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Published September 12, 2013, 08:59 PM

Second suit over guardian’s work ends finding no liability

A jury on Thursday found that the former public administrator for Grand Forks County was negligent in handling the estate of an elderly woman in 2011 but that her misdeeds caused no damages to Faith Krueger.

By: Stephen J. Lee, Grand Forks Herald

A jury on Thursday found that the former public administrator for Grand Forks County was negligent in handling the estate of an elderly woman in 2011 but that her misdeeds caused no damages to Faith Krueger.

That let the county off the hook in the lawsuit Krueger, 86, brought seeking $250,000, the amount she says disappeared while she was a ward of the county.

Testimony during the trial that began Tuesday included tales of missing gold coins worth $175,000 and several 100-ounce bars of pure silver stashed in a county employee’s home.

But Thursday’s outcome was similar to the Aug. 30 verdict by a different six-person jury in a twin lawsuit against the county brought by Paul Veum, 77, who also claimed Barbara Zavala, the county’s public administrator until abruptly resigning in January 2012, took or mishandled his assets while he was a ward of the county in 2011.

The same players, including several of the same witnesses, were at each trial: state District Judge Richard Geiger of Grafton, attorney Howard Swanson defending the county and attorney Tim Lamb representing Krueger, as he did Veum.

“I thought we would win,” Krueger said after verdict was read in court at 6:45 p.m. Thursday as she started back to her assisted living apartment. “I will be fine.”

Breach of duty

The five men and one woman on the jury determined that while Zavala breached her fiduciary duty as Krueger’s guardian and conservator and was negligent in handling her assets, Lamb did not prove Zavala’s actions caused any losses to Krueger. That meant the county, the only defendant in the civil trial, wasn’t liable for any damages for the poor work of its former employee.

The jury in Veum’s case last month found only that Zavala failed in her fiduciary duty but that it caused no damages.

In both cases, Swanson argued that the two elderly plaintiffs themselves testified they weren’t certain what property they owned, or what happened to it, if anything.

Despite wild tales of gold coins worth $175,000, there was no real evidence Krueger ever had them, Swanson said. The silver bars taken by Zavala’s assistant, Cathy Westensee-Fisk, to her own home for safekeeping, are back in Krueger’s possession and Lamb wasn’t even seeking recompense for them, Swanson said.

“There is no evidence of any missing assets,” Swanson said “Allegations are not evidence. Speculation is not evidence.”

The reality, Swanson argued, was that since her husband — Jack Krueger, a longtime electrical engineering professor at UND — died in 2007, Krueger had mental health problems that confused her about the quantity and quality of her property and led to a judge appointing a guardian for her.

Zavala’s poor work as public administrator didn’t lead to Krueger losing anything, Swanson said, citing testimony from a Realtor, an accountant and a banker, all familiar with Krueger’s estate.


Aside from the civil trials, state and federal prosecutors have been investigating Zavala since 2011 over allegations she mishandled assets of her wards while she was public administrator from 2008 to early 2012, when she resigned abruptly.

No criminal charges have been filed, although Zavala’s attorney, Kerry Rosenquist, told Judge Geiger last month that a federal prosecutor said he was seeking an indictment against her.

As she did in Veum’s trial last month, Zavala invoked her Fifth Amendment rights Wednesday and refused to answer any questions on the witness stand.

County officials told Zavala she was going to be fired because of the allegations and she immediately resigned in January 2012.

Zavala told the court she’s now working for Transystems, the trucking company which hauls sugar beets to American Crystal Sugar plants in the Red River Valley.

The two civil trials highlighted the unusual nature of county public administrators, an office created a century ago to take care of elderly and vulnerable people with no one else to care for them.

Like most North Dakota counties, Grand Forks County now contracts with a private firm which specializes in guardianship and conservatorship cases.

Partly because of the controversy over Zavala’s work, the state has moved to take over financing the work of public administrators to give more consistent oversight.