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FBI investigates Silicon Valley trust fund thefts

On Behalf of | Jul 18, 2012 | Trust Administration |

He was her boyfriend and the company controller in her Silicon Valley trust administration business. Unfortunately, the man may also be the embezzler behind a scheme that caused more than $17 million in clients’ funds to evaporate.

The FBI is tracing the California backstory of the relationship between a Santa Clara County businesswoman and a partner she thought she could trust with over $104 million.

Furthermore, probate records say the trust administrator was inadequately insured to cover losses to the trust funds and estates of her clients.

The private asset manager must restore the accounts, even as she convinces the FBI that her former boyfriend is responsible for bleeding them dry. No arrests have been made to date.

Government officials have confirmed that they are investigating a theft at Backhouse Fiduciary Services.

The trust administrator’s attorney claims his client had been duped until February, when she discovered a large discrepancy between company records and a Heritage Bank balance. The bank supplied the business owner with nearly 50 wire transfers from 35 trusts, dating back to May 2010. Every transfer was authorized by the controller.

The woman’s now ex-boyfriend allegedly fled after the she questioned him about the transfers.

A separate law firm is working on behalf of the depleted trusts attempting to follow the money trail. Attorneys are expected to canvas the controller’s associates and company lenders to find out why no red flags signalled the alleged white collar wrongdoing.

The FBI, California authorities and clients were notified of the depleted trust funds immediately after the money was discovered missing.

Many individuals and families automatically assume that the credentials and business practices of a trust company are impeccable. Private trust companies may not have the same fee structure, account management, investment strategies or legal reviews as commercial institutions.

Experts recommend making no assumptions about the integrity of a trust company. The custodians of estate and trust funds may be just as vulnerable to theft and corruption as any other business. Uninsured trust funds may never be recovered after poor money management or crime depletes, or erases, them.

Source: miamiherald.com, “FBI probes $17.3 million in thefts from trust funds,” Karen De Sa, July 7, 2012