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Wednesday, September 06, 2006

Keeping the Wolves from Grandma's Door: Financial Exploitation of the Elderly

One of my prior posts mentioned World Elder Abuse Awareness Day. On that day, the International Network for the Prevention of Elder Abuse (INPEA) held meetigs at the United Nations and one of the speakers was Sally Hurme, Coordinator, Outreach & Service, AARP Financial Protection.

Sally's speech focused on ways to protect the elderly from financial predators, and an essay version follows below.

June 15, 2006 was World Elder Abuse Awareness Day. You might ask, what is World Elder Abuse Awareness Day, how did it come into being, and what is its significance? The proclamation of the "Day" came about through the efforts of the International Network for the Prevention of Elder Abuse (INPEA). INPEA is a standing committee of the International Association of Gerontology with representatives from 31 countries on all continents. (FN1) INPEA asked the representatives in the various countries to develop activities to raise political and media awareness of the problem of elder abuse in their respective countries.

As we recognize in the US, awareness of elder abuse is about where child abuse was two decades ago and domestic violence was a decade ago. Federal and state dollars spent on prevention, intervention, and prosecution of elder abuse is a slim fraction of what is devoted to child abuse and domestic violence. In many other countries, elder abuse isn't on the public's radar at all. This could be caused by denial or cultural acceptance. It does not mean that elders are not abused physically, emotionally, or financially around the world. The demographics of increasing aged populations worldwide are a reality. People today are living longer worldwide -- much longer.

Only 20 years ago, it was believed that population aging was primarily a phenomenon of the industrialized nations. We know now that population aging is a global phenomenon. Mortality rates in most developing nations have declined faster than expected over the past two decades, with the result that many such nations now have life expectancies approaching, or even exceeding, those of the developed nations. By the year 2050, there will be 2 billion older persons in the world -- compared with 600 million today. In 2050, the percentage of older persons will rise to 21 percent worldwide, up from 8 percent today. Today in India there are 80 million senior citizens, more than the entire population of Britain. (FN 2).

No country can ignore these demographics and no country can ignore the fact that their elders are vulnerable to being abused. Awareness of the reality of the potentiality and actuality of abuse is imperative before countries will devote the attention and resources necessary to put in place the policy, programs and procedures that will begin address the problem. World Elder Abuse Awareness Day was an initial step to focus the attention of the international public and policy makers that elder abuse happens.

The primary international event to raise worldwide awareness of elder abuse was a symposium held at the United Nations on June 12. Representatives from eight countries, as well as Mrs. Nane Annan, the wife of the United Nations Secretary General, spoke about efforts underway to attack elder abuse. I had the privilege to be asked to focus my comments on the financial exploitation aspect of elder abuse. Around the world, and even in the US, when people think about elder abuse, if they do at all, they think of physical violence. Unquestionably, physical abuses--the ducubidi caused by neglect, the assaults on persons with dementia, the rape of nursing home residents, and the murders that go uninvestigated because to old persons are supposed to die--are an outrageous shock to the social conscience. Just as shocking is the financial abuse of older persons that is happening around the world.

While we can project the worldwide demographic bulge, universally we acknowledge that we don't know exactly how much elder abuse or financial exploitation happens. (FN 3). We do know that what is reported is only the tip of the iceberg. (FN 4). One study has estimated that there are at least 5 million financial abuse victims in the United States each year, but officials only hear of about perhaps 1 in 25 cases. (FN 5). While many people associate elder abuse with physical violence, analysis of reported abuse in the United States demonstrates that financial exploitation happens more frequently. Its emotional consequences leave as lasting scars as physical violence. (FN 6).

Across the world it is imperative that we acknowledge that financial exploitation is already happening at an alarming rate and will continue to spread. To be equipped to address this inevitably growing problem, we first need to understand how elder financial abuse happens, who are the victims, and who are the perpetrators.

The victims of exploitation deserve society's special attention and protection because they are targeted for particularly pernicious crimes directed at their financial security. Studies point to specific cracks in victims' defenses against exploitation: trust, financial naiveté, cognitive impairments, social isolation, dependency, fear, and embarrassment. (FN 7). Perhaps unique among other types of crime, there is a very real chance that the victim has no idea that she has been or is being victimized. The victim may have no awareness that anything is amiss with his finances; that a trusted person is dipping into her bank account. Or he is just not able to recognize that the person who is taking his money is a thief. (FN 8)

It is not so much the victims' vulnerabilities or weaknesses that "allow" these crimes to happen. Credit must be given to, or blame be placed on, the perpetrators. They are good at what they do! They are cunning, experienced, and professional. They rarely look like criminals. Think of them as wolves in sheep's clothing. These perpetrator wolves come in two disguises: "the strangers" and "the trusts."

The strangers -- who work hard at looking like the trusts -- are the con artists, telemarketers, tradesmen, (FN 9) like the plumbers who used the ruse that they were working for the water board in Edinburgh, Scotland, to get inside homes of older persons to steal money, (FN 10), tricksters who charged a partially-sighted 89-year old woman in Manchester, England, £100,000 to resurface her driveway, (FN 11), and hucksters promoting money-making opportunities based on any number of enticing schemes ... the list seems endless.

The US Department of Justice recently announced 565 arrests in Operation Global Con that involved 2.8 million victims with $1 billion in losses. This international enforcement operation involved authorities in the US, Canada, Costa Rica, the Netherlands, Spain, the United Kingdom, New Zealand, and Nigeria. One case involved a fraudulent investment scheme that took $6 million from more than 13,000 foreign investors and 10,000 US investors. Another scam in Venezuela and Guatemala duped Spanish-speaking Americans to pay a fee in advance for the "La Familia Gold Card", a credit card that did not exist. Another involved foreign-currency option contracts pitched by telephone to customers in the United States, Canada, and the United Kingdom. (FN 12)

The second category of perpetrators includes those even more dangerous wolves called the "trusts." They are able to accomplish their crimes because they start with a huge advantage. The victim knows them before the crime begins. They trust their predator. They may have even given birth to them. They believe them, rely on them. Their life may even depend on them. They are their family, friends, neighbor, a new sweetheart, their caregiver, minister (FN 13), financial advisor, attorney (FN 14), insurance agent (FN 15), or banker. (FN 16) They may have a legal, fiduciary, or moral responsibility to take care of the person who is their victim. They violate that trust and responsibility by taking for their own purposes the resources and dignity of the person who relied on them.

How do these family members, friends and advisors commit their exploitation? It can be outright stealing by walking away with valuables or jewelry. A caregiver can sneak a blank check out of a checkbook, or use an ATM card to cover personal expenses. (FN 17) It can be done by coercion or duress with threats that "if you don't give me your pension check, I'll beat you or put you in a nursing home." It is done by persuasion: "If you give me your house, I'll always take care of you." It's done through professed affection: "I love you more than your kids who never come see you, so buy me a new car." It's done by professed authority: In Melbourne, Australia, a man impersonating a police officer only preyed on elderly victims. In one incident he flashed a badge saying he was from the drug squad. He appeared to be speaking into a lapel microphone while he searched the man for drugs and took his money. (FN 18)

Greed may play a role when family members prevent the parent from selling a home to pay for nursing care so the property will be available for the children to inherit. It happens through dependency when a daughter won't purchase medications for her ill mother because she needs her mother's income to live on. An unemployed son may snatch his mother's pension check to support an addiction.

It's done by intentional cunning like Pren Karaqi, who complimented a recent widow on her garden and within two weeks had moved into her home, posing as a registered nurse who would take care of her. He directed her to add his name to all her accounts, wire $42,000 to a Swiss bank account, buy a $29,000 car, and change her will to leave her home to him. (FN 19)

It's done by taking advantage of social isolation or even creating isolation so the victim is shielded or separated from existing social networks. The caregiver screens calls, intercepts mail and restricts visitors to gain psychological control. It is done by locking the elder in a back room and taking control over the apartment and pension. (FN 20)

Financial abuse most frequently is the result of a relationship gone wrong, or a betrayal of trust. A family member, friend or stranger may develop a trusting relationship with the older person with the expectation that they will derive financial gains from the relationship. All too often the caring person becomes an opportunist. He or she starts out actually helping to pay the bills. But as the older person declines in mental agility, the opportunity to dip into the bank account for personal needs becomes overpowering. (FN 21) The use of legal--or purported legal--documents such as joint bank accounts, durable powers of attorney, deeds, and wills exponentially complicates detection and recovery because of the intended screen of legitimacy. The legally complicated issues of consent, undue influence, (FN 22) and capacity create a golden opportunity for success in accomplishing the exploitation. It looks legal; it's hard to detect; it's unlikely to be reported; it's complicated to unravel; it's unusual to be prosecuted if it is revealed. The trusted-but-not-to-be trusted wolves are grinning ear to ear.

The stranger wolves are grinning, too. One international scam that rakes in a billion dollars each year is the "you have won the lottery" scheme, such as the prolific El Gordo scam out of Spain or the Canadian Lottery. (FN 23) The telemarketers promise instant wealth, but before the money can be delivered, the winner must first wire out of the country thousands of dollars in so-called fees and taxes. (FN 24) There is also the advance check scheme. This money-making ploy involves a large check that the victim is told to deposit and then refund a smaller amount, keeping the difference. Of course, the check is counterfeit so instead of gaining a commission, the victim loses the total check amount. (FN 25) One alert Florida senior spotted these two plots in one scam when he received a phony $4,000 check as an advance on the taxes he supposedly needed to pay to collect his $49,000 lottery payout. (FN 26) And there is the ubiquitous "Nigerian" or "419" scam that uses forged documents purporting to come from nonexistent government agencies or companies in West Africa that promise large amounts of money if the recipient reveals a bank account number.

Unsuspecting investors, intent on making sure their money will last their life span, are tricked into investment scams that leave them destitute in their final years. It could be the long familiar Ponzi scheme with promises of high returns that are financed only by bringing in new investors to the ruse. (FN 27) Fraudulent investment opportunities in coins and stamps also target older investors around the world. In Spain, more than 350,000 pensioners of modest means lost €3.5 billion in a stamp dealing scam. They were told the investment was guaranteed and the stamps would appreciate by 6 percent a year. (FN 28) When the pyramid scam crumbled, police were called to control hundreds gathering in protest outside the company's headquarters.

Our task as elder advocates is to become even more committed through national and international cooperation to shutting down the wolves, expanding our knowledge about the wolves' ways, and sharpening our skills to blunt their claws. Their lairs may be in Spain, Canada, Nigeria, or the United States. They could be anywhere in the world on the Internet hiding behind a pseudo URL. (FN 29) They are at their best in the bedroom or living room behind closed doors so no one becomes suspicious. Their tools are kind words, wonderful promises, and fancy pieces of paper. They don't need masks because the victims know exactly who they are because they are sons and daughters. They don't need guns or leave bruises because they talk their victims into handing over the money. They don't create fear; they build on trust.

Even though there are no broken bones, the effect is devastating financially and emotionally. Not only are life savings wiped out with little time to recover financial stability, there is an enormous psychological toll. Loss of assets means loss of independence and security, resulting in being dependent on family or pubic assistance. Financial abuse isn't just about loss of money. Its ramifications go far beyond the dollars. It causes fearfulness, loss of confidence, depression, hopelessness, and suicide. (FN 30) That list is too long.

Elder advocates must continue to stress that our clients are being abused. Policy makers cannot be allowed to ignore or forget what is happening to their constituents and their family members. Resources need to be allocated; laws need to be revised; (FN 31) attention needs to be paid to fact that how we treat our elders reflects what we are as a society. World Elder Abuse Awareness Day was one step to raise international awareness of elder abuse and financial exploitation and to reinforce our universal commitment to keeping the wolves away from our parents and grandparents wherever in the world they may live.

NAELA member Sally Hurme is staff attorney with AARP Financial Protection in Washington, DC.

FN 1 "The International Network for the Prevention of Elder Abuse aims to increase society's ability, through international collaboration, to recognize and respond to the mistreatment of older people in whatever setting it occurs, so that the latter years of life will be free from abuse, neglect and exploitation."

FN 2 Lola Nayar, Celebrating Old Age by Making a Difference in Society, April 18, 2006, INDO-ASIAN NEWS SERVICE.

FN 3 A poll taken in conjunction with World Elder Abuse Awareness Day, found that more than half of all respondents believed that there was a great deal of neglect and mistreatment of the elderly in Britain. Elderly Abuse ‘Becoming Common', BBC NEWS, June 5, 2006. One in Five Israeli Elderly are Abused, Jerusalem Post, Feb. 19, 2006.

FN 4 One invaluable source of current information about fraud, exploitation and abuse in the United States and other countries are media scans by The American Society of Adult Abuse Professionals and Survivors (ASAAPS). The US Federal Trade Commission complies reports of fraud in its Consumer Sentinel database. For an analysis of fraud and identity theft complaints from consumers over 50 to the FTC in 2004, [click the link]. In 2004 reported fraud cost people 50 and older $15 million out of the $565 million total fraud losses reported nationwide.

FN 5 John Wasik, The Fleecing of America's Elderly, CONSUMERS DIGEST (March/April 2000).

FN 6 Reports of financial exploitation investigated by US Adult Protective Services were 20.8% of all reports, compared to 12.5% for physical violence. Pamela B. Teaster et al., ABUSE OF ADULTS AGE 60+: THE 2004 SURVEY OF ADULT PROTECTIVE SERVICES (2006).

FN 7 Thomas L. Hafemeister, Financial Abuse of the Elderly in Domestic Settings, in National Research Council, ELDER MISTREATMENT: ABUSE, NEGLECT, AND EXPLOITATION IN AN AGING AMERICA, 391-393 (2004).


FN 9 George Gregg was indicted in Maricopa County, AZ, for taking $50,000 from an elderly woman for roof repair. He never did any work but collected payment several times from the 77-year Scottsdale resident. Handyman Scams Targeting Elderly, KPHO PHOENIX, May 10, 2005. The president of a Japanese home repair company was arrested for possibly defrauding 800 older homeowners into doing 1 billion yen in unnecessary home repairs. 7 Home Repair Staffers Arrested, YORMIURI SHIMBUN, June 13, 2006.

FN 10 Plumbers, who claimed they needed access to the home to check taps and pipes, preyed on at least 14 elderly and vulnerable victims stealing thousands of pounds. Alan Roden, Bogus Callers Swoop on OAPs, The Trail of the Con Men, May 16, 2006, EDINBURGH EVENING NEWS.

FN 11 Plumbers, who claimed they needed access to the home to check taps and pipes, preyed on at least 14 elderly and vulnerable victims stealing thousands of pounds. Alan Roden, Bogus Callers Swoop on OAPs, The Trail of the Con Men, May 16, 2006, EDINBURGH EVENING NEWS.

FN 12 U.S. Department of Justice, Hundreds Arrested in Operation Global Con, May 23, 2006.

FN 13 Bradley Guy Miller knocked on the doors of elderly residents asking for money to help the homeless and victims of domestic violence, telling the people that he was a worker for a non-profit religious group. He altered $5 donation checks for the needy into $50 checks for himself, making $70 to $100 per day. Senta Scarborough, Police: Mesa Man Bilked Seniors in Charity Scam, ARIZONA REPUBLIC, June 1, 2005.

FN 14 A New Jersey attorney admitted bilking a 90-year-old client out of her home and life savings by drafting a power of attorney for her two "new friends" and helping them sell her home. Michelangelo Conte, Slap on the Wrist for Scam Attorney, JERSEY JOURNAL, July 9, 2005. Christchurch, New Zealand, solicitor stole $700,000 from elderly client using an enduring power of attorney. Dean Calcott, Four years jail for breach of trust, April 6, 2006.

FN 15 An insurance salesman made cash withdrawals and took out loans against life insurance policies he had sold to elderly clients. He also diverted premium payments for his own use. Former KC man gets one year for fraud, KANSAS CITY BUSINESS JOURNAL, May 17, 2006.

FN 16 Owens v. Mazzei, 1743 EDA 2003, 2004 Pa. Super. 106 (April 7, 2004) (bank employees and bank civilly liable for using undue influence to persuade 82-year-old customer to name branch manager and assistant manager as beneficiaries of a pay on death account and consolidate all other accounts and deposits totaling over $600,000).

FN 17 Travis Lau, Caregiver Allegedly Stole Woman's Credit Cards, EVENING SUN, April 9, 2005.

FN 18 Shelley Hodgson, Fake Cop Sent to Jail, HERALD SUN NEWS, May 13, 2006.

FN 19 Man Accused of Stealing $200,000 from Elderly Woman, CLICKONDETROIT.COM, July 1, 2005. In Connecticut Lynda Gardner befriended 77-year old women and began running errands for her. Gardner drained the victim's savings, checking and life insurance accounts, forged 65 checks and used the woman's PIN to access accounts at least 76 times, totaling $236,000. Tracy Kennedy, Mother and Son Plead Not Guilty to Fraud Charges, REGISTERCITIZEN.COM, April 27, 2005.

FN 20 Hurme, Perspectives on Elder Abuse (2002).

FN 21 Ronald Block was once a true friend, who spent years keeping Norman Roussey's accounts straight and his house clean until, tempted by Roussey's impaired mental state and bulging bank account, he finally gave in and plundered his friend's finances. Jason Dearen, Friendly Fraud: The Closest Person in His Life Took almost Everything He Had, INSIDE BAY AREA, April 11, 2005.

FN 22 San Diego prosecution team was successful in overcoming the defense that the victim willingly gave away by proving that the victim's consent had been stripped away by undue influence. Judy Campbell, Elder-abuse Prosecution Guru Sheds Light on Crimes, INSIDE BAY AREA, April 11, 2005.

FN 23 Binational Working Group on Cross-Boarder Mass-Marketing Fraud, Mass-Marketing Fraud; Report to the Attorney General of the United States and the Solicitor General of Canada (May 2003).

FN 24 An older woman was told that to win the "International Lotto" she had to wire $2,448 to cover "insurance fees." When she resisted she was threaten with legal action if she did not forward the money to claim her prize. Bryce Mursch, Elderly Graniteville Woman Victim of Lottery Scam, WISTV, Columbia SC, May 17, 2006.

FN 25 Caroline Mayer, Banks Honor Bogus Checks and Scam Victims Pay, Washington Post, June 1, 2006,

FN 26 Senior Citizen, Son Hunts Down Scammers, WPBFNEWS.COM, June 23, 2005.

FN 27 South Florida insurance agents were arrested for convincing clients to liquidate annuities to invest in a bogus company that would buy and sell distressed real estate with returns of up to 9 percent. No real estate was purchased, but phony investor statements were sent until the scheme collapsed. DFS Arrests Two S. Fla. Agents in $1.2 M Ponzi Scheme, INSURANCE JOURNAL, May 17, 2005. Gladys Meija, a 70-year-old restaurateur who would prefer to be retired, gave a frequent customer $50,000 to invest because he guaranteed 5 to 6 percent return so she could retire. The scheme collapsed and she now works two jobs to pay her bills. Penne Usher, Local Senior Victimized in Investment Fraud, AUBURN JOURNAL, July 8, 2005.

FN 28 Elizabeth Nash, Pensioners Fight to Recover Savings After Scam, THE INDEPENDENT, May 11, 2006. Fourteen older New York investors lost more than $1 million to a confidence scheme to sell rare coins that -- they were promised -- would be repurchased at a 20 percent premium in a year. Robert E. Kessler, Three Charged in Rare Coin Scheme, Newsday, January 21, 2005.

FN 29 More than 1 million consumers have been tricked into divulging their personal information to senders of phishing emails, with industry losses totaling nearly $1 billion. Bob Sullivan, ID Theft Concerns Grow, Tools Lacking, MSNBC.COM, June 23, 2005.

FN 30 Hafemeister, supra note 7, at 391-392.

FN 31 Congress is currently considering the Elder Justice Act (S. 2010). Its passage would provide a much needed federal focus point, and potential resources, to address elder abuse. NAELA is a member of the Elder Justice Coalition supporting passage of the EJA.

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