Signs of Elder Financial Abuse

CHAPTER 1: METHODS AND TACTICS OF AN ELDER FINANCIAL ABUSER

Our families, communities and state legal system have worked in recent years to protect our loved ones from elder financial abuse. That said, families with elder adults still share a deep fear about the physical, mental and financial safety of their loved ones. Elder abusers, however reprehensible, often find ways to circumvent the protections that our families and society provide our senior citizens. Wrongdoers have their methods and tactics, and it’s our responsibility to counter them at every turn. If they think they’ve gotten away with hijacking estate or trust assets, trust litigation attorneys should make them pay under the full weight of civil law.

In my practice, which likely mirrors our country at large, the following are the five most common ways elder financial abuse happens:

1. Caregiver Abuse

When a Michigan trial judge dismissed a family’s lawsuit against a home care company for sending a caregiver with two felony criminal warrants to care for a man in his 80s, the national press erupted with questions about how this could happen.

In this particular case, a caregiver company – Kentucky-based ResCare – sent a woman to a retired Detroit-area businessman to look after his ailing wife, who had dementia. It didn’t take long until the wife’s jewelry began to disappear, as well as the businessman’s fortune. Court filings estimate the losses to be as high as $1.5 million. The caregiver, if she could be called that, moved the businessman out of his bedroom into the basement of his lakefront home and moved her mother into the home. The businessman’s wife died, and within months the caretaker “married” the businessman.

When the businessman’s family members finally intervened and removed him from his home, his finances were in a shambles. He didn’t have bank accounts with positive balances or working credit cards. He had his social security monthly payment – that’s it.

The Michigan businessman and his family are simply representative of the widespread abuse affecting our growing elderly population. I have handled a number of cases where predators, posing as legitimate caregivers, soon take advantage of the elderly. This misconduct includes physical and medical neglect often coupled that with embezzlement and theft.

The Michigan case didn’t work out well – not that any of these abuse cases by nature work out well. Even with a partial financial recovery, the seismic emotional repercussions stemming from misplaced trust don’t easily recede.

2. Financial Exploitation

Financial exploitation takes many forms. Every day, even though I have been counseling families for decades, I am regularly surprised. The sale of an elder’s medications; grocery bills more attributable to cash withdrawals taken by caregivers than bread and milk purchased for the elderly; lawn service for a small yard at $300.00 per week; money used for gambling; medical care and dental care neglected because of the theft of funds; and assignments of bank accounts into joint tenancy with a wrongdoer.

Most families with victimized elders could readily add to the list of the ways elders are financially exploited. Vigilance helps.

Here are some examples of vigilance:

• Be very careful and take precaution when hiring caregivers. Simply hiring a caregiver company is not an insurance policy against wrongdoing.
• Watch your elder’s bank accounts – particularly withdrawal activity or changes in accounts. Sometimes the horse is out the barn door before you discover bank transfers but it is still better late than never (or a year later).
• Be careful and inquiring when you hear that your elder has been making frequent trips to the bank.
• Be vigilant in watching your elder’s mail. We have seen circumstances where financial information is hidden from the view of the elder and his or her relatives. This is a sign of great danger. Some financial advisors believe that an elder’s credit report should be ordered periodically. This could also be a good “canary in the coal mine.” We have seen cases where social security checks were cashed by wrongdoers. Direct deposit of social security checks, retirement and dividend checks provide some distance between a wrongdoer and your elder’s money.
• Review receipts from vendors (grocery store, pharmacy, Costco etc.) for goods purchased for your elderly relative. We have seen wrongdoing first discovered in this review. A $350.00 receipt from the local grocery store showing a $200.00 cash withdrawal can make even the most oblivious suspicious.
• Watch for service scams. New heaters, air conditioners, garbage disposals or lawn irrigation systems sold at a large premium are not unusual.

Reverse mortgages can be a blessing or a curse. Reverse mortgages may provide a large lump sum payment or a stable predictable monthly income to senior adults, but money coming from reverse mortgages may also be a large tempting “cookie jar” for unscrupulous caretakers or relatives. More than once have I seen reverse mortgages paid to vulnerable senior adults with questionable capacity. The existence of a reverse mortgage is often not discovered by the senior homeowner’s family until the senior has passed away.

3. Misuse of Powers of Attorney

Durable powers of attorney can be a great legal vehicle for senior adults to appoint a trusted agent to handle health, legal and financial matters. Such powers, when used with prudence by trusted family members or agents, provide legal protection when and if the senior becomes incapacitated or incompetent. Such powers when used correctly are an unfettered blessing. If misused, such powers can destroy a lifetime of planning.

The effective and prudent use of durable or medical powers of attorney brings no headlines. In the same way, misuse of such legal vehicles is often kept secret and only met with incredulity by relatives when discovered.

We have seen a number of incidents where powers of attorney were misused at the end of life of an elderly adult to benefit the holder of the power of the attorney. Examples of misuse include: The transfer of real property to the holder negating trust provisions that provide for a different distribution; entry and seizure of safe deposit personal property coupled with later denials of the existence of such properties; dramatic changes in bank accounts that are inconsistent with will or trust provisions; and transfer of vehicles.

Some holders of medical powers of attorney have misused their powers to prevent family members from visiting the hospital bed of a gravely ill or dying relative. California has recently addressed this issue in legislation – making such abuse much more difficult. In the meantime stories abound about how a son or daughter, grandson or granddaughter, could not visit a dying relative because a stepmother or stepfather prevented the visit. If these problems were not so common there would be little need to address it. For those who face the issue, they should immediately contact a lawyer familiar with elder abuse laws. Medical facilities should also be aware of their own limitations is preventing visits.

4. Isolation and Freeze-Outs

Isolation of elders from their families, neighbors and loved ones is an all too common occurrence. Changed door locks, new locked front gates, mobile telephone seizures, failure to answer or open the door to visitors, and unreported removals of elders from their homes are part and parcel of isolation. These actions cause family members to fear for the safety of their loved ones and also may create a sense of helplessness. Unfortunately, such conduct is common.

For Californians who encounter isolation or freeze-out abuse, the first step is to call Adult Protective Services or its equivalent. Local law enforcement agencies also often have task forces that deal with such abuse. Civil lawyers skilled and experienced in elder abuse issues can assist in such contacts and can also address such issues in civil filings that include restraining orders and other appropriate measures.

Words of warning – while isolation and freeze-out conduct might be obvious to the family member of the elder, such conduct may not be as obvious to authorities. Criminals and wrongdoers do not usually jump at the chance to admit guilt. While there is no excuse for elder abuse, wrongdoers will readily provide excuses. Common excuses include “I had to keep everyone away because they just upset” the elder; “We had to move Grandpa to Arizona because they had the best medical care there”; “I had to keep Aunt Bessie from the phone because she only got upset when she heard from her relatives”; “Of course I had to keep my dad away from my sisters and brother because they are greedy and they only wanted to get his money”; and “I needed to protect my uncle because he was afraid that his children were going to hit him, push him down or lock him up in a mental asylum.”

Don’t expect the isolator to readily admit that she bought her boyfriend a new Harley with grandma’s money, that the house and surrounding are a pigsty because she is doing meth, or that all of grandma’s jewelry was sold to support her drug habit. You’ve got to dig at it when your loved one is isolated – when you are frozen out. The process can be demanding, frustrating, and can cause anxiety. Still don’t turn your back on your elder – do something – protect the vulnerable.

5. Unwarranted Transfers

First, an obvious acknowledgment: families often have difficulty in transferring an elderly family member to an assisted living or nursing facility in situations where it is absolutely in the senior’s best interests to have such a transfer. I’d venture to say that most transfers are absolutely warranted and done with love and care for the senior. It is the unwarranted transfers, coupled with wrongdoing, that can petrify family members.

The common setting for unwarranted transfers is the presence of a family member – maybe a stepbrother or stepsister – who is estranged from the senior’s other children and family members. For whatever reason, and by whatever treacherous means, the wrongdoer is able to get the elder into his or her home and get the elder’s estate plan altered. Once the estate plan is effectively altered, it can be “Katy bar the door” for change.

More than once we have seen circumstances that the senior is transferred against his or her wishes to a facility geographically removed from other family members. In the meantime, personal goods and family mementos are often discarded or hidden. These actions often cause even greater anger than money transfers. You simply can’t replace photographs, family heirlooms, military awards, or personal collections with money. The discarding of important family treasures is an affront to the remaining family members – a complete disregard of important family history – and a glaring mark of the greed of the wrongdoer.

Difficulties abound when trying to address unwarranted transfers. First off, the senior often lacks capacity. So what do we look at when the senior lacks capacity? One way to deal with an incompetent senior is to seek a conservatorship of his or her person and estate. This is not without complications. Does the senior really wish to be supervised by a stranger or even a benign family member? Conservatorships can be expensive and time consuming. Prospective conservatees are afforded counsel – public defenders or otherwise. The costs of such counsel is paid from the conservatee’s estate. Courts are often reluctant to appoint conservators even for those with great impairment – it is the taking away of one’s freedom, even if such freedom increases vulnerability to scams and unscrupulous people.

Detecting the Tactics of Elder Financial Abuse

The sooner elder financial abuse is detected, the better the chance for recovery of estate and trust assets on behalf of the victims. So what are the typical signs or “red flags” to look out for? According to the guidelines of National Adult Protective Services Association, the following factors should be watched closely to avoid a potential personal tragedy and financial disaster:

1. Liabilities & Unpaid Bills: What if an elderly loved one should have the means to pay the bills every month, but somehow their utilities get shut off? There might be more in play than just a senior’s faulty memory – a bad actor may have made off with money from the elder’s accounts, leaving the victim high and dry.

2. Surrender of Oversight: Very often we see cases of a “new friend,” neighbor or opportunistic relative appearing on the scene to offer their “help” in managing the elder’s financial account. At times they even succeed in gaining power of attorney. This effective forfeiture of oversight should be looked into closely for other indicators of suspicious activity.

3. Suspicious Withdrawals: As any good investigator will tell you, follow the money. When financial accounts begin registering unexplained withdrawals or checks set to “cash,” it’s time for you to speak with bank employees and get further details on who’s making these transactions.

4. Vanishing Assets: Another tell-tale sign of elder financial abuse is when valuables begin to disappear. Suddenly an elder’s jewelry, cash or financial documents like stock certificates vanish, and the perpetrator takes to living lavishly with new purchases of fancy attire, vehicles, property, etc.

5. Changed Estate Documents: Wrongdoers who commit elder financial abuse will often seek to legitimize their predatory behavior with the stamp of legitimacy. Exercising undue influence on the elderly victim, they’ll “shop around” for any lawyer who will agree to change a will or trust document in their favor. Ask your elderly loved one about any such changes – if you are faced with such a situation, it may be time to consult an experienced trust litigation attorney.

6. Creditors Come Knocking: Is the elder encountering financial trouble where there should be none? Find out the explanation for property liens or foreclosure warnings. The reason behind creditor claims may be more than just a mistake – your elderly family member might have been financially exploited by an abuser who cleaned out their accounts.

Identifying Financial Exploitation and Scams

As the population of senior citizens in California continues to grow, so too will the challenge posed by fraudsters who want to prey on our elderly and steal their money. To help seniors and their loved ones identify and avoid scams, I’ve compiled a list of the most common ploys, tricks, and tactics financial criminals use against the elderly. So watch out for the following forms of fraud:

1. Grandparents Scam

A senior will receive a phone call beginning with, “Grandma?” The caller will cleverly elicit the grandchild’s name. Posing as the grandchild, the scammer will then say they’ve gotten into some form of deep trouble – they might tell the senior they’re in jail or stranded in a foreign country. It’s an emergency, and they need help immediately! With the grandparent now upset and ready to assist their supposed grandchild by any means possible, the scammer will ask them to wire money to their bank account, often by Western Union.

To avoid falling for the grandparent scam, don’t let a caller drag you into the guessing game, whereby you willingly provide them with the names of your grandchildren and other relatives. If a scammer is more sophisticated, they might research their victim on social media – sometimes they’ll run the scam on platforms like Facebook. Call your family members and check on the whereabouts of your grandchildren, no matter how convincing a story you may hear over the phone or through social media.

2. Secret Shopper

To your surprise, you receive a check in the mail for several thousand dollars to Wal-Mart or another big-box store. You’ve been chosen for the secret shopper program! In reality, you’re being conned into depositing a bad check. Once you’ve deposited, the scammers will ask you to mail them a check with the difference – and that’s in addition to your being responsible for the fraudulent check you’ve cashed. Secret Shopper is a nasty scam that leaves its bewildered victims thousands of dollars poorer.

Keep elderly loved ones away from fraud schemes like Secret Shopper by using the too-good-to-be-true rule: if it’s too good to be true, it’s not true – someone’s after your money. That means Secret Shopper offers are as good as garbage.

3. Email Scams

Email scams have been around a long time and aren’t going away – it’s cost-effective for swindlers to send out millions of spam emails, even if they only get one or two responses from potential victims. If you have an email account, you’re going to receive these from time to time, even with the best spam filters.

The most notorious email scams are “Nigerian prince letters,” which inform recipients that they have been selected to share in an enormous royal fortune in Nigeria or some other West African nation. All the recipients have to do to gain their riches is wire money to the esteemed “prince” to pay the transaction fee. Naturally, there is no pot of gold at the end of the Nigerian rainbow, with the net result of your bank account being emptied.

Another common type of email scam is known as phishing, the imitation of real websites to elicit personal and financial information. You might very well receive a “bank alert” that seems to be from your bank; the message will inform you that your bank account is overdrawn, you are the victim of identity theft, etc. Even the layout of the email and fake website will look convincingly real. Yet the actual purpose of the phishing scam is to get you to enter your bank account ID, password, Social Security Number, etc., into the phony website, all in order to defraud you.

In addition to Nigerian prince emails and phishing schemes, you may also receive emails marked “urgent,” etc. Often they’ll seemingly be sent from friends and relatives. They’ll have attachments in the form of letters or videos you’re told to open. In reality, they’re fake letters with harmful attachments – viruses or malware that are designed to infect your computer and steal your personal information. Online criminals can even mask their spam messages to make it appear they come from friends, family, and colleagues in their attempt to trick you into opening the attachment in order to unleash their virus.

To steer clear of email scams, the best policy is simply to delete unfamiliar emails and not engage too-good-to-be true offers to share in African riches. If you get a “bank alert” email that you’re unsure of, check your account online (don’t click on any link in the message) or simply call your bank to check your account. Also remember to never open attachments in unknown messages, and be very weary of vague requests from seemingly familiar senders who might very well be identity thieves and con artists.

4. Investment Fraud

Investment fraud is an all-too-common form of elder financial abuse, and scammers find numerous ways to perpetrate the crime against seniors. The first variety are classic Ponzi schemes, where elderly clients are recruited into dubious investment ventures promising big returns, but which in reality generate no profit – investment proceeds are simply skimmed from client funds.

Ponzi schemers will pose as legitimate entrepreneurs or investment advisors, sometimes offering free meals to attend their “wealth seminars.” By the time a Ponzi scheme collapses (as it inevitably will if authorities don’t intervene), victims are often left penniless and effectively unable to recover any of the funds they had invested in the scheme – the perpetrator likely spent all the money and distributed it out as false profits.

It’s unfortunate but true that there are also a few bad-faith brokers out there who are willing to defraud their elderly clients. Investment advisors and brokers who violate their clients’ trust can sometimes go years stealing before they finally get caught. To keep a financial predator from looting your accounts or those of your loved ones, make sure to review their background through FINRA’s BrokerCheck – it never hurts to get a second opinion on a firm or particular advisor.

Along with Ponzi schemes and outright abuses by bad-faith brokers, also watch out for multi-level marketing schemes (MLMs). MLMs, otherwise known as pyramid schemes and “network marketing,” are technically legal business models that require the new member to recruit others into the venture in order to sell whatever product might be on offer. Senior citizens, at times lonely and in need of companionship, can be vulnerable to these schemes, some of which will send them box-loads of products and charge them whether they agreed or not. So while MLMs are technically legal, they are often highly exploitative of senior citizens through their deceptive terms and conditions.

To steer clear of investment fraud, apply the “too good to be true” rule to investment offerings that boast sky-high returns and near-zero risk – chances are it’s a Ponzi scheme. Conduct due diligence and consult a reputable advisor who can help you or your elderly loved ones make sound investment decisions. And stay away from MLM pyramids, the only point of which is to enrich their very top layer while exploiting everyone else below them with largely empty promises of wealth.

5. Telemarketing Fraud

Often connected with investment scams are predatory telemarketing schemes, another way fraudsters look to entrap seniors. Many elderly Americans receive several phone calls a week from slick salesmen pitching everything from penny stocks to flimsy-sounding “premium retirement programs” for their portfolios. Quick-talking telemarketers will pressure lonely, confused seniors into “once-in-a-lifetime” investments in dubious or non-existent oil and gas holdings, foreign currency exchange, real estate, and even “blockbuster” movie productions. Another ploy is to hit up the victim for contributions to a supposed charity. Finally, don’t be fooled by con men (and women) who pretend to be calling from your bank, hospital, insurance provider, etc. They’re looking to elicit your personal information to commit identity theft against you.

It’s sad but true that financial abuse is made easy over the telephone. To prevent telemarketing fraud, make it an express policy to never sign onto anything over the phone. Courteously hang up and make sure to register for the US government’s Do Not Call list. Keep it simple – never give personal or financial information to unknown callers, no matter who they might claim to be.

6. Repair Fraud

Seniors are frequently targeted for elder financial abuse right in their own home – through the common tactic of repair fraud. If an elder is forgetful or possibly suffering from dementia, wrongdoers will look to exploit this weakness by overcharging for home repairs and yardwork. Sometimes scammers will even come around repeatedly, performing the same task several times over a given period and defrauding the victim in the process. Even unscrupulous auto mechanics have been known to jack up prices for elderly, confused customers and engage in dishonest, unethical practices like changing tires every few months.

Another updated form of repair fraud is the “antivirus” scam, which can be perpetrated in person, online, or over the phone. You might receive a fake email, a telephone call, or even a door-to-door visit from someone claiming to check your computer for viruses. They’ll tell you your computer is infected and “repair” it, charging you for a non-existent service and possibly even stealing your personal and financial information while they access your computer.

Countering repair fraud might mean going to the doctor and getting an evaluation over possible memory loss or increased confusion. Seniors with conditions like dementia must be protected from financial exploitation – one effective way to shield vulnerable elderly loved ones from repair fraud is to obtain financial power of attorney. When a responsible younger relative takes on this legal duty, it’s sometimes possible to recover funds lost to repair fraud.

7. Sweepstakes Scams

Fake sweepstakes, lotteries, and raffles represent a widespread form of fraud perpetrated against senior citizens. You’ll get a flashy mailer informing you of your “amazing” prize winnings, or perhaps a telephone call or spam email. A fabulous fortune is yours to be had, you’re told, and all you have to do to attain your winnings is pay a phony “tax,” “shipping fees,” or other made-up charges. Your social security number and bank information might even “required” to claim the supposed prize. In reality, of course, the sweepstakes is a scam meant to trick you out of hundreds or even thousands of dollars, potentially putting your identity at risk.

The too-good-to-be-true rule applies to most scams, and ridiculous sweepstakes mailers are no exception. A real raffle or lottery wouldn’t require you pay or provide sensitive personal info to access your prize. Sweepstakes offers and other contest “winnings” should be promptly tossed in the trash, and whoever’s sending them through the postal system should be regarded with strong suspicion. Seniors should have a trusted loved one help them sort through mail and identify all such deceptive mailers.

Countermeasures & Heightened Vigilance

What are some initial steps you can make to prevent elder financial abuse? Several measures are available for family members, lawyers, financial professionals and medical caregivers. Along with basic awareness, coordination and ongoing communication between parties translate to increased protection. Here are some basic actions you can take to keep elderly loved ones safe from exploitation:

1. Financial Oversight: A family member and financial professional at the local bank or advisory firm should establish a system of oversight over an elder’s accounts. In addition to setting up bill payment, keep a sharp eye on any excessive withdrawals or irregular transfers. Consider joint accounts with the elder, and look into the possibilities of a limited credit card for an elder susceptible to financial exploitation.

2. Revocable Trust: With a revocable trust in place, a trustee has access to a trust account without enjoying the status of legal ownership. Stopping irresponsible or just plain bad trustees from squandering assets translates to building in effective safeguards.

3. Communication: The “human element” is vital in preventing elder financial abuse, and that means maintaining effective lines of communication between all interested parties, whether it be the attorney, investment advisor or medical caregiver. Just as importantly, a loving relationship with an elderly family member makes all the difference in shielding them from harm. If a senior is lonely, they’ll be more vulnerable to fraud or unethical sales pitches. Just visiting an elder regularly, talking and showing them you care is an enormous boost in keeping them safe.

4. No-Contact Lists: “Boiler room” telemarketers and deceptive mailers target elders who suffer from cognitive impairment. One way to block most, if not all, of these unwelcome solicitors is to contact the FTC’s Do Not Call Registry, Nomorobo and the Direct Marketing Association. Speak with your elderly loved one about the harmful nature of these calls and fliers to help them spot when they’re being scammed.

Protecting your elderly family member is virtually a full-time job – for many it becomes a full-time job of care, comfort, housing, medical visits, and protection. Such duties may be embraced with love, but it is a love coupled often with real suffering.

It is never easy to care for a parent with dementia – or with chronic physical or mental problems. Both physical and mental exhaustion often accompany such care. Sibling issues arise between those who are near the elder family member and those who are geographically removed. Friends of the elder might be critical of the care or protections that are put in place for the elder’s benefits. Not all is black and white. Taking care of an elder adult often reminds us to reflect on the meaning of the Fifth Commandment: “Honor thy father and thy mother.” Doing this honor is a day-to-day process, and is not without its challenges.