Two Probate Referees Working Out of State Quit

Two politically well-connected California probate referees resigned from their jobs Tuesday after The Times asked Controller Gray Davis how they could perform the part-time estate appraisal work while they were residing in China and Maryland.

One of the out-of-state referees who stepped down is attorney Michael R. Steed, 44, a former director of the Democratic National Committee and a voter in Montgomery County, Md. The other is Laurence E. Lipsher, 51, an accountant and longtime friend of three Democratic members of Congress from California, who spent at least half his time the last few years in China and Hong Kong on private business--sometimes for months at a time.

On Tuesday, Davis, who appointed the two men to their posts, issued a statement saying that there had been “no complaints about the job performances of either Mr. Steed or Mr. Lipsher. However, as a result of concerns raised by the Los Angeles Times, this office started an investigation to determine whether personal business outside the state prevents these referees from spending enough time in California to adequately do their job.”

As a result, Davis said, Steed and Lipsher offered their resignations and the controller accepted.

From 1988 through 1992, Lipsher collected fees totaling $288,173 and Steed $234,303 for their part-time jobs appraising estates for probate courts in Los Angeles County.

The referees receive no taxpayer dollars but earn a fee for work assigned by the probate courts--0.1% of the value of the assets they appraise. Each fee cannot exceed $10,000.

Aides to Davis said there is no legal requirement for probate referees to reside in the counties in which they serve--or even in the country--as long as they do an adequate job. Like many referees, Lipsher and Steed employ office staff who can do appraisals of real estate, personal property and business holdings.

Davis and his aides say that California’s system of appointed probate referees has done an excellent job.

In 1988, the California Law Commission, which reviews areas of state law for the Legislature, found occasional problems but concluded that “most judges and practitioners think the referee provides a useful and ordinarily high-quality service at modest cost to the estate, and that the referee system should be retained.”

Many of the probate attorneys and judges contacted by The Times also praised the performance of the California probate referee system and gave high marks to the 165 referees.

But critics say it is a system based on political patronage and they complain of “ghost” or “phantom” referees--individuals who appraise property, stocks and bonds and other estate assets with the help of staff or other referees without being present themselves.

This month, The Times reported that many of those appointed by Davis since he took office in 1987 are friends, political allies or relatives of campaign contributors. Among those he has appointed are the son of Assembly Speaker Willie Brown (D-San Francisco), his former chief deputy, the daughter-in-law of a major contributor and wives of three labor leaders whose unions have contributed to Davis’ campaigns.

Neither Steed nor Lipsher could be reached late Tuesday after their resignations.

In an interview before his resignation, Lipsher said that he is not a “phantom”--that he has always done much of his own work, even during absences, using overnight delivery services to and from Asia.

Lipsher said he began traveling extensively in Asia in the mid-1980s, trying to win support for a $4-million project to distribute veterinary drugs in southwest China. When that venture failed, he began spending even more time overseas--working from an accountant’s office in Hong Kong.

Lipsher said that for the past two years he has spent half of his time in China and that he was sometimes overseas for two or three months at a time.

“I do not live in China,” he said. “I travel back and forth.”

For the past year, he has listed the Hong Kong office as his address with the State Board of Accountancy. He said he voted in last year’s general election from overseas by absentee ballot.

He said he returned to California late last month and expects to spend most of his time in the United States.

“I’ve never hidden it,” he said. “I’ve never denied it. Whenever any work came up, I’ve always been able to handle it.”

Lipsher has been a Los Angeles County referee since 1975--continuing to appraise estates for the county’s probate courts even after he moved to Petaluma in Northern California in 1981. Most referees live in or near the counties they serve.

He said that much of the appraisal work required of him--evaluating real estate, stocks, cars, jewelry and other items of personal property--could be done by the professional staff in the office he shares with a number of other California probate referees. If he was in China when his signature was required to meet a court deadline for settling an estate, he said he had documents expressed to him in Hong Kong.

Steed did not return calls to his Maryland home, his Washington business office or Southern California phone numbers.

Bettie Smith, an aide in Steed’s Glendale office, said: “He is here every time I need him.”

Reached by telephone in Maryland before his resignation, Steed’s wife said he spent about half his time in California.

Maryland records show that Steed, who was executive director of the Democratic National Committee from 1981-84, registered to vote as a resident of Chevy Chase, Md., in 1984 and has been voting there ever since.

An attorney, Steed has filed a Maryland address with the California State Bar since 1990. A year ago, he was appointed a senior vice president for ULLICO Inc., an insurance company based in Washington, D.C.

The two referees were first appointed by Davis’ predecessor, Democrat Ken Cory, but have been reappointed to their posts by Davis. Lipsher was reappointed in 1987 and 1991; Steed in 1989 and again this year.

Late last week, Davis’ chief of staff, Scott Shafer, said that because of The Times’ inquiry the controller’s office dispatched auditors to review their work.

Both men, Shafer said, “listed Southern California residences in their applications to be reappointed to be referees. While it is permissible for referees to spend time in other parts of the state or other parts of the country, we’re very concerned that they be physically present in their offices on a regular basis and that they manage their staff appropriately.”

The critical question, Shafer said, is: “Have they been doing the work?”

Several referees contend that to do the job properly referees must maintain a physical presence in their assigned communities--not just to set accurate values on real estate, but also to field questions and complaints from attorneys, executors and beneficiaries to estates--duties that should not be delegated to staff.

“How can (a referee) possibly be in tune with the nuances of a community, particularly in California where all kinds of crazy things happen, when he lives so far away?” asked former referee Rae L. Kirk of Monterey County. “There are things that influence property values you don’t know unless you’re there.”

Both Lipsher and Steed are well-placed in California political circles.

Lipsher said he has known Democratic U.S. Reps. Howard L. Berman and Henry A. Waxman since college, and U.S. Sen. Barbara Boxer since high school. Federal records show he has donated $1,800 to their campaigns between 1989 and 1992.

Like many referees, Lipsher also makes a number of $200 contributions to candidates each year--the legal limit that referees can make to state candidates. In his case, he donated a total of $5,600 since 1985, according to a computerized campaign reporting service.

Steed has contributed $1,500 to Democratic U.S. Senate candidates, including $500 to California’s Dianne Feinstein.

State campaign records report that Steed contributed $300 in 1991 to unsuccessful Democratic state Assembly candidate John Emerson, now the White House chief of personnel.