Sen. Fletcher Hartsell Jr. is one of the top Republicans in the state legislature, a veteran of more than 20 years in Raleigh with a reputation for getting things done. He boasted in a recent interview that in the past session, no one had a hand in more successful legislation.
But a deal in Hartsell’s private law practice is drawing attention of a different sort. He is a target of allegations of financial misconduct and negligence as the trustee of an elderly couple’s estate in his hometown of Concord, northeast of Charlotte.
Lawyer David Bland of Matthews was assigned by the court to sort out the details of the multimillion dollar estate of Harold and Audree Mills. Bland says in court documents that the senator has engaged in a “continuing course of self dealing transactions” and allowed his younger brother, Thomas Hartsell, to “grossly overcharge” a trust that held their money. A longtime employee, David Piatt, who helped the Millses with daily tasks for years, says the Hartsells “set out to pilfer this estate.”
The Hartsells deny wrongdoing and say they have been swept up in an ugly family fight over money that the couple intended for a church. Thomas Hartsell, a financial planner who was paid a total of at least $300,000 from the trust and by Harold Mills, once said he thought his help for the couple would cause the family to “pin a medal” on him.
Sign Up and Save
Get six months of free digital access to The News & Observer
“I didn’t realize they’d pin a lawsuit on me,” he said.
Fletcher Hartsell said in a testimony that his actions were aimed at carrying out the wishes of Harold and Audree Mills. Through a lawyer, Cynthia Van Horne of Charlotte, he declined comment for this report. “Fletcher Hartsell is pleased with the present posture of the case,” Van Horne said, “and is pleased that the courts have to date agreed with his decisions to make sure the money goes to the church.”
Until this month, Hartsell, 65, was chairman of the powerful Senate Finance Committee; he now co-chairs the Joint Legislative Program Evaluation Oversight Committee, an arm of the legislature that audits state programs. For much of the past decade, when Democrats were in charge, he was voted the Senate’s most effective Republican.
But Hartsell has experienced recent turbulence. The News & Observer reported this month that his campaign-finance reports for 2011 and 2012 show that he paid off nearly $100,000 in personal credit card bills using campaign funds. He also paid thousands more in reimbursements to himself and his law firm from campaign accounts.
Hartsell faced no opposition in the primary or general election campaigns in 2012.
Hartsell has previously acknowledged in an interview that while he thinks the spending was primarily related to his campaign, he may have made invalid payments covering personal expenses with campaign money. If it happened, he said he would repay those expenses. The State Board of Elections is investigating.
There is no evidence that the trust allegations and the campaign matters are related. But records do show a payment from Hartsell’s campaign to his brother, in part for the brother’s use of a vehicle owned within the Millses’ trust.
An employee’s affidavit
Harold and Audree Mills owned and operated Mills Florist, a well-known Cabarrus County floral business that for decades supplied flowers and arrangements for funerals, weddings and other events in the county. They built up millions in stocks, cash and real estate.
Piatt, the couple’s longtime employee who assisted in their personal affairs, says the estate reached about $6.7 million. Anthony Orsbon, the lawyer for Thomas Hartsell, says it was closer to $4 million.
The couple had no children. As they grew older, there were persistent concerns about their health. Fletcher Hartsell helped them draw up a charitable trust plan to pay for care and then leave their assets in installments to McGill Baptist Church of Concord, where the Millses and the Hartsells had long-standing ties. He set it up in early 2007.
By that time, both Harold and Audree Mills were the subjects of pending incompetency hearings, brought two years earlier by a family member to establish their state of mind.
Harold Mills died in February 2008 before the process was complete. He was 91. Audree Mills was found to be incompetent in 2008. She died in early 2010 at 95.
Her doctor has testified that she was being treated for Alzheimer’s disease and could not make sound decisions from October 2002 forward; she had also suffered three strokes in eight years, beginning in 1994. Her estate is trying to undo a number of legal moves made under her signature with Fletcher Hartsell’s involvement as a lawyer. Court documents allege that the senator was aware of her mental status beginning in at least 2005; he has testified he saw no reason for concern.
Piatt, too, was a member of McGill Baptist Church, and had been accepted as an openly gay member with his partner in 2003. The church was expelled from the Southern Baptist Convention as a result; it was a decision that made headlines.
Piatt said he and his partner would sit in the pews with the Millses and the Hartsells, who were helpful in the church’s decision to accept him. He felt indebted to the senator. But he testified in a November hearing that he believes the Hartsells “used” him to gain the couple’s trust. Hartsell later left the church.
In a sworn affidavit, Piatt said that Hartsell approached him in late 2004 or early 2005 and said that his brother was a financial planner who was moving back to Concord after a divorce and could help the Mills with estate planning. Documents Thomas Hartsell provided to the court said he had more than 20 years of experience.
Piatt said his eventual blessing was important because Harold Mills thought the Hartsells “were shifty,” according to testimony he gave in an October hearing. Mills, according to several accounts in the court files, was stubborn and untrusting.
In hindsight, Piatt testified, he thinks the Hartsells were interested in their own financial gain, an allegation the Hartsells deny. Asked to explain, Piatt hesitated until the clerk overseeing the hearing said he was allowed to answer freely.
“My truth, to me, is that Tom and Fletcher Hartsell set out to pilfer this estate from the very beginning,” Piatt testified.
Several legal actions have alleged that the senator and his brother set up the charitable trust and a related property holding company in such a way that it led to significant and needless payments to themselves.
But the Hartsells say their decisions were sound.
Buying a building
Thomas Hartsell said his plan was to sell the couple’s real estate holdings – nearly 20 properties that weren’t making much net income – and use the cash to fund growing health care needs. They formed a property company and made Thomas Hartsell its co-manager with Harold Mills. They then transferred the property company into the trust, with Fletcher Hartsell as the trustee.
The couple was to receive 6.5 percent of the trust’s total value each year. After their deaths, the church would get similar payments up until a 15-year term expired.
Audree Mills received nearly $500,000 from the trust before her death, according to Thomas Hartsell’s lawyer.
Family members have questioned a big purchase that came after the Millses property was liquidated – a commercial building in downtown Concord that once had been the senator’s law office. Thomas Hartsell set up his financial planning office in the building and did not pay rent, according to testimony he gave in March 2009.
But he said that was offset by work he performed for the estate without getting paid.
Alice Mills White, a niece of the Millses, said there are as many as 70 possible heirs and that no one is looking to get rich. One nephew owns half of a valuable family lake house and is seeking the other half share that was owned by the Millses.
White said most want a verifiable listing of how her aunt and uncle’s money was spent by the Hartsells, and that her aunt did not want her estate to go to one church.
“They did not want this being managed and paying fees for 15 years,” she said. “It’s wrong.”
Questions about billing
Lawyers have been focused tightly on spending from the trust and the related property company involving the Hartsells.
Court documents and testimony show that Thomas Hartsell billed the estate at rates of as much as $250 an hour. Among the bills:
• $10,000 for taking Harold Mills to see his wife each day while she was hospitalized. He billed five hours a day for eight days, saying it qualified as “extraordinary” work.
• $18,375 for research and responding to an accounting firm about the couple’s personal and trust tax returns for 2007. He said it took more than 73 hours.
• $40,000 for meeting with Harold Mills, having lunch with him and going through his papers looking for income tax information 40 times. Hartsell said he “generally” did not bill for lunches.
In addition, in January 2008, Thomas Hartsell wrote himself a check from the property company’s account for $10,000, listing it as a “partial payment of management fees” in the memo line. But the company’s operating document forbids payment for “merely being a manager.” He also gave conflicting answers for the reason behind more than $80,000 in checks he wrote to himself from the property company accounts. In all, Thomas Hartsell testified in a deposition in 2009 that he was paid $288,000 in a roughly three-year period for “management services” to the couple as well as financial planning, overseeing property matters and out-of-pocket expenses. In a recent hearing, he acknowledged more payments since then.
He says he is owed at least another $251,000 for work he performed for the couple, and he has repeatedly said he stands by his billings.
Last week in Concord, a judge listened to arguments in one aspect of the controversy, then halted the proceedings and encouraged the sides to negotiate a settlement.
“There are enough legal issues to keep a court busy for a mighty long time,” said Special Superior Court Judge Richard L. Doughton of Sparta.
Talks were ongoing all week, and two lawyers involved said a tentative agreement was reached late Friday. It could take weeks before anything is made public or final, they said.
There have been various rulings along the way. One judge’s dismissal of the major part of the case was reversed by the state Court of Appeals. After Judge Doughton dismissed a big part of the case two months ago, based on an interpretation of state law, it is headed back up on appeal.
A court-appointed lawyer who represents the estate of Audree Mills told the judge last week that he wants sunshine on the handling of the estate and does not believe that has happened so far. The lawyer, David Bland of Matthews, claims in court documents that the senator engaged in a “continuing course of self dealing transactions” with his brother and that he was “advancing his own interests” ahead of Mrs. Mills’. He alleges “constructive fraud” by the Hartsells.
The elected clerk of court in the county, William Baggs, brought Bland in from outside the area to fight on behalf of Audree Mills’ estate.
“We want open, honest disclosure,” Bland said. “We need to get this thing so it can pass the smell test.”
Thomas Hartsell’s lawyer, Anthony Orsbon of Charlotte, said his client’s work was billed at acceptable rates.
Orsbon said he was hopeful the whole thing could soon be settled and in an interview acknowledged that every charge leveled in court has not yet been answered.
“Allegations are allegations,” he said. “If what they say is true, then it’s terrible. If it’s not, then it’s all nothing.”