Class Action Alleges More Than $100M in Special Needs Trust Assets Misappropriated Over a Decade

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A proposed class action lawsuit accuses several entities and individuals of misappropriating more than $100 million of special needs trust assets over more than a decade, leaving some of the most vulnerable members of society without a means of financial support beyond public assistance. 

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The 57-page lawsuit accuses defendants Boston Finance Group, Boston Asset Management, three Prospect Funding entities, American Momentum Bank, and three individuals of causing and/or aiding and abetting the “unfathomable misappropriation” of more than $100 million in assets spread among 2,000 special needs trusts established for elderly or disabled beneficiaries and typically funded from settlements or recoveries from serious personal injury litigation. 

More than 1,500 of the special needs trusts, many of which were court-ordered to protect the funds therein, are missing all or part of their assets, the filing alleges, claiming in particular that American Momentum Bank, where the special needs trust funds were deposited, “did nothing to prevent the money from being taken” despite numerous red flags. 

According to the case, the corporate trustee for the special needs trusts, The Center for Special Needs Trust Administration, a 501(c)(3), filed for bankruptcy in February 2024. Per the suit, the bankruptcy filing came almost two years after The Center’s board of directors claims to have first become aware of the apparent misappropriation scheme allegedly carried out by “the trustee’s founders, insiders, attorneys, and their related entities.”  

The Center’s bankruptcy petition revealed that the trustee had, between 2009 and 2020 and unbeknownst to proposed class members, allowed more than $100 million in special needs trust assets to be “siphoned and misappropriated” from their accounts, the filing says. In particular, the more than $100 million was transferred from the special needs trusts and paid out as a purported loan to defendant Boston Financial Group, the case claims. 

Per the complaint, the founders of The Center for Special Needs Trust Administration, defendants Leo J. Govoni and John W. Staunton, along with defendant Jonathan Golden, have been the controllers and beneficial owners of Boston Financial Group. The suit says that although Govoni resigned from the Center’s board in late 2008 or early 2009, with Staunton also serving on the board until his 2009 resignation, the two defendants’ resignations were “no doubt a ruse through which they would create the appearance of separation from the Center’s operations.”

Shortly after Govoni and Staunton’s resignations in or around 2009, the Center began to transfer what ended up totaling $50 million from special needs trust accounts maintained at defendant American Momentum Bank to one or more Boston Financial Group accounts maintained there, supposedly as a loan to a “credit facility,” the lawsuit alleges. 

“Incredibly, the Center states in Bankruptcy Case filings that it has no copies of any loan documents memorializing the alleged [Boston Financial Group] Loan, although it admits the loan documents are referenced in an August 2011 letter from [Boston Financial Group] to the Center.” 

Beginning in January 2012, the Center transferred to Boston Financial Group an additional $50 million from those same special needs trust accounts, again purportedly as a loan, the case continues. 

The lawsuit, citing the Center’s bankruptcy filings, states that the $100 million-plus loan to Boston Financial Group matured on January 1, 2017, yet the firm continued to receive money from the Center and the special needs trust accounts until late 2020. The case claims that there has been “no meaningful attempt” from Boston Financial Group to repay the $100 million and that the firm “only purportedly [makes] periodic interest payments and an alleged small principal reduction payment.”

The Center stated in bankruptcy filings that it first became aware that the $100 million was missing in the wake of the April 2022 resignation of Caitlin Janicki, Govoni’s daughter, from her roles as head of case management and vice president of the trustee, the suit says. Following non-party Janicki’s resignation was the Center’s finding of an unsigned November 2021 letter in which Govoni sought to revise the terms of the note and line of credit agreement with the Center, even though the loan had matured years earlier, the case shares. 

Until the Center filed for bankruptcy this year, it gave no notice to proposed class members of the existence of its loans to Boston Financial Group or the company’s defaults on those loans, the filing charges. According to the complaint, the Center has taken no reasonable action against any of the defendants involved in the misappropriation of the special needs trust funds for which it is a trustee. 

“The Center now blames everyone but itself and its current directors for the massive, unmitigated misappropriation of [special needs trust] assets,” the filing says. “The Bankruptcy Case filings state that there are 1,570 compromised trusts, whose Beneficiaries are the Plaintiffs and Class Members in this Action.” 

The lawsuit looks to cover all United States residents who are the grantors and/or beneficiaries of pooled special needs trusts administered by The Center for Special Needs Trust Administration, as the trustee of those accounts, and affected by monetary transfers to Boston Financial Group out of one or more special needs trust accounts at American Momentum Bank. 

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