host James A. Walker about how to navigate the state’s social services labyrinth. The state accused him of telling relatively wealthy seniors to shift the cost of their nursing home care to taxpayers by filing false claims for Medi-Cal benefits.

But only 203 of the seniors received compensation, which totaled $1.8 million. The lawsuit alleges that 280 seniors were unjustly denied any compensation and that those who collected only received a fraction of what they deserved.

Walker’s Senior Care Advocates was the subject of a four-year investigation that culminated in 2008 with the state attorney general’s office accusing him of abusing the Medi-Cal program by giving misleading advice to seniors. Walker had his license to practice law revoked in 2010 and he agreed to pay a $275,000 fine while admitting no wrong-doing.

An investigation a year ago by California Watch found that the victims fund, created in 2003, was playing scrooge and had handed out less than 1% of its holdings to applicants. The fund had received 675 claims as of April 2011 and paid out a total of $92,500 to six claimants. The fund, which gets its money from annual filing fees for state corporations, had $14.3 million in its coffers at the time, although $10 million was soon to be borrowed by the state to help balance its budget.

When the 500 seniors filed their claim, the Secretary of State’s Office proposed treating them as a single claim and offered to split the maximum payout of $20,000 between them, or $40 apiece.    

“I really feel like I’ve got a line of people at a soup kitchen, and for two years the secretary has been . . . saying these people aren’t hungry enough,” said Mark Redmond, the attorney who filed suit on behalf of the seniors.

–Ken Broder


To Learn More:

Seniors Sue Secretary of State for Fraud Compensation Funds (by Christina Jewett, California Watch)

Fraud Victim Fund Hands out Less Than 1% of Holdings (by Christina Jewett, California Watch)

Victims of Corporate Fraud Compensation Fund (Secretary of State’s Office)

Relatively Wealthy Clients Filed False Claims for Benefits, Officials Argued (by Cynthia Hubert, Sacramento Bee)

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