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When Fiduciary Breaches Amount to Criminal Offenses

A woman from New York State has been sentenced to five years in prison and fined over $100,000 for fraudulently mishandling her deceased father’s estate. The case is an important reminder of the solemn duty one assumes as a fiduciary, the great power bestowed upon fiduciaries and potential for abuse of power, and that breaches of fiduciary duty can result in both civil and criminal liability.

Steve Kallis executed a Will in the year 2000, in which he named his two granddaughters and his son as the beneficiaries of his estate. However, when Mr. Kallis died in 2016, his daughter, Patricia Giddings, concealed the 2000 Will and claimed that her father had died intestate, without a will, and she applied to be the administrator of his estate claiming to be its sole beneficiary. Mr. Kallis’ son predeceased Mr. Kallis, and Ms. Giddings was Mr. Kallis’ only surviving spouse or child at the time of Mr. Kallis’ death, so if Kallis had in fact died intestate, Giddings would have been his sole heir. The granddaughters named in the 2000 Will were Ms. Giddings’ own children.

Ms. Giddings, under the false guise as the administrator of her father’s estate, proceeded to convert all of her father’s assets and property (including his home) into her own name.

Upon receiving a tip from a New Jersey Wills and Estates Registrar, a state prosecutor commenced an investigation into Giddings’ conduct and found that her claim that her father died without a Will was false and that she had wrongfully and knowingly embezzled all of his assets.

A grand jury indicted Ms. Giddings on multiple counts of felony theft, misapplication of entrusted property, falsification of records and criminal contempt. She pleaded guilty to the charges in November, 2019 and was slapped with a 5 year prison sentence and $100,000 fine in January, 2020.

This Giddings-Kallis case provides a good lesson of the immensely broad powers vested in those who assume the role of fiduciaries, the potential for abuse of those powers, and a reminder of the fact that such abuse or breaches of fiduciary duty can amount to criminal charges. An estate trustee, acting in breach of their fiduciary duty, may not only be liable on civil grounds to those individuals they have wronged, but may also face criminal punishment (fines, jail sentences, etc.) should their conduct warrant same.

Under the Canadian Criminal Code, the following provisions, among others, could theoretically be applied to hold estate trustees or other fiduciaries accountable for egregious acts that amount to criminal misconduct: ss. 332 (theft); 336 (criminal breach of trust); 361-362 (false pretenses); 366 (forgery) and 386-388 (fraud).

Interestingly, while there is a specific criminal provision that speaks to crimes committed by a person holding a power of attorney (section 336: theft by person holding a power of attorney), there is no section in the Criminal Code that specifically addresses criminal misconduct of estate trustees, although section 336 (criminal breach of trust) could readily apply to such circumstances.

This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

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