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Mom ordered to repay $507K for raiding daughters' trust funds

A mother who raided the trust funds of her two adopted children must repay the kids $507,000, a state Superior Court panel has ruled.

That is more than twice what Melanie R. Werner illegally removed from her two daughters’ accounts to buy a house in Allegheny County after she and her husband split.

The kicker for Werner, is the court found that she not only has to repay the children for the $252,000 she took from their funds to buy the house in Sewickley, she has to give them all of the money she received when she resold the property for $507,000.

The Superior Court decision came in a recent opinion by Senior Judge John l. Musmanno. It backs an earlier ruling by county Judge John A. Zottola.

According to Musmanno, Werner and her then-husband Eric set up the trust finds for their daughters soon after they adopted them in the mid-1990s. The couple separated in 2009 and Melanie filed for divorce in 2010.

When they split, Eric moved out of the “very large” family home. Months later, Melanie Werner withdrew $252,688 from the girls’ accounts and used $235,000 of it to buy another home in Sewickley, court filings state. She listed the title to that house in her name alone.

After Melanie Werner filed for divorce, the county judge froze all the assets held for the benefit of the children. In August 2013, right after Melanie Werner resold that house for $507,000, the kids sued their mom, claiming she had misappropriated their money.

Two years later, Zottola found Melanie Werner had violated her duty as custodian of her daughters’ accounts. He ordered her to hand over all of the proceeds from the house sale.

On appeal to the state court, Melanie Werner argued that she had acted for the financial benefit of the kids, Musmanno noted. She claimed the house she bought with their money really was their property, so they didn’t suffer any financial loss.

Besides, she contended, she couldn’t afford the $40,000-a-month upkeep of the home the family was occupying when she and her husband separated. In any case, Melanie Werner contended she should at least be allowed to keep the profit from the sale of the second house.

Her arguments failed to convince Musmanno. “Indeed, the children were, in fact, harmed by Melanie’s misappropriation,” he wrote.

Musmanno noted that both girls are currently in college and because of their mother’s action had no access to their trust money to pay educational expenses. “Further,” he found, “the children were deprived of any interest or investment returns that could have accrued….had Melanie not invaded the (trust) accounts.”

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