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October 27, 2010
Paladino’s Handling of Aunt’s House Involved a Curious Chain of Transactions
By PATRICK McGEEHAN
In 1992, when Alzheimer’s disease had begun stealing the faculties of his Aunt Anna, the widow of his beloved Uncle Pasquale, Carl P. Paladino was appointed to safeguard her affairs. Mr. Paladino had significant credentials to serve as his aunt’s financial guardian: he was an established real estate developer and lawyer, someone who would become rich enough to bankroll his own campaign for governor.
But over the next several years, Anna M. Paladino’s finances deteriorated along with her health, so much so that she became dependent on Medicaid to cover the costs of her care. Her house, her most cherished asset, was sold — first to Mr. Paladino’s son, and later, for no money down and much less than its appraised value, to the woman who would become Mr. Paladino’s mistress and bear a child by him.
When Mr. Paladino’s aunt died, in 2000, his by-then former mistress owed her $67,000. Some of Mr. Paladino’s closest relatives said they could not explain exactly how that odd circumstance had come to pass.
Albina Wood, a cousin of Mr. Paladino’s who had lived in their aunt’s house as a child and who served as the executor of her estate, expressed disbelief when told the home had been owned for the last 13 years by Mr. Paladino’s former mistress.
“That wouldn’t even make any sense,” she said during a long interview.
When Mr. Paladino took over his aunt’s affairs, Ms. Wood said, he was determined to keep the house in the family. That, in fact, became a collective mission of the family.
“We had to protect the house,” she said.
Through a spokesman, Mr. Paladino, the Republican nominee for governor of New York, declined to answer questions about his handling of his aunt’s affairs.
As successful as Mr. Paladino was, court records show that he collected fees of more than $15,000 for his services to his aunt. One of the most valuable assets he had to manage was the house.
In 1994, Mr. Paladino told the court the house was worth $87,000. He based that assessment on an appraisal conducted by his brother-in-law, Daniel F. Hannon, who was a local real estate agent. Mr. Hannon’s appraisal was the only one submitted to the court and, according to Mr. Paladino’s son, William, was the one the family relied on.
Parting with the house, it turned out, was no small matter for the Paladino family.
When the time came to sell it, Mr. Paladino tried to persuade Ms. Wood to buy the house, but she could not afford it, she recounted. Instead, he found a buyer under his own roof.
He arranged for William, then 24 and still living with his parents, to buy the house for just $10,000 upfront. He did so despite having an offer from outside the family that was just $1,000 lower than William’s, records show.
“He sold it to his son so we could keep it in the family,” Ms. Wood said.
Records, though, show that William Paladino owned the house for a single day. One day after taking ownership, in May 1995, he signed the house over to his father.
William Paladino, in an e-mail exchange, said he could not recall why he had done so.
“I am not sure why I signed the deed over to my father the next day,” he said.
By the time the court approved the sale to him, he wrote, “I was probably getting nervous about being able to actually carry this house.”
Mr. Paladino did not pay off his son’s debt to Anna. Instead, he assumed the mortgage, becoming indebted to her for about $75,000 while he was the court-appointed conservator of her finances. He began paying her $675 a month toward the mortgage.
By that time, Anna had been moved to a nursing home, the Garden Gate Health Care Facility in Cheektowaga, on the edge of Buffalo. She paid more than $6,000 a month.
Elizabeth S. Scott, a professor at Columbia Law School, said that conservators have a duty to act in the best interests of the person whose affairs they are managing and usually go to greater lengths to demonstrate that their involvement is beyond reproach.
“It’s not impossible that the sale of the conservatee’s house to the conservator might be in the conservatee’s best interest,” Ms. Scott said, “but to avoid the appearance of self-dealing, a careful conservator would get three appraisals by commercial Realtors unrelated to him and then buy the house for the highest estimate.”
Mr. Paladino soon resold the house to a trust managed by other family members. By then, Anna’s house had been sold three times within the family in a matter of years, but she had recouped only $15,000 of its value.
In 1997, the Paladinos sold it again, this time to Suzanne Brady, who was an employee of Mr. Paladino’s real estate company. In time, Ms. Brady would also become Mr. Paladino’s mistress, and the mother of a daughter by him, now 10.
She made no down payment, but took on the remaining mortgage of $71,000 from Mr. Paladino’s aunt. In effect, Ms. Brady bought the house for $16,000 less than it had been appraised for three years before.
William Paladino, who, along with two other family members, sold the house to Ms. Brady, said he could not recall why they decided to sell it to her on those terms or what role his father played in the sale.
Ms. Brady did not respond to messages left at the house, where she still lives, seeking her comment.
Soon after the house was sold to Ms. Brady, Anna stopped paying full fare for her stay at Garden Gate and began receiving assistance from Medicaid — the very program Mr. Paladino has promised to shrink by making it harder for patients to qualify.
Ms. Wood recalled that “when her money ran out,” Anna had to be moved from a private room to a shared room in the nursing home. The changes in her aunt’s circumstances were “very, very traumatic” for the whole Paladino family, Ms. Wood said.
By 1998, Mr. Paladino’s reports to the court show, Anna’s only steady source of income, besides her $1,000 monthly Social Security checks, was the mortgage payments she received from Ms. Brady, who still owed her almost $70,000.
Anna Paladino never collected the balance of that debt. She was 83 when she died of pneumonia at Garden Gate in January 2000. She left virtually no assets to the 13 heirs named in her will — except the mortgage from her nephew’s former mistress.
http://www.nytimes.com/2010/10/28/ny...l?ref=nyregion
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