Winter 2008

Elder Financial Exploitation: Cracking the Nest Egg
By Arn Bernstein
Aging Well
Vol. 1 No. 1 P. 22

Generations of savers are at risk of losing their nest eggs to financial abuse that often goes unreported. Help protect your clients by knowing the most common senior swindles.

In Iowa, a 92-year-old retired Army veteran was victimized by thieves to the tune of more than $100,000.

In Hollywood, a church pastor stole between $100,000 and $200,000 from a woman in her 80s.

A few hundred miles south, near San Diego, a couple aged 95 and 88 were swindled out of their $750,000 house.

In Texas, an older woman loaned her credit card and ended up $50,000 in debt.

Ugly crimes that don’t get much press. And they’re not isolated; similar situations occur almost constantly nationwide. Even more distasteful is that in all but one of the cases above—which represent more than $1 million in stolen money and goods—the thief was well known to the victim.

If you work with older adults, the chances are good that at least one of your clients has been or is currently, unknown to you, a victim of financial abuse—and far beyond a cleaning person taking $20 out of a purse. “Senior exploitation is absolutely on the rise,” says Detective John Ryan of the senior exploitation unit (SEU) of the Delaware County (PA) District Attorney’s office. “However, it’s very difficult to state accurate statistics, as so many cases aren’t reported.”

Unfortunately, he’s not merely opinionating. As the number of older adults grows, so does the rate of crime against them. Based on information released by the National Center on Elder Abuse, there may be as many as 5 million annual cases of elder financial exploitation nationwide. And the majority are never known to the law; the Senior Forum on this topic, part of the 2005 White House Conference on Aging, estimated that only one of 100 cases is reported.

Even less available is just how much money older adults are swindled out of. Using the Delaware County District Attorney’s office as a rough model, since the formation of its SEU in 2003, it has received reports topping $5.2 million—and that’s only one county. Considering that Pennsylvania has the second-largest number of those aged 55 and up in the country—Florida’s in the top spot—it’s likely Pennsylvania alone could approach triple-digit millions. Multiply that by the rest of the country, and the numbers are almost certainly into the billions.

Vulnerable Target
So why are older adults being singled out by thieves and fraud artists? First, as previously mentioned, their numbers are increasing daily; in 1997, 12.7%, or 31.2 million, of the U.S. population was aged 65 or older. By 2030, it’s expected to reach 22%, or 70 million. Second, advances in medical science are prolonging the lives of existing elders. Third, the “Greatest Generation,” which comprises the largest part of older adults today, is the first to substantially benefit from Social Security, meaning it has monthly income beyond savings. In the same vein, it’s the first (and likely last) generation to receive cradle-to-grave pension plans from former employers, meaning additional income.

Fifth, the majority of elders bought homes in the 1950s for between $10,000 and $15,000—homes with an average equity today of anywhere from $100,000 to $300,000 and often higher, depending on location. Sixth, many from the Greatest Generation not only live in their homes but frequently alone, as their spouse has passed on. The latter is especially true if they’re relatively self-sufficient. And because of this, they often crave conversation of any kind.

Finally, most of today’s older adults are products of the Great Depression. They grew up with frugality, sacrifice, and corner-cutting, and as a result, are a generation of savers; they have a nest egg for the proverbial rainy day. They also have great credit. “They’re probably the richest generation of that age group since the start of the country,” Ryan says, noting that approximately 80% of all deposits in savings institutions are controlled by those aged 65 and older. “It’s almost like once someone turns 65, they have a bull's-eye on their back,” adds Suzanne Cobb, director of the guardianship/money management program of Senior Source of Greater Dallas. “Our referrals increase annually, and 30% to 40% involve financial exploitation.”

How do criminals defraud older adults? There are several methods, some nearly 100 years old and some modern. Some are deceptively simple; others are devilishly clever and complex. It’s important to understand how each works to get a better handle on spotting and/or preventing it. The following is a bare-bones catalog.

Larceny/Burglary
Probably the most basic yet potentially most dangerous type of theft, it plays on the fact that, as a product of their times, many older adults tend to be more trusting of others. Essentially, one or more individuals will knock on the elder’s door or approach them in the yard. Inside, they’ll generally try to get them in the kitchen or dining room. Using any one of countless excuses—”I’m selling subscriptions,” “I’ve had an accident,” “May I please have a glass of water?” “I need directions,” “My car broke down,” “I’m from the water/electric/gas company”—one thief will capture the elder’s attention via conversation or showing them a map, magazine, or other diversion. The other will typically ask to use the bathroom and then quietly slip upstairs or into another room, do a fast but thorough search, steal anything small of value (jewelry, cash, cameras), and rejoin the others. They then say a quick goodbye and leave.

If the elder is outside, the second or third person usually stays hidden and enters the house surreptitiously. Things can become nasty, depending on what the thieves find. In Hamilton, NJ, for instance, one scammer discovered a safe upstairs, and the resident, aged 99, was ordered to open it or be killed. She was robbed of nearly $100,000.

Home Improvement/Construction Fraud
This scam hinges on the fact that most elders grew up in an era when most business was done on a handshake. The basic scenario: The older adult is approached by a landscaper, contractor, roofer, or home improvement specialist—generally with an appropriately logoed truck/van—who explains that he or she was doing some work in the neighborhood and happened to notice the older person’s roof, windows, or driveway are in disrepair and, as he’s in the area anyway, can fix them at a much better rate than usual.

Sometimes the thief supposedly has leftover materials and can only make the offer that day. After a perfunctory look at the “problem,” the scammer elicits a down payment, generally cash (bigger discounts offered) or check, to “pay for materials” and then vanishes. By the time the victim realizes the fraud, the check has been cashed, and the perpetrator has moved on.

In a gutsier alternative, the fraud artists actually return to the house to do some “work.” Sometimes it’s only partial, such as removing window frames; other times it’s substandard or bogus, such as simply laying tar on a driveway. They then collect the balance or more cash for additional supplies and vanish. Some string out this routine for three or four visits. In one case in Hudson Valley, NY, a woman was conned out of approximately $65,000.

Senior Center Cheats
It’s not technically illegal, but still thievery. At senior centers that host speakers, an authority on antiques, old coins or stamps, period jewelry, vintage furniture, or some other collectible will characteristically give a “treasures in your attic” talk, emphasizing that those present could have untold thousands around the house accumulating dust. At the end of the presentation, the expert (who may be an authority but is more often a dealer) mentions that he or she offers free appraisals and hands out cards or brochures.

The trusting elder later contacts the speaker, who gladly comes to the house to inspect the collectibles. Coincidentally, whatever the victim has happens to be a far less valuable variant. But as it’s in nice shape, the expert knows someone who may want it and offers to assume the risk and buy the item(s) outright, naming a figure that’s a fraction of the actual worth. The scammer pays the victim, usually in cash, leaves with the goods, and realizes a healthy profit reselling them to collectors or other dealers. In an Ohio case, an expert paid an 80-year-old man $350 for some old jewelry and knick-knacks. One of the items was a vase worth roughly $2,300 on its own.

Telemarketing Fraud
A 1997 study by the National Fraud Information Center noted that 38% of its telemarketing complaints were from older adults. The fact that they’re more likely to answer calls and frequently too polite to hang up only aids the perpetrators.

Types of telemarketing fraud can include an amazing offer on prescription drugs, appliances, additional insurance, stocks, funeral services, etc.; informing the victim they’ve won the Canadian or Mexican lottery, a wonderful vacation, or a prize; a person calling from the city or state to check a name and Social Security number; incredible investment opportunities; donations to charity; and dozens of other schemes. The ultimate goal is to persuade the victim to make a payment over the phone or get personal information that can be used to steal money from bank accounts. It’s estimated that telemarketing bilks people of more than $40 billion annually.

Internet Fraud
As more older adults learn how to use e-mail and surf the Net, they become more susceptible to Web-based crime. Most of us have gotten e-mails from a lawyer or deposed leader in a foreign country, usually Africa, who needs to get $20 million to the United States and is willing to give you $5 million for your trouble; all you have to do is send your bank information to enable the deposit.

But that’s only one method. In addition to the same lottery and super-deal scams offered over the phone, Internet fraud increasingly involves phishing, where authentic-looking e-mails are supposedly sent out from legitimate concerns such as Citibank, requesting key account numbers.

Older adults who enjoy bidding or selling on online auctions are also at risk, the most common problem being nonreceipt of merchandise won or nonpayment of merchandise sold. In both cases, of course, the payment or product is sent to the thief first. In fact, according to FBI records, auction fraud accounts for 44.6% of overall online crime.

Identity Theft
We’re all familiar with the basics. But, Ryan notes, what many may not realize is that according to Federal Trade Commission statistics, this is the fastest-growing nonviolent crime in the country. As of May 2007, there were an estimated 650,000 new cases reported annually. And it’s progressively involving elders.

The biggest problem in stemming identity theft is that it can occur in so many ways. It can be as uncomplicated as going through someone’s trash or someone in the house pocketing a single check, bill, or credit card receipt/statement or as elaborate as someone cruising a cemetery to jot down names of still-living spouses from headstones. The scammer’s intention is to capture as much information about the victim as possible and then use it to illegally acquire funds by tapping existing bank or credit card accounts or opening whole new card accounts or lines of credit. The older adult is typically unaware that the account was opened until bills start arriving, and if the scammer is crafty enough to use a false address to intercept the bills, discovery takes even longer.

Even seemingly innocent things such as magazine subscription labels can be abused if someone knows how to misuse them on a computer. Ryan recalls one especially predatory case: “We had a home caregiver who only wanted to sit with hospice patients. It turned out she was stealing their identities and used their credit card data to pay off a car loan.” In another theft, in Folcroft, PA, a person aged 19 bought two houses, homeowners insurance, and several cars using information stolen from an older woman.

Fiduciary Misappropriation
It’s the most insidious fraud committed against elders; in 100% of cases, the thief is someone the victim trusts, often family. It adds betrayal to the theft. “It’s the most prevalent type of fraud against elders we see,” says Mike Gargiulo, deputy in charge of the Los Angeles County District Attorney’s Elder Abuse Section. “It could be a son, daughter, nephew. Sometimes it’s someone who’s been out of the older person’s life who will return and reinsert themself when the elder becomes needy and requires help. Sometimes it’s a maid or friend. They gain influence over the victim and usually get legitimate access to their financial resources.”

How large the theft is depends on the control the thief holds. If it’s bank access, it can range from cashing stolen pension or Social Security checks to taking massive withdrawals from savings and checking accounts. If it’s power of attorney, it’s possible for elders to be stripped of everything.

When family members are involved, transactions can appear more aboveboard to an observer because often the person will simply talk the older person into giving them money as a gift. Barring that, scammers take over or assist in the elder’s banking, making sure they steal a piece of every transaction for themselves. Ryan recalls a brother and sister who took $210,000 from their parent, and a nephew with a gambling problem who lost $300,000 of his aunt’s savings. “They felt they had it coming,” he says. “It was their share of the estate.” But, obviously, a caregiver can do the same and sometimes uses a public persona. In Bellevue, IL, a former fire chief and his wife befriended a woman aged 82, eventually became her legal guardian, and then stole $200,000 from her.

There are also cases where a person simply gains trust and cheats an older person with no access at all. In San Bernadino, CA, a woman aged 95 with poor vision was asked by a friend and local mayoral hopeful to sign an endorsement for his candidacy. What she actually signed was a contract to buy a new car. And in Upper Darby, PA, a married couple convinced a man aged 75 who they met at a local mall that the wife desperately needed a liver transplant to survive. When the man called the hospital to check on the “patient,” he discovered he had been scammed for $314,000.

A key point to remember is that even when the thieves are caught, they rarely have enough resources to make full or even partial restitution to the victim. And financial exploitation can be devastating to older people; they’re past the point of being able to work to build up another nest egg.

Why Unknown?
There are several reasons why elder financial exploitation remains one of the most underreported crimes in the country, including the following.

• Family members have convinced the elder they deserve the money.

• Victims may not be able to understand that they were cheated.

• Victims are embarrassed to admit to family or friends how they were duped.

• Victims discover the theft but believe it’s too late to do anything about it.

• The theft isn’t discovered until after the victim’s death.

• Victims know they are being robbed but don’t want to get a family member in trouble.

• Victims fear that if they tell family or the police, they will be thought incompetent and sent to a nursing home.

Fighting Back
So you now have a basic outline of elder financial exploitation and the toll it can take. What can you, as a healthcare professional, do to combat it?

The first is to be vigilant for one or more of the telltale signs. The second—and far more important—is to convince your client or his or her family to report any crimes to the proper authorities. Most states and cities have an elder exploitation unit, generally through the local district attorney. If your specific area has none, simply call the police, even if it’s months after the fact. “Seniors need to report what happened to them,” Gargiulo says. “If they don’t, we don’t even have a chance, and the bad guys win.”

— Arn Bernstein is a Philadelphia-based freelance writer and editor.

What To Look For
You can’t report elder exploitation unless you know it’s occurring. Keep an eye out for:

• Unusual or unlikely account activity, typically large withdrawals or frequent withdrawals/transfers in round amounts, larger checks written to unusual recipients, and names added to the account signature cards.

• Unlikely or suddenly frequent purchases. Do any signatures look forged?

• Changes in attitude; if the elder suddenly appears nervous, tense, becomes acutely money conscious, or is suddenly reluctant to discuss finances.

• Complaints or mentions of objects or money being missing from the house.

• Inconsistent financial activity, e.g., ATM withdrawals when the elder never leaves the house.

• Withdrawals from investments despite early withdrawal penalties.

• Sudden changes in wills, trusts, contracts, power of attorney, durable power of attorney, property titles, deeds, or mortgages, beneficiaries on insurance policies, etc.

• Anyone new, family or friend, who enters the picture and tends to accompany the older adult everywhere (especially the bank), appears to exert influence and/or answer for them, seems to have no other means of support, seems to have a high interest in the patient’s finances, and tries not to leave you alone with the client for too long.

— AB