Condemnation and Interpleader (C&I) Trust Fund Scandal

Court administrators determined that at least $1.2 million was "missing" about six weeks ago, and referred the matter to the Special Investigations Division of the district attorney's office. — Josh Meyer

Lubomyr Prytulak
Ukrainian Archive, www.ukar.org

07 December 2002

Gary Klausner
Supervising Judge, Civil Division
Los Angeles Superior Court
111 North Hill Street
Los Angeles, CA
USA     90012

Re: Rambam v Prytulak   BC271433   James R. Dunn

Gary Klausner:

I take it that if a Los Angeles Superior Court (LASC) judge discovers that a thousand dollars has been mistakenly deposited into his bank account, he will keep the windfall without informing the bank, on the ground that it is the bank's obligation to keep track of its own money, and not the obligation of a customer to play nursemaid by informing the bank of its mistake.  I take it similarly that if an LASC judge sees someone accidentally drop his wallet, he will pick it up and pocket it without drawing attention to himself.  Or for that matter if a guest in his house leaves her purse behind.  Or if a cashier at the supermarket gives him too much change.  Or if his neighbor's child throws a ball into his yard.  In every such instance, the LASC judge will appropriate the thing that has fallen into his hands, without informing the owner, all according to the primary principle that a finder is not obligated to play nursemaid by informing careless people of their losses, and also according to the secondary principle that people can be assumed to prefer to suffer their loss in private rather than to avoid loss while exposing themselves to the embarrassment of others learning of their carelessness.  I infer all this from the behavior of Los Angeles judges with respect to their Condemnation and Interpleader (C&I) Trust Fund.

From what I can gather — and I am ready to stand corrected by your better information — whenever a litigant deposited money with the Court in the C&I Trust Fund, and later forgot to retreive his deposit, or merely the interest on his deposit, then the Court simply kept the money without telling anyone, because — as explained by the wise judges — it is the litigant's obligation to keep track of his own money, and not the obligation of the court to play nursemaid.  The wise judges also said that they were precluded from publishing a list of unclaimed deposits, because to do so would violate privacy, this on the supposition — it would seem — that a litigant who has forgotten to retrieve his money will prefer to lose the money than to risk others learning of his forgetfulness.  As an Internet search for "unclaimed funds" reveals, there is no shortage of government agencies which are less squeamish about publishing the rightful owners of unclaimed funds, as for example the Treasurer's Office in Kane County, IL www.co.kane.il.us/treasurer/unclaime.htm.

The Los Angeles Superior Court continued its rapacious practice year after year, decade after decade, building its horde, earning interest on it, until it totalled — well, no outsider can even begin to guess what it actually totalled.  Commonly repeated is the sum of US$54 million, although US$81.6 million has also been cited.

Some statements concerning the bank's keeping its stash secret:

"Very simply, the court's position for a long time was this money was confidential," said Alf Schonbach, the Superior Court finance and accounting administrator who oversees the fund.  "The court made no effort to contact persons to whom the money might be owed."  [...]

[F]or decades the Superior Court failed to make public the individuals, businesses and municipalities that are owed money from the account.  [...]

"What's so shocking about this case is that over the years Los Angeles County did not make any effort to return these monies to the rightful owners," [Encino attorney James] Blatt said.
Troy Anderson, Court Withheld Trust Account From Public, Daily News, www.newsmakingnews.com/archive9,6,00,9,900.htm

It wasn't merely that the LA Superior Court neglected to inform rightful owners of money that was due them — it was that the Court actively blocked attempts to trace ownership:

Since substantial sums are involved due to compounding interest, municipalities and even private citizens working for the municipalities sometimes subsequently try to locate the cases in which they believe money is owed.  But success is limited, the prosecutor said, because the county refuses to provide outsiders with a blanket list of all such cases.
Michael D. Harris, Unclaimed Funds At Heart of Ploy Charged by DA: Court Auditor Allegedly Helped Lawyer Claim Condemnation Trusts, Los Angeles Daily Journal, 31-Aug-1998 johnnypumphandle.com/cc/jail.htm

And here is the "playing nursemaid" statement being made by the Superior Court finance and accounting administrator, Alf Schonbach himself:

"Ultimately, the responsibility really falls on the attorneys in these cases," Schonbach said.  "Given the number of cases heard in Los Angeles Superior Court, it's unreasonable to believe that a small accounting staff within the court is going to play nursemaid and remind these attorneys that they have forgotten to complete their work."
Troy Anderson, Court Withheld Trust Account From Public, Daily News, www.newsmakingnews.com/archive9,6,00,9,900.htm

Does a vast horde of money which has been forgotten by its rightful owners, and is out of sight of the public, invite theft?  One can find indications that it does:

The missing money was in a "condemnation account," where municipalities and development agencies place public funds in trust while litigation is in progress over efforts to acquire private property for public purposes using eminent domain laws.  "So in that sense it is taxpayer money," [Executive Officer/Clerk John A.] Clarke said.

Court administrators determined that at least $1.2 million was "missing" about six weeks ago, and referred the matter to the Special Investigations Division of the district attorney's office, which investigates significant cases involving possible malfeasance by government employees.

The amount could go higher, potentially into several millions of dollars, "when they start looking into it," [then Presiding Judge-Elect Robert] Parkin said.

Josh Meyer, Los Angeles Times, 11-Dec-1996.

Having been advised by Los Angeles County Treasurer Joe Spillane that the county takes in between $400 million and $600 million a year, financial analysts tell Insight it seems odd that the C&I fund audit would reflect a mere $54 million.  [...]

And somehow no one in the Los Angeles County government, including the Board of Supervisors that requested the special audit, caught the multimillion-dollar blunder until Insight began asking why the audit as certified was short tens of millions of dollars.
Kelly Patricia O’Meara, A Financial Fiasco Is in the Making, Insight, undated www.insightmag.com/main.cfm/include/detail/storyid/161202.html

Court stonewalling in response to requests for information limits the press to painting a picture that is fragmentary and incoherent.  An internal audit commissioned by the Court itself found — as might be expected — no wrongdoing.  No external audit was ever conducted.  Instead, the spotlight of blame was directed at two peripheral participants, Superior Court auditor Gregory Pentoney, and Encino lawyer Robert Fenton:

Court officials have stated that it is ultimately the responsibility of the attorneys in these cases to retrieve their client's deposit, as the court cannot be held responsible to play "nursemaid" in reminding attorneys to complete their work.

But that is precisely what happened, according to court records, when, in 1996, court finance and accounting administrator Gregory Pentoney teamed up with Encino attorney Robert Fenton to play "nursemaid."  The two devised a scheme by which Fenton would act as a "bounty hunter" to recover forgotten money held in the account on behalf of municipality.

Fenton and Pentoney had a well rehearsed scheme by which Pentoney would release the court case index to Fenton, which he systematically denied to other members of the public.

During the execution of a search warrant at Pentoney's home on Nov. 1, 1996, a spreadsheet was discovered which outlined the fee schedule; 50 percent of the first $25,000, 40 percent of the next $75,000, and 33.3 percent of any amount over $100,000 recovered was due to Fenton, and Fenton would pass one third of that to Pentoney.

From Dec. 1995 to Nov. 1996, Fenton is believed to have uncovered up to $5 million in forgotten interest for local municipalities and earned $1.5 million in bounty fees, of which he paid $463,000 to Pentoney for the inside information on about the 99 accounts.

Fenton pled no contest to the charge of giving a bribe, and Pentoney pled no contest to the charge of accepting a bribe.
Joaquin Vieira, Superior Court Blasts News Articles, Welcomes Audit of Trust Fund, Metropolitan-News Enterprise www.lasuperiorcourt.org/courtnews/uploads/10200091161639AuditArticleMetNews.htm

Pentoney-Fenton ventured beyond merely returning money to its rightful owners while taking a commission for themselves — they also stole:

In addition, prosecutors claim that [Encino lawyer Robert] Fenton helped [Superior Court auditor Gregory] Pentoney submit false documentation with county officials to suggest that the county owed Irwindale $1.5 million in interest from 10 condemnation accounts.

In reality, the accounts did not exist.  Irwindale had created 10 condemnation accounts with the state but had already collected the interest on the accounts.

The county paid Irwindale $1.5 million in interest and Fenton collected a fee of 30% to 50% for finding it, according to prosecutors.

"That is direct theft right out of the taxpayers' pocket," [Deputy Assistant Attorney Alexander M.] Karkanen said.

Hugo Martin, Los Angeles Times, 01-Sep-1998

However, the failure to subject the entire C&I Fund to an external audit under the direction of an independent prosecutor, and the failure to subpoena witnesses and to seize documents, calls to mind the possibility that Pentoney and Fenton — though apparently guilty as charged — nevertheless played the role of scapegoats, distracting public attention away from those who created the C&I Fund and who bore responsibility for it and toward some others clinging to lower rungs of the ladder of power who had not the will to resist stealing from the Court a tiny portion of what they could see the Court had stolen from the public.  Furthermore, allegations have been made that even the Pentoney-Fenton prosecutions were curtailed:

At first Judge Waldrip was honorable.  He was going to pursue the case going to trial.  The Los Angeles judges did not want the case to go to trial.  "The defense lawyers will argue the Los Angeles judges have a slush fund!"  ....  I was in court when [Judge] Stuart T. Waldrip was speaking to the Orange County District Attorney.  He said he received a call from "The Chief Justice of Los Angeles" that he was instructed not to take the case to trial!

This is a crime.  The phone call is illegal ex parte communication to pressure a judge to not proceed with the justice system.  The judges of Los Angeles and the Los Angeles District Attorney want to drop ten felonies against Pentoney.  In exchange ... Pentoney will keep his mouth shut and not rat on the Judges of Los Angeles.
Marv Bryer, County of Los Angeles Judicial Scandal! Big Time! www.jail4judges.org/JNJ_Library/stak0/corrupt/scandal.htm

At present, the Los Angeles Superior Court continues to suffer from the disrepute of the C&I Trust Fund Scandal remaining both unresolved and widely commented upon.  Nor is it merely the case that the C&I Trust Fund Scandal, together with the LASCJA Slush Fund Scandal that I wrote to you about on 28-Nov-2002, are the only Los Angeles justice system financial misdeeds that have come to public attention.  Rather, these two scandals appear to be but corks bobbing on the waves of extortion and corruption in which the Los Angeles justice system is submerged, as exemplified further by litigants being sometimes required to pay for jurors' lunches, and by Los Angeles District Attorney Gil Garcetti withholding $13 million in child-support payments from intended recipients:

According to the documents provided to Insight, plaintiffs and defendants apparently are being required to pay for the lunches of jurors and bailiffs on days they are in deliberations.  In one instance a plaintiff, who asked not to be identified for fear of retribution, was advised by counsel that plaintiff "had to pay for lunch for the jury."  This case was a civil lawsuit and the jury was not sequestered.  According to the plaintiff, "I felt like I was being extorted, but I was unaware of court rules and the law so I complied with the attorney's request."

The plaintiff handed a bailiff a credit card, whereupon he and another bailiff took 12 jurors and two alternates (16 people total) to lunch at the El Sarape Restaurant in Glendale.  Lunch for day one of deliberations cost the plaintiff more than $150, including a $22 tip.

On day two, the plaintiff thought they got a break: 12 jurors and only one alternate joined the two bailiffs for lunch at the China Inn Restaurant in Glendale.  The bill still came in just under $150, with what appears to be the standard $22 tip.  In both instances — and Insight has the credit slips — the bailiff signed the plaintiff's name.  "I don't know, says the plaintiff, "if the judge said something to my attorney or what.  I guess I was just naοve."

Not according to Judge Charles Stoll of the Superior Court of Glendale.  "Having lunch paid for by the plaintiffs or defendants happens in most jury cases in Glendale," says Stoll.  "It's maintenance of the jury," Stoll continues.  "They don't have to pay by credit card; the bailiff will accept a check.  It's been going on for years."

Perhaps it has, but is it based in law?  According to the judge who assures Insight he has cleaned up the "coffee-and-flowers" fund, there's no way.  "It would be wrong," says Chavez, "for any attorney to tell a client that they had to pay for lunch.  I'm not aware of it happening....  There is nothing in the law that says someone has to pay for lunch for a jury — absolutely nothing."  Chavez adds, however, that "sometimes people do want to pay for the jury's lunch, but if they do the jury never knows who paid for it."  Just benevolence, you see.

So while the court in Glendale appears to be keeping the jurors and bailiffs fed in a bizarre act of enforced charity, Los Angeles District Attorney Gil Garcetti has run into trouble with the $13 million he has been withholding from child-support payments under exotic circumstances.  Insight's May report on this resulted in a lawsuit filed by Richard Fine in the name of John Silva of Sylmar, Calif., an aggrieved parent who has paid child support since 1984 that records indicate was never forwarded by Garcetti to Silva's children.  Fine has just won the right of discovery against the district attorney on his way to forcing disbursement of the huge fund.  Although Garcetti tried to get the class-action lawsuit dismissed because, as Fine recalls, "he said he was doing the best he could and therefore we didn't have a right to sue him," the judge ruled in favor of Fine and the case continues to move forward.

"We've learned from discovery that they have 100,000 files that date as far back as 1984 involving more than $13 million held by Garcetti," says Fine.  "We've got to request that the files be matched up — the payer and payee — and then require Garcetti to distribute the money.  This is one of the greatest human tragedies I've ever handled.  People are knocking on his door asking for money owed to them and he's basically saying forget it.  People have lost their homes and gone hungry and he couldn't care less.  This is a prime example of bureaucratic laziness.  If we changed the structure and paid the employees of his department based on the number of cases that got paid, I guarantee that all $13 million would get paid out in 30 days."
Kelly Patricia O'Meara, New Scandals in L.A. Court, 06-Dec-1999, Insight Magazine 06-Dec-999 nafcj.org/Page14.html

The present letter joins with my earlier letters to you in suggesting an answer to the question of why Brooklyn resident Steven Rambam chooses to trek to distant Los Angeles to conduct his frivolous and vexatious Rambam v Prytulak law suit.  That answer is beginning to look like it might turn out to be that the Los Angeles Superior Court is among the most corrupt in the nation, and for that reason is able to furnish upon demand a judge — James R. Dunn — capable of the extraordinary feats of

  1. refusing to evaluate his own jurisdiction over non-resident litigants for an interval of eight months,

  2. spoliating eight litigant submissions that support the defense, and

  3. refusing to supply Defendant Lubomyr Prytulak with a minute order for Prytulak Motion-to-Quash-D that was heard on 25-Nov-2002.

At the top of the list of those responsible for the corruption of the Los Angeles Superior Court might be judges who have played leadership roles, and high on any list of national priorities might be blocking such leadership from being promoted and thereby carrying the infection of corruption to higher courts.

Lubomyr Prytulak