financial exploitation of seniors
This article will discuss the financial exploitation of seniors. Various types of exploitation will be explored, using examples from the author's practice. The author will discuss both civil and criminal remedies and will address some methods of prevention of financial exploitation.
I. WHAT IS FINANCIAL EXPLOITATION?
The definitions for financial exploitation vary from jurisdiction to jurisdiction.[1] One definition would be "the illegal or improper use of an adult's funds, property or assets".[2]
Almost one half of the reported cases of financial abuse or exploitation in the United States involve victims aged eighty or older.[3] Nearly one third involve victims between ages 75 and 79.[4] While individuals over age sixty-five are about one eighth of the U.S. population, they make up one third of the victims of reported fraud.[5]
It is generally accepted that only a portion of cases of abuse against the elderly, including physical, emotional and financial abuse, are reported to authorities. The percentage of total reported cases may be as little as sixteen percent, with the remaining eighty-four percent unreported.[6] There are many theories regarding why cases of fraud and financial exploitation go unreported, including social isolation, diminished capacity of the victim and the victim's embarrassment or shame at being defrauded.
1. MISUSE OF THE ASSETS OF A senior
The classic case of misuse of the assets of a senior involves spending the senior's money either without authorization and/or not for the benefit of the senior. This broad category can range from the caretaker daughter accessing the mother's checking account to pay her own bills to theft of cash or jewelry by a non-family caregiver or neighbor. Approximately ninety percent of cases involving misuse of assets of a senior are the result of exploitation by a family member of the senior or a friend of the senior.[7]
A common tool for financial abuse is the durable general power of attorney in which the senior as principal appoints another individual as his or her agent to facilitate assistance with financial affairs by providing the agent with authority to obtain information and authorize transactions on behalf of the senior. The purpose is to authorize another party to handle financial matters, without the expense, inconvenience and lack of privacy that a court appointment creates, or the expense and formality of creating a trust.
While the power of attorney is a widely used instrument for the purpose of financial management, this informal and unsupervised arrangement can lead to problems.[8] These problems can vary from a misunderstanding of the role of a fiduciary which causes the agent to commingle funds to blatant misappropriation of the senior's funds, using the power of attorney as a tool to divest the senior of their assets.[9] Sometimes the abuser intends to use the power of attorney for exploitation, and facilitates the execution of the document, but in other instances, the agent simply discovers that no one is monitoring their actions and realizes that they have an opportunity. In still other situations, the agent, over time, comes to believe himself “entitled” to the senior’s assets.
Theft or exploitation by a fiduciary is not limited to agents under power of attorney. The records of courts across the country are replete with cases involving theft or misappropriation by trustees, guardians and conservators. In short, financial exploitation of seniors is a widespread and growing issue in our society.
Sometimes the financial exploitation is accomplished by other means, including coercing an individual into signing a deed or placing another individual's name on a bank account as a joint owner. Another practice is accompanying a senior to the bank to make a withdrawal for the benefit of the perpetrator. Seniors can also be victims of theft by family, friends or service providers, and others, who remove personal property from the senior's residence. Some exploiters will approach the senior for a loan of money, which is never paid back.
If a senior is dependent upon another for support services in order to remain in the community, the senor may feel that he or she has no choice but to accede to the demands of the individual, particularly if the senior is unable to drive and requires assistance in managing errands.[10] A nonambulatory senior is particularly vulnerable to financial exploitation.
One common phenomenon in exploitation is the appearance of the "new best friend". This is an individual who ingratiates himself or herself with the senior, often times claiming that the senior is like their "mother" or "grandmother". The senior, who may have been isolated and lonely, is flattered by the attention and over time comes to rely on this new friend, trusting him or her more and more. The plan, of course, is to gain the confidence of the senior and control the senior's assets. Often times this individual will also attempt to isolate the senior from their family and friends, increasing the senior's dependence on the new friend.
Examples of Exploitation By Individuals The Senior Knows
The following are actual cases of financial exploitation of vulnerable adults from the case files of the author, with necessary identifying data altered to protect privacy. The material facts in each case are unaltered.
Mrs. A
Mrs. A. was a 75 year old widow who lived alone.[11] None of her children lived nearby, but they kept in touch by telephone. Mrs. A was befriended by a young woman she met at a meeting of Alcoholics Anonymous. Within a few months, the young woman was driving Mrs. A. to AA meetings and visiting her regularly. The young woman visited Mrs. A nearly every day, and called her every day. Often, the young woman would order flowers for Mrs. A, using a credit card which was billed to Mrs. A, and which the young woman also used to pay many of her own bills.
Mrs. A had other new friends as well. These were her "telephone friends"' who would call her and talk to her for hours. Mrs. A really enjoyed having friends who regularly called for long conversations. They were such good friends! They knew the names of her children and remembered the events going on in her life, frequently remembering to inquire as to how various grandchildren were doing with different endeavors. These friends all worked for "non-profit" political organizations, and they really appreciated the money that Mrs. A would send to support their causes on a regular basis.
When the family realized that Mrs. A had given nearly $100,000 to her telephone friends in one year and that the credit card charges the young woman was incurring began to increase as she grew bolder with her charges, the family decided to act. They filed for conservatorship to limit Mrs. A's access to funds for her "telephone friends" and for a restraining order against the young woman, who had a history of identity theft.
Mrs. B.
Mrs. B. was 87 and recently widowed.[12] She has no children and no close relatives. Mrs. B had a family friend, whose adult children began to take a strong interest in Mrs. B after she was widowed. They eventually convinced Mrs. B that her agent under power of attorney was not handling her affairs properly and took her to see an attorney, who drafted a new power of attorney appointing one of the adult children as her agent. The power of attorney stated that the agent was not authorized to make gifts.
Mrs. B. became extremely ill after the new power of attorney was executed, and she died three weeks later. During the last three weeks of her life, the agent wrote five checks, which were the only actions he took as agent. Three were to the agent or his siblings, and two were written to pay Mrs. B's bills. The last check written and cashed before Mrs. B's death was a check by the agent to himself with the memo line indicating it was for payment for his services as agent. His fee for writing five checks was $5,000.
After Mrs. B died, the agent wrote a check for $75,000 which also indicated it was for services as agent under power of attorney. The bank was not yet aware of Mrs. B’s death. However, the check did not clear the bank because Mrs. B did not have sufficient funds on deposit.
Mrs. C
Mrs. C and her husband had no children.[13] They lived in a condominium complex that was heavily populated with seniors. Mrs. C's husband had nieces who lived a few hours away, and would visit the couple on occasion. Mrs. C and her husband were befriended by a kindly middle aged neighbor who would bring them home cooked food and run errands for them. This neighbor was a bookkeeper and tax preparer. Eventually she began preparing the couple's tax returns. After Mrs. C was widowed, the neighbor called the niece who was agent under power of attorney, and told her that Mrs. C had asked her to take over as agent, because it was such a long drive (two hours) from the niece's home to Mrs. C's town and Mrs. C didn't want to inconvenience her.
The neighbor began paying Mrs. C's bills. Because Mrs. C and her husband had very high income and many investments, as well as a long term care policy, there was sufficient money to pay Mrs. C's bills for years, even as her health declined and she required more care. One day, the niece received a call from the neighbor, informing her that Mrs. C was "out of money" and "needed a nursing home". A review of the records revealed that Mrs. C was nearly broke, and much of her money had disappeared in cash withdrawals from Mrs. C's account to the neighbor's account. The neighbor had even used Mrs. C's debit card to pay her own bills.
Col. D
Col. D and his wife were retired, high ranking military officers.[14] They had a beautiful home, built while they were on active duty. They eventually retired to their dream home, and for many years while their health was good, they remained active. They traveled regularly and filled their home with beautiful possessions. When Col. D's wife died, he was eighty four and he began to decline. A laborer who did yard work for Col. D befriended him. The laborer and his family began to cook meals for Col. D and run errands, including making certain that Col. D had a supply of alcohol to drink. The laborer took Col. D to the bank to sign a power of attorney so that the laborer could pay the bills for him.
The laborer befriended Col. D's only close relatives, a nephew and a niece who both lived out of state. The laborer would call the relatives regularly and assured them that Col D. was doing well and that he was being taken care of.
After the laborer took over management of Col. D's finances, he began to deplete his assets. Col. D had a sizable military pension and other income which was well in excess of his needs. All of the money deposited into Col. D's bank account was withdrawn each month, and his other accounts were liquidated. Eventually, the laborer applied for a home equity loan on Col. D's residence, telling the banker the money was needed to repair the home or else social services might make Col. D leave. The home equity loan gave the laborer another $60,000. A year later, all the money was gone, other then Col. D's monthly income. The house was in filthy disrepair, with the beautiful landscaping overgrown.
Mrs. E
Mrs. E suffered from bi-polar disorder most of her adult life.[15] She had no relationship with her children for years and after she was widowed. She lived alone and isolated. Mrs. E was befriended by her financial advisor who visited her regularly and helped her to manage her investments, which totaled over one million dollars. Eventually, the financial advisor took Mrs. E to see his lawyer, and a series of amendments to Mrs. E's trust were drafted by the lawyer for Mrs. E. Mrs. E was so fond of the financial advisor that she funded trusts for his minor children's college educations.
Eventually, Mrs. E came under the protection of Adult Protective Services as she began to suffer from cognitive decline. The social worker was able to make contact with one adult child of Mrs. E, a daughter who quickly came out from out of state to visit her mother. The daughter stayed in town long enough to take her mother to an attorney to draft a new will, leaving her mother's estate to her, to the exclusion of her siblings. The daughter contacted the siblings and told them their mother was fine, but didn't want to see either of them. The daughter did not share contact information regarding her siblings with the social worker. Before the daughter left town, she had her mother place her brokerage account containing all of her investments under the daughter's management, and the funds were transferred to the daughter's broker for "management".
The transactions by the daughter were discovered, as well as contact information for the other children. The county requested appointment of a professional guardian and a professional conservator. The gifts to the first financial advisor's children were discovered and the conservator filed an action to recover the funds. The financial advisor's attorney entered an appearance on behalf of the advisor to defend the gifts, despite having represented Mrs. E in drafting amendments to her trust.
Mrs. F
Mrs. F was a widow in her eighties, who had one son. He would help Mrs. F with her financial affairs.[16] When Mrs. F purchased her townhome, she didn't realize that the title to the property was being placed in her son's name. When she sold her large home, her son took to proceeds check to "invest" for her. Later, when Mrs. F asked her son to place her home and the investment account in her name, he refused. He threatened to transfer the townhome out of his name and told her that he would not pay to bury her when she died, because of the trouble she was creating with these requests. Apparently her son had been told that this was an effective way to shelter the money and the house if his mother needed nursing home care. Mrs. F was afraid to take any action against her son, because her children and grandchildren were very important to her.