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Preventing Elder Fraud
As elder law attorneys, we’re often confronted with questions regarding elder fraud. It’s not unusual for senior citizens to be the target and/or victims of unscrupulous individuals seeking to steal the elder’s identity, money or dignity. The culprits come in all “shapes and sizes” and their only goal is self-enrichment. The question we confront, therefore, is what advice and counseling to provide? What resources exist to help and, hopefully, protect our clients.
Let’s take the case of Mary. Mary is 82 years old and lives alone. Her husband of 51 years passed away when Mary was 79. He had a small insurance policy and they had accumulated about $150,000.00 in assets over the years. All-in-all, Mary had about $200,000.00 available for her support. But James, her husband, had made all the financial decisions for the couple and now Mary found herself somewhat “adrift.” Her only income is her monthly Social Security check in the net amount of $945.00. Unfortunately, she needs to dip into her assets regularly to cover her monthly expenses.
Mary has two children, a son and a daughter, and is close to each of them. Due, however, to some physical problems she now needs to rely on her daughter for help with day-to-day activities such as food shopping, cleaning and the like. Her memory is starting to fail and she experiences some confusion from time-to-time. She treasures her independence, however, and lives alone in her home, which she and her husband built over 45 years ago. Mary continues to pay her bills and make her own financial decisions even though both her children offered to help with these chores. The kids, who frequently check up on her, noticed that her checkbook is a mess and she is not keeping good records of her transactions. She has a credit card but they can’t find the monthly statements.
Recently, Sarah, Mary’s daughter, found a letter from a “stock broker” in Mary’s mail indicating that Mary made a large stock purchase over the phone. When Sarah questioned her mother about the transaction, Mary was at first evasive, then argumentative and then tearful. She finally told Sarah she had been called by a nice man offering to help her increase her monthly income. He sounded so sincere and caring that she was certain she couldn’t go wrong. This was a couple of months ago and since giving him her credit card number she hasn’t heard from him and hasn’t received the promised income either.
Mary’s case is typical of the type of fraud that is perpetrated daily on senior citizens. And, Mary is typical of senior citizens who need help and assistance but are too proud, obstinate or ashamed to ask for it. She was lonely and on the other end of the line was a friendly voice. Someone who was only interested in her, who wanted to help Mary maximize her income. Someone who understood how difficult it was to make ends meet. So, Mary took his advice and bought what he had to sell.
In Mary’s case the voice was selling stock. It could just as easily have been shares or interests in a foreign lottery or magazine subscriptions or an annuity or a revocable living trust or club memberships or even a low-cost vacation. The list is seemingly endless. Mary was the victim of what the Securities and Exchange Commission calls “boiler room” fraud. A classic “boiler room” has been described in the following manner in an opinion in a recent SEC enforcement case:
“The brokers sat ‘cheek by jowl’ in a room the size of a basketball court. All of their desks were lined up side by side in rows. The firm held mandatory sales meetings every morning at which time sales techniques were demonstrated and scripts for the firms ‘house stock’. . . were distributed. Brokers were expected to follow the scripts and only give customers the information they contained. Brokers were discouraged from doing any outside research, and were told to rely on the firm’s research and representations. . . . After the morning sales meeting, brokers were expected to spend the entire day (except for a lunch break) on the telephone. The firm expected a high volume of sales, and if brokers did not stay on the phone, they were fired. . . .”
The children sought the advice and guidance of an elder law attorney because they wanted to help their mother but did not know how to proceed. Sarah and her brother have to be more proactive on behalf of their mother. But first, they need to work with her to help (not force) Mary to understand that she needs their assistance. To do this they may need to bring in a professional, such as a geriatric care manager, to work with them to help formulate a plan that works. They need to learn and employ the art of gentle persuasion. They need to respect Mary’s dignity at all times as well as her need to feel as independent as possible.
Is there anything the elder law attorney can do? In Mary’s case perhaps a call to the credit card company may help. Certainly contact with the SEC is appropriate. Report what happened to the state’s securities regulator or contact the North American Securities Administrators Association. Most importantly, work with the family to help them help Mary understand her need to let them assist her with her finances. Frequently, the senior will listen to and take the advice of an elder law attorney. To gain Mary’s confidence, however, the very first thing one must do is listen to her, that is hear what she has to say and evaluate it. Then, after you know what her concerns and goals are, you can begin to win her trust and lastly give her guidance and advice.
Mail fraud is another often practiced approach to divest seniors of their assets. Mail fraud has been defined by the U.S. Postal Service as a scheme to get money or something of value from an individual by offering a product, service or investment opportunity that does not live up to its claims. Mail fraud can take the form of a sweepstake associated with a free prize or a “free vacation.” It may appear to be “government look-alike mail” or solicitations disguised as invoices. And, of course, there’s the old standby, the chain letter. If you suspect that a senior citizen has been the victim of mail fraud report it to your local postal inspector.
Identity theft is also a rapidly growing problem of great concern and perhaps the most insidious of all the problems. There are a number of things one can do to protect one’s self from identity theft. Take mail from your mailbox promptly. Do not leave outgoing mail in unsecured locations. Never give personal information over the telephone unless you initiated the call and know with whom you are speaking. Shred preapproved credit card applications before discarding them. Protect and safeguard your wallet and only keep in it what you need. Don’t carry your social security card, passwords or PIN numbers with you. Obtain credit reports at least once a year to check for fraudulent activity.
If you suspect your senior has been the victim of identity theft then promptly contact all creditors to inform them of the problem. Notify your postal inspector and report the problem to the FTC. Call the credit card bureaus’ fraud units to report the theft and ask to have a “fraud alert/victim impact” statement placed in the file. This statement requests that creditors call the account holder before opening any new accounts. Alert banks to flag accounts and contact the individual if they notice any unusual activity. Change PIN numbers and passwords. Contact the Social Security Administration’s Fraud.
Senior citizens are easy prey to unscrupulous individuals. They often need the support of their families to help them with their financial transactions. The elder law attorney is one of the most important resources the family can access for help. As an attorney your job is to familiarize yourself with the resources necessary to protect seniors from elder fraud.
Resources:
Social Security Administration, Fraud Hotline 1-800-269-0271
U.S. Postal Service, Newark Division 1-973-693-5400
Security and Exchange Commission 1-800-SEC-0330
Federal Trade Commission 1-877-IDTHEFT
Camden County Division of Senior Services 1-877-222-3737