HANNA ESTATE FRAUD IN THE SPOTLIGHT
July, 2023 | By Brett Darken
A new estate-fraud case is center-stage in South Carolina’s courts.
The Palmetto state has been a hotbed of probate, trust and conservator fraud cases for more than half a decade: In March of this year, attorney Alex Murdaugh was convicted of murdering his wife and son. But years before the high-profile attorney was tried for murder, Murdaugh was tied to the disappearance of a 4.2 million dollar insurance settlement, paid to the estate of one of his clients. An estate of which he was a trustee.
Just months before the Murdaugh trial, The CEO of Palmetto State Bank, Russell Laffitte, was convicted of fraud in Federal court. Laffitte used the money of his trust clients to make loans that were hidden from—and did not benefit—his client’s trust.
CROSSROADS OF FINANCE AND LAW
There are more than 2 million new probates opened every year in the USA. If just 1% of those estates have some fraud involved it means that more than 20,000 new cases of estate fraud start every year.
Estates and conservatorships are accounting and financial events that are supervised by the courts. Estates often involve insurance, stocks, bonds, annuities and real estate. But they can also involve mineral rights, patent rights, royalties and often whole businesses: Real-life versions of the show, “Succession.”
In daily life, people made deposits and withdrawals from banks, they insurance, pay bills, apply for loans and sell real estate.
But in most probates, estates and conservatorships, a layer of complexity is added to these normal transactions: Financial transaction must be disclosed to, and approved by, a judge (or a person deputized by a judge) such as an estate administrator, executor a conservator.
This added layer of “process” is deigned to give all parties increased transparency and disclosure, but the trade off for this transparency is that it often slows the speed of the transactions. A real estate sale that might take two months to close in normal circumstances, might take a year to close under court supervision.
SECRET ASSET SALES
One of the red-flags for fraud in the South Carolina case was that the conservator wanted to sell real estate both fast, and in secret.
The drama rises from estate of Carlos Hanna, who died in 2010. The estate has bounced around South Carolina’s courts for more than a decade, but it jumped into the headlines about six weeks ago, when the family noticed that the court appointed conservator, Jeffrey Robinson, tried to sell the home of Georgia “Jo” Hanna out of Jo’s conservatorship. (“Jo” is a dementia patient living in a memory-care facility.)
Robinson (left) is the Treasurer of Darlington County, South Carolina. On the side, he works as a financial advisor and fiduciary. In the Hanna case, Robinson had been appointed as the conservator of “Jo” by Darlington County probate judge Marvin Lawson.
On April 18, 2023, attorney Charles E. Ipock wrote a letter to Judge Lawson. Ipock is a member of Haynesworth-Sinkler-Boyd, a law firm with more than 100 attorneys and multiple offices in South Carolina.
On behalf of Robinson, Ipock asked Judge Lawson to issue an order to Robinson, as conservator, that gave the court’s approval to sell the house in which Jo Hanna lived before needing memory care.
Ipock’s letter to Judge Lawson contains just two paragraphs, but in it, Ipock writes:
“As you will note, I request an Order of the Court without notice,
as allowed under South Carolina Probate Code.”
Ipock then sites the section of South Carolina legal code that allows a conservator to do things “without notice.” In short, Ipock and Robinson wanted Judge Lawson to issue an official court order allowing them, like Murdaugh and Laffitte before them, to hide their financial activities from the family.
Days later, on April 24, 2023, Judge Lawson (right) issued the order that Ipock had requested: Lawson authorized Robinson to sell “Jo’s” house “without notice.”
ATTORNEY FINDS THE FRAUD
Darlington County South Carolina has fewer than 70,000 people. It did not take long for the Hanna family to learn that Robinson, Ipock and Lawson had secretly agreed to sell “Jo” Hanna’s home, and conceal the sale from the Hanna family.
One of Jo’s children, Craig Hanna, and his wife Dana, contacted attorney Tucker Player in Columbia, South Carolina. Tucker Player’s keen eye for detail stopped the sale of the home “without notice.” Here’s how he did it:
NON-FINANCIAL DECEPTIONS
Fraud is theft based on deception. In the Hanna case, the deception was unique: It wasn’t found in a forged brokerage statement, inflated invoice, or a deflated appraisal. There were no numbers involved in the fraud at all. In this case, attorney Player found a subtle and sophisticated deception used by attorney Ipock that twisted the language of South Carolina’s law.
Player found that in attorney Ipock’s motion to Judge Lawson, Ipock cited a specific statute in the code of South Carolina to support his request for an order “without notice.” The statute cited by Ipock deals with the actions of trustees and conservators (SC § 62-5-428).
At first glance, attorney Ipock’s request appears to comply with the law: South Carolina’s code says that conservators can ask a judge to issue orders “without notice” for a list of things.
But Player drilled into the details of the legal code. He found that all of the things that can be done in a South Carolina conservatorship “without notice” are clerical or administrative (ie: Increase the bond, ask for an accounting; pay funeral expenses, etcetera). As attorney Player cites in his May 18, 2023 filing with the South Carolina Supreme Court:
“Nowhere in this statute does it allow any court to dispose of property without notice.
The only actions that can be taken without notice are those actions specifically
enumerated….”
Player’s granular dive into the legal code uncovered the deception by Robinson and Ipock. His work delivered powerful results: Within days of filing his written complaint to the court, the sale of Jo’s house was halted and both Judge Lawson and Conservator Jeffrey Robinson resigned from the case.
Attorney Charles Ipock at Haynesworth Sinkler Boyd has not replied to emails seeking comment on the case, nor has Jeffrey Robinson.
The Hanna estate has been open in South Carolina’s courts for more than a decade. Now that the forensic efforts have begun in earnest, the case may provide insights into the legal and accounting tricks used by financial predators to target their victims. As is often the case in fraud investigations, the “victims” are people who were once called “clients.”
Stay tuned for more as the Hanna case unfolds in South Carolina.
Brett Darken writes about families, finance and fraud. He is an estate trustee and has been licensed in securities, insurance and real estate, and has been a member of the Association of Certified Fraud Examiners since 2017.
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