Articles Tagged with elder financial exploitation

The Department of Justice coordinated the largest elder fraud sweep by filing cases and consumer actions related to financial scams targeting or disproportionately affecting seniors nationwide. In their announcement yesterday, the DOJ claimed that their civil, as well as criminal actions, filed with the support of law enforcement, involve claims of three-fourths of a billion in monetary losses and millions of alleged victims. Elder financial exploitation, the illegal misappropriation of an old person’s funds, is destroying millions of lives. News of the DOJ elder fraud sweep comes a month after the Consumer Financial Bureau released a report with data indicating an increase in reported incidences involving elder financial exploitation. While the reported elder financial exploitation prevalence might shock some, our investor fraud lawyers are very familiar with this growing epidemic.

Elder financial fraud manifests in many ways through a variety of scam artists from Ponzi Scheme perpetrators to relatives. The DOJ’s recent prosecution focus is tech support fraud, which is the most commonly reported fraud that the elderly reported to the Consumer Sentinel Network. Other types of popular financial scams affecting seniors are investment schemes, identity theft, internet phishing, grandparent scam, lottery scams and more, according to the National Adult Protective Services Association. Additionally, older individuals lose their life savings, investments or retirement money from unscrupulous brokers or financial advisors. Seniors get conned into making inappropriate investments because of their greater tendency to trust financial professionals. Worst of all, seniors defrauded at broker-dealers do not have the time to remake money earned throughout their lifetime.

The Consumer Financial Bureau analyzed data from Suspicious Activity Reports filed between April 2013 and December 2017 to shed more awareness on the issues of elder financial exploitation. Broker-dealers and other financial institutions file suspicious activity reports with the U.S Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) in compliance with the federal Bank Secrecy Act.  The study found that suspicious activity reports referencing financial exploitation quadrupled within these few years. In 2017, the financial institutions reported $1.7 billion in 63,500 suspicious activities reports. The average loss indicated on elder financial exploitation suspicious activities reports was $34,200, but that amount varied depending on the type of account, specific age group, and other factors.

Recently the Government Accountability Office (GAO) published a report about the extent of elder abuse by guardians and measures that exist to protect older adults. This has become an issue of utmost importance as the number of older adults, over the age of 65, are expected to nearly double to 88 million by 2050 (GAO Report 2016). A “guardian” is a legal relationship created by a state court by granting one person the authority and responsibility to make decisions on behalf of an incapacitated individual, like an older adult. The appointed guardian could be a family member, a professional guardian, or a public guardian. According to the GAO report the most common type of elder abuse inflicted by guardians appear to be financial exploitation. This GAO report attempted to identify red flags of abuse, study reported complaint data about guardianship abuse in 6 states- California, Minnesota, Florida, Ohio, Texas and Washington- and evaluate measures that are in place to help protect older adults.

The federal government does not regulate or directly support guardianship but they may provide indirect support through federal agencies, by sharing information and providing funding for state and local courts who oversee the guardianship process. There are limitations on the data available to study cases of elder abuse because states do not have adequate data on number of guardians serving seniors and not all cases of elder abuse are reported.  A close look at reported elder abuse cases since 2010, identified using public-record searches reveal instances of misappropriation of funds, falsified payments, mistreatment of the elderly, diversion of payments, overcharging accounts, excessive spending and inflated personal expenses, and neglect.

FINRA ’s Role in Fighting Elder Financial Exploitation