Bay Area Reporter - September 27, 2007
Heather Cassell, h.cassell@ebar.com

In fact, John Marino couldn't even attend his mother's funeral, he said, because of the fear that using the trust money would negatively affect his government benefits.

In 2003, Marino, 62, who has been living with AIDS since the beginning of the epidemic in the early 1980s, was searching for a way for his friends and family members to assist him without affecting his benefits. He thought he found a way through a special needs trust, but in 2006 the San Francisco Housing Authority claimed the trust as income after learning about it.

Marino has been in dispute with the San Francisco Housing Authority and Stephen Dale of the Dale Law Firm in San Francisco for nearly a year and has only received an increase in his contribution for his Section 8 housing and silence from Dale.

"People wanted to help me with medical expenses that were not covered by my own benefits," said Marino. "I thought, this was ridiculous. There's got to be a vehicle that will allow my family and friends to assist me without my being penalized for their gift."

A yoga instructor who works several hours a week at two senior centers in San Francisco, Marino said he though he found a way when one of his students mentioned to him that her family set up a special needs trust for her brother, who was also living with AIDS, through Dale.

Marino told the Bay Area Reporter that he was skeptical about the trust at first, but in 2003, he began investigating special needs trusts and how they work. His skepticism began to subside after seeing fliers for workshops Dale presented about the trusts that were sponsored by the Positive Resource Center. Marino also learned that Dale was an impaneled attorney for the AIDS Legal Referral Panel. He also read a pamphlet provided by Dale's law firm about special needs trusts that clearly states "there are numerous categories of distributions which are specifically excluded from being treated as annual income to the Section 8 recipient ... these include distributions that are temporary, nonrecurring, or sporadic income, including gifts."

With the personal referral from his student, the knowledge of the backing of two of the Bay Area's well-known AIDS organizations, and the pamphlet, Marino scheduled a meeting with Dale. Marino's friend Richard Carrazza went with him.

According to Marino, Dale told them that "it would protect all of his benefits." Marino said that he was "very clear with [Dale] about what benefits I had," as he was concerned about his government benefits being affected.

"I did not want to be fraudulent in this," said Marino. "I wanted to do this in the most above board way I could find."

Convinced by Dale that the special needs trust would meet Marino's needs, Carrazza purchased the John Marino Special Needs Trust for $1,200 from Dale in 2003. The trust was established with $13,000 from a settlement Marino received from a car accident and has never held over $10,000 annually from family funds deposited yearly into the trust. Carrazza, the trustee, managed the special needs trust to cover medical and other expenses that weren't covered by Marino's government benefits, on an as-needed basis, Marino said.

But Marino told the B.A.R. that he never received a fee agreement from Dale outlining the services agreed upon, including if he had any problems related to his benefits, and the method of payment.

Carrazza did not respond to repeated attempts to contact him.

In 2006, when Marino inadvertently told James Grossman, an inspector for the San Francisco Housing Authority, about the trust during a routine inspection, it was counted as income.

Marino contacted Dale to assist him with his dispute with the housing authority, but, according to Marino, was asked by Dale, "How did they find out?"

Taken aback, Marino said, "It doesn't matter how they found out, it matters only that the instrument that he sold me was deficient."

Marino immediately hired attorney Philip Horne to represent him at the housing authority's administrative hearings in October 2006 and requested in writing a refund for the special needs trust from Dale. Dale never responded to Marino's repeated requests.

"Mr. Marino, like a lot of other people with AIDS, purchased a special needs trust ... a trust that can't do what he was led to believe it would do," said Horne, who believes that Dale should refund Marino for the trust.

Horne told the B.A.R. that he contacted Dale to resolve Marino's complaints against him, but that he "refused to resolve the issue."

Marino sought help from the ALRP and Catholic Charities, but was told that they couldn't help him, he said.

The referral wasn't made through the ALRP, according to Executive Director Bill Hirsh, in a letter responding to Marino's complaint against Dale, therefore the agency wasn't able to assist him. According to Hirsh, Dale hasn't received any other complaints and out of 700 impaneled attorneys, 450 of whom are active, Dale is the only attorney who has the experience with special needs trusts.

"There are very few attorneys who do them and have the experience he does," said Hirsh.

Marino filed a complaint against Dale with the State Bar of California around the same time, but the bar couldn't assist Marino either. In April, Marino received a letter responding to the complaint he filed that stated "because there was no fee agreement or indication of what services were supposed to be provided ... we do not have sufficient facts demonstrating misconduct by the attorney."

In the meantime, within months, and without Marino's knowledge after an administrative hearing with the housing authority last October, the housing authority increased his contribution to his utilities and Section 8 housing expenses by $1,332 a year, Marino said.

The increase affected Marino's fragile financial position and his home. Marino lives on an estimated $26,736 a year through his benefits and limited employment.

Attorney responds

"Mr. Marino is the victim of an agency that has lost its vision here," said Dale, who conducts about 25 workshops on special needs trusts a year in California and has been working with ALRP for over 10 years. "If you look at the law here, they're wrong - but they are not being held accountable."

Unlike other jurisdictions, which Dale said do not count special needs trusts as income - San Francisco does.

"San Francisco has taken the stance that all distribution is considered income," said Dale, in the middle of shooting a DVD about special needs trusts to sell on his Web site, "which wasn't the case five years ago."

Asked if he had received any complaints about the Section 8 housing authority regulations in relation to special needs trusts that he's sold, Dale said that he's had two or three complaints, then added, "We specifically do not represent folks because we can't."

Dale told the B.A.R. that the housing laws "are all written very badly" and that "there isn't a body of law for housing authority because there isn't money in it for lawyers."

Horne agreed with Dale that the housing authority's "interpretation of the law" regarding special needs trusts is inaccurate.

Grossman is no longer employed with the housing authority, according to an administrator.

An e-mail sent by Gregg Fortner, executive director of the housing authority, on September 17, defined a special needs trust as "such trusts may also avoid beneficiaries losing access to essential government benefits," but clarifications weren't provided. Even in the housing authority's administrative hearing decision on October 13, 2006, it recommended more information about the special needs trust. "The fact that the distributions were not on a regular basis, alone, would not demonstrate an exception to the rule. Without further evidence of the nature of the distributions, i.e. temporary, nonrecurring, or sporadic," said the decision. Yet in the same recommendation the housing authority ruled for the special needs trust to be counted as income.

"I know for a fact that our manager and our staff have talked to him repeatedly to provide information," said Tony Ucciferri, Section 8 administrator of the San Francisco Housing Authority late Tuesday, referring to Marino. "He is free to provide information at any time he can bring it in and we will review it. I don't believe that anyone has told him anything but that."

Ucciferri told the B.A.R. that Marino didn't have to use a lawyer to get this information.

"If people have these trusts they have to hide them," said Marino. "Because if they don't and it's found out that the trust has been helping them in any way they are going to lose their benefits or they're going to be somehow jeopardized."

Upon learning about the increase in his contribution in February, Marino sent three separate letters to the housing authority requesting information about the appeals process to the administrative hearings. Marino claims that he never received a response, he only received a letter with his contribution adjustment in March.

During a phone call on September 24, Fortner said that he considered the case closed as of October 13, 2006 and told the B.A.R. that there was no other appeal process.

"That was it," he said.

Fortner also didn't understand how Marino couldn't have received a notice about the adjustment in his contributions as a notification was sent the same day to Marino and Horne.

The pressure mounted as issues with his housing increased, with his landlord trying to force him out of the apartment he has lived in for 12 years, Marino said. Then his mother died earlier this year. Afraid to access the funds in the special needs trust because of how his government benefits would be affected, Marino didn't attend his mother's funeral.

"My health has suffered enormously at the hands of a bunch of attorneys who dug in there heels to protect themselves and each other rather than being fair, direct, and honest with me," said Marino. "They have a responsibility to their clients to protect them and rather than protecting me they sought to protect an impaneled attorney and themselves. That really hurts."

Marino is still trying to obtain an appeal to his original hearing with the housing authority, but continues to receive silence to his questions about the appeal process. Silence also shrouds his repeated requests to Dale for a refund on the special needs trust.

"I would love to get the money back," said Marino. "Not only the money that I spent for the trust, but the money I spent defending it and the benefits that I lost."

He added, "There is no way to recover the emotional strain."

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