Bar Harbor Bank & Trust will have to defend itself in court against allegations that the bank allowed a now-convicted conman to steal over $1 million from an elderly widow’s estate and then tried to cover up its involvement.
Kenneth Lindell was sentenced to 10 years prison for defrauding two widows of more than $3 million. Bar Harbor Bank & Trust is now being sued over its role in the case.
The judge presiding over a lawsuit filed in Maine Business and Consumer Court by the estate’s beneficiaries issued a ruling Wednesday denying the bank’s request to be dismissed from the case. The ruling does not make a determination about whether the allegations are true, but it says the plaintiffs have the right to pursue their case against the bank.
The judge dismissed the bank from two of the 11 counts alleged by the plaintiffs but upheld the other nine. The bank responded Friday by saying it acted appropriately at all times, and that the allegations against it are without merit.
The civil case centers around Robert Kenneth Lindell Jr., a former Maine legislator and financial adviser who was convicted in November of defrauding two widows of more than $3 million in what authorities have described as one of the worst cases of elder financial abuse in the state’s history.
A Penobscot County Superior Court jury convicted Lindell on 15 counts of securities fraud, intentional evasion of Maine income tax and failure to pay Maine income tax. He was sentenced in April to 10 years in prison and ordered to pay $750,000 in restitution.
Prosecutors in the criminal case said Lindell began acting as a securities agent for Phyllis Poor of Belfast in the early 2000s and was eventually given power of attorney and named co-personal representative of Poor’s estate and trustee of accounts for her disabled veteran son, Frederic Poor, and two grandchildren. Phyllis Poor died in 2012 at age 92, leaving behind an estate valued at roughly $6.7 million.
Lindell used his access to Poor’s finances to write checks to himself and his company from the accounts of Poor’s estate, paying personal expenses with trust and estate money, prosecutors say. He also bought, renovated and lived in a home in California wine country with money from Poor’s accounts.
The second widow, Gianna Lewis, lives outside Paris and has known Lindell since he was born, according to prosecutors. Lindell was the trustee for accounts set up for Lewis by her late husband, and Lindell was convicted of writing himself checks from her account and paying his personal expenses with the money.
In March, the beneficiaries of Phyllis Poor’s estate sued Lindell and three alleged co-conspirators, including Bar Harbor Trust Services, a subsidiary of Bar Harbor Bank & Trust. The plaintiffs allege that Bar Harbor knew or should have known that Lindell was withholding funds from trusts set up for Poor’s family members, of which the bank was being paid “thousands of dollars annually” to act as co-trustee.
The plaintiffs say the bank failed to notify them of Lindell’s suspicious activities regarding the trusts, and that when it became clear Bar Harbor might be accused of assisting Lindell in committing fraud, the bank hired a law firm and used money from the Poor family trusts to pay its legal fees.
“(Bar Harbor) retained the law firm of Pierce Atwood LLP to assist it in developing a strategy to conceal the activities and omissions of (the bank) while at the same time continuing to serve as administrative trustee to the trusts,” the complaint says. “It paid for its own defense lawyers … from (the trusts) in an amount of at least $6,433.19.”
In its failed motion to be dismissed from the case, Bar Harbor called the allegations against it “nonsensical” and said the bank “had no duty to ascertain” whether Lindell had properly funded the Poor trusts.
Bar Harbor said Phyllis Poor’s will had appointed Lindell her estate’s “personal trustee” and had granted him sole authority and responsibility for all matters regarding distribution of funds to the trusts’ beneficiaries, as well as all decisions regarding the acquisition and disposition of assets.
As the “administrative trustee,” the bank did not have authority to make distributions or to acquire or dispose of trust assets, it said.
Founded in 1887, Bar Harbor Bank & Trust is one of Maine’s largest banks with total assets of $3.7 billion as of June 30. The bank’s chief marketing officer, Joseph Schmitt, said Friday in a prepared statement that the bank did nothing wrong regarding the Poor family trusts.
“Bar Harbor Trust Services feels very strongly that at all times it has acted appropriately and looks forward to the opportunity to demonstrate that it performed as it was required to and that the claims alleged against it by the plaintiffs are meritless,” Schmitt said.
Sarah Irving Gilbert, partner at Camden-based law firm Camden Law LLP, is representing the Poor family members who filed the lawsuit. Gilbert said the judge’s ruling Wednesday is significant because it allows her firm to move forward with demands for documents that will show what transpired between Lindell and the bank.
She said the bank’s failure to protect the trust beneficiaries from Lindell’s theft is only half the story, and that equally damning were its efforts to cover up its involvement after the fact and obstruct the plaintiffs’ fact-finding efforts.
“The allegations against Bar Harbor Trust in this case are serious,” Gilbert said. “We’ve alleged, and we are going to be allowed to proceed, on claims that this financial institution where thousands of Mainers bank has engaged in civil conspiracy, theft and fraud.”
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