The DOJ Announces Largest Elder Fraud Sweep After Reports of Increasing 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.

Perhaps more horrifyingly, the Bureau’s data only reflects reported cases, while estimates indicate that a lot many more incidences of senior financial abuse are not reported. The reported elder financial exploitation incidences predictably represent less than 2 percent of the projected 3.5 million cases in 2017. Many older individuals do not report their elder financial abuse out of fear or reluctance to report a previously trusted individual. The elderly are at risk of being swindled not only by strangers but also their family members, caregivers, and other trusted people. The Bureau found that older adults will on average, lose more a lot more money from being swindled by someone they know than through a stranger. For that reason, our investor attorneys remind investors not to let their relationships come in the way of reporting financial fraud.

There were a few differences in the suspicious activity reports filed at depository institutions, like banks or federal credit unions and those filed at money service businesses. A monthly service business, MSB is the financial regulation industry’s legal term for non-bank financial institutions that act as a money transmitter, check casher, and provider of other monetary conversion services. The data reflects that more financial elder financial exploitation suspicious activities reports get filed with MSBs rather than depository institutions. On the other hand, the MSB reports only one percent of their suspicious activities reports compared to the greater than half provided by depository institutions. Another notable finding is a higher rate of scams performed by known people (2/3) in depository institutions than the 2 percent of suspects in MSBs.

Sometimes, reporting an instance of fraud to the supervising MSB or depository institution is not enough, and additional measures need to be taken to reclaim losses. The Bureau’s report shows that financial institutions report fewer than one-third of their elder financial exploitation suspicious activity reports to federal, local and state authority. The low number reported is deeply concerning since the appropriate agencies might not know to intervene and stop the fraud. When financial institutions fail to alert a third party, the older people will often miss out on appropriate protection and legal remedies to protect themselves from further harm. For this reason, older individuals need to find the courage to take measures into their own hands and alert law enforcement or a securities fraud lawyer.

Fortunately, securities laws, financial industry rules, and regulations provide avenues for seniors defrauded by financial professionals registered under FINRA. If for any reason, you or someone else may be a victim of elder financial fraud by a broker or advisor, please contact our investor fraud attorneys for immediate legal assistance. Our investor fraud attorneys have extensive experience with helping investors, from all walks of life, recover losses stemming from swindling financial professionals. Call to have a confidential conversation with one of our supportive and understanding investor fraud attorneys in a free consultation.