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Protecting Mom & Dad's money-- What to do when you suspect financial abuse (Part I) – 1/28/2013

The New York Post called it the swindle trial. Jurors likened it to a Shakespearean tragedy. When New York socialite Anthony D. Marshall was convicted of defrauding and stealing from his elderly mother, philanthropist Brooke Astor, reports detailed how he conspired with lawyer Francis Morrissey to amend her will in his favor, took millions without her consent, and lifted paintings from her walls while she languished in her Park Avenue home. The trial painted a portrait of greed and filial neglect. Both men were sentenced to one to three years in prison and are currently out pending appeal.

Elsie Brookss lifestyle was a world apart from Astors, but their stories are tragically similar. When she was 72 she sold her mobile home and moved in with her daughter and granddaughter in Monterey, Calif. She decided she didnt want to deal with her finances any longer and let the two take control. But her daughter, Lisa Karen MacAdams, and granddaughter, Christi Schoenbachler, drained Brooks of jewelry, furniture, and an annuity worth almost $90,000, and abandoned her at a nursing facility, according to court documents. They were convicted of grand theft and financial elder abuse, both felonies, and two counts of misdemeanor elder abuse. Last summer, a California appeals court stayed one of Schoenbachlers misdemeanor charges.

Elder financial abuse is the ultimate betrayal, says Colleen Toy White, a superior court judge in Ventura County, Calif., who sees roughly 40 cases of such abuse each month. Its shocking to see how vulnerable the elder person is.

Weve told you about scams by strangers, among them fraudulent sweepstakes phone calls and investments, and grandparent scams (Scamnation!, October 2012 issue). Far more insidious are deceptions by neighbors, friends, employees, and relativesthe very people entrusted to care for and protect seniors.

Such abuse can be financially and emotionally devastating. And experts say its likely to increase because of a stalled economy and an aging population. Awareness is rising thanks to cases such as Astors. Yet because seniors might not recognize when it happens to them or are too ashamed to speak, the crime lurks largely out of sight.

In a randomized New York telephone survey released in 2011, for instance, seniors mentioned being victims of financial exploitation more frequently than any other type of abuse. Yet the study estimated that only 1 in 44 incidents of financial elder abuse is officially documented.Nearly every time I lecture on financial abuse, people will approach me with their personal stories, says Elizabeth Loewy, a Manhattan assistant district attorney and lead prosecutor on the Marshall case. They will talk to me about their grandmother, aunt, or neighbor, usually a senior with cognitive issues, who had this problem. And its like a light will go on, and theyll ask, So this could be a crime? 

Unreported crimes

Financial exploitation of elders is broadly defined as the illegal or improper use of the funds, property, or assets of people 60 and older. In the New York survey, 4.2 percent of older people surveyed said that theyd been exploited by family members or others. In a national study from 2009, 5.2 percent of older Americans said theyd been victimized by family members, and 6.5 percent said theyd been exploited by others. A seminal national study by the MetLife Mature Market Institute found that the cost of such abuses is at least $2.9 billion a year. Yet John Migliaccio, the institutes director of research and gerontology, acknowledges that the studys methodologypulling from compiled news reports of abuseunderestimates the crimes true price. What were seeing is a tip of the iceberg, he says.

Nevertheless, the study reports some startling facts: In 107 cases, seniors lost an average of more than $145,000 from fraud committed by family, friends, caregivers, and neighbors. In 159 cases involving fraud by strangers, the average loss was more than $95,000.

Studies of investment abuses tell similar stories. In a survey last year of about 2,600 financial planners by the Certified Financial Planner Board of Standards, 56 percent said they knew older clients who had been subject to unfair, deceptive, or abusive practices. Among reported cases, the average loss estimate was $140,500; the median was $50,000. Only a quarter of surveyed CFPs said the crimes perpetrators rarely or never knew the victim.

Law-enforcement and social-services professionals see exploitation rising sharply. Rhode Island Attorney General Peter Kilmartins office opened 128 financial-elder-abuse cases in 2011, a 40 percent rise from 2010. Paul Greenwood, a deputy district attorney in San Diego and head of the countys elder-abuse protection unit, says the office will prosecute about 200 cases this year. Ive never been busier, he says.

Better reporting contributes to that growth, Greenwood says. So does the flat economy. As people become more desperate from the economy, they need that extra money, says Sally Smith, adult protective services case manager supervisor at the Franklin County (Ohio) Office on Aging.

Caregivers and freeloaders

Experts say its not only the volume of cases that have swelled but also the variety. Greenwood says fraud committed by strangers such as unlicensed home contractors and phone sweepstakes scammers is bigger than ever. So are crimes involving people in close contact with seniors. Ninety percent of abusers are family members or trusted others. Of all reported elder-abuse cases, financial exploitation is reported most frequently.

"The referrals we get run the gamut, from someone having their Social Security check being taken to an account drained of over $200,000, Smith says.

Professional caregivers pose particular risks because of their closeness to the victims and, perhaps, their generally low wages. We unearthed numerous cases in which health aides, either in the home or in an institution, had taken items, cash, or Social Security checks from their elderly charges, or worse. The New York study found that 12 percent of elder abuse was perpetrated by home health aides.

I see a lot of middle-aged women, unskilled caretakers, Toy White says. For the first time in their lives that we know of, they start to steal. The temptation of the money is so great.

New friends also can be perpetrators. Cynthia Gartman, president of Ikor, a for-profit advocacy and guardianship service based in Kennett Square, Pa., recalls an elderly woman with diminished mental capacity supporting a number of predators, including a minister. One was taking the woman shopping once a week so that shed buy the freeloader groceries and supplies.

In a classic elder-abuse scenario, the predator isolates the older person, creating an environment of manipulation, intimidation, and fear. In 2012, Rodney Chapman of Damariscotta, Maine, was sentenced to five years in prison after pilfering the life savingsmore than $300,000of his widowed neighbor, Gwendolyn Swank, now 86. According to a court document and police reports, Chapman played on Swanks fears of reported drug trafficking in the area and encouraged her to pay phony law-enforcement agents for her protection. On several occasions, he ordered the frightened woman to hide in her house. He took away her phone, restricted visitors, coerced her into drinking whiskey, and limited when she could drive. Investigators later determined that Chapman had spent some of Swanks money to renovate his home and blew the rest.

By the time we intervened, she was down to living on peanut butter and rice cakes, Lincoln County, Maine, Detective Robert McFetridge told the Bangor Daily News in June 2012. She was really a prisoner in her own home.

The neer-do-well grandson

By far the most disturbing abuse is by family members themselves. Kin who seem reliable can turn bad from greed or desperation. They can coerce an older relative into giving up money or control of assets, threaten or intimidate, or like Astors son, steal outright. They can ask a cognitively impaired person for repeated loans and never try to repay. Or they can abuse power of attorney or a joint account to siphon funds. You especially want to trust family members, says Utah Attorney General Mark Shurtleff. But even your loved ones could try to hurt you.

Those cases can also involve neglect or physical abuse. Financial abuse is often the motivator for beating up Grandpa or neglecting Mom, says Kathleen Quinn, executive director of the National Adult Protective Services Association, which represents state and local programs that investigate abuse of vulnerable adults and takes steps to protect the victims. Youre not getting her the care she needs because you want the money for yourself.

An archetypal exploiter is a neer-do-well son, nephew, or grandson, living on Grandmas couch and borrowing or stealing money. He might have emotional scars or a drug habit, or he might view his elderly relative as an easy source of cash.

Another threat is a relative acting as a caregiver who starts with good intentions but then siphons money from her charges accounts. Many will write themselves a check to gift money to themselves, says Steve Starnes, a certified financial planner in McLean, Va., who counsels advisers on dealing with the elderly. They feel like, Im looking after my loved one and I deserve something in return. 

At the heart of these cases is a grievous breach of trust. Arthur Green, 74, of Brooks, Maine, signed over the deed to his lakefront home and adjoining cottage to his granddaughter, Nevin Bennoch, assuming that he could live there rent-free through retirement, according to Greens attorney, Denis Culley, of the nonprofit Legal Services for the Elderly in Augusta, Maine. Instead, Bennoch and other family members moved into Greens house, put the cottage up for sale, and began a campaign of harassment, Culley said. When Green, a former construction worker, was served with an eviction notice, he contacted Culley, who fought successfully to return his properties. Without the agencys help, Green says, Id probably be under a bridge in a cardboard box.

Sometimes prosecutors and judges characterize such financial shenanigans as civil cases, rather than criminal ones, which could prevent or delay their resolution. Prosecutors also may be unwilling to use seniors as witnesses if their mental capacity is in question. And often the victim may not want to talk, out of shame or fear of losing their independence. Smith of the Franklin County Office on Aging recalls a client who was sitting in the dark because her son was taking her Social Security checks and not paying her utility bills. She refused to press charges.

Predators who succeed once often try again. You dont want to admit that you were taken the first time, says Jaye Martin, executive director of Maines Legal Services for the Elderly. So you dont say no when they keep coming back.

As in domestic-abuse cases, victims may fear their abusers wrath if they report themor they might be afraid of losing them. Most of the time the person whos exploiting her is her caregiver, Smith says. So if they go to jail, whos going to take care of her?

In fact, the similarity to domestic violence helps explain why elder financial abuse goes underreported. It took people a while to wrap their heads around the idea that domestic violence was a crime, says Loewy, the Manhattan assistant district attorney. Were where domestic violence was about 20 years ago.

Whats being done

Those problems havent stopped law-enforcement and other professionals from pushing to improve awareness and prevention of financial exploitation of older people. With little federal coordination and funding, most activity happens at the state level. Experts we interviewed in several states mentioned improvements in recent years in the communication among adult-protective-service workers, emergency medical personnel, police officers, prosecutors, and other workers to identify and deal with suspected crimes.

Strained state budgets challenge more progress. Some jurisdictions in California, for instance, have established dedicated courts like that of Toy White to handle the growing number of elder-abuse cases. A spokeswoman for the California Administrative Office of the Courts expressed concern about the elder courts survival in the face of state budget cuts. In spite of a burgeoning elderly population, Maines Legal Services for the Elderly has seen its funding remain flat over the past decade, Martin says.

In 25 states, financial institutions are required to report suspicious withdrawals from seniors accounts and other uncharacteristic activity, according to the American Bankers Association. The ABA says it supports its member banks with education, including training that focuses on teaching employees to identify behavioral and transactional indicators that could signify financial abuse.

But a recent Government Accountability Office report found examples where bank employees missed opportunities to identify elder exploitation. Banks misconceptions about federal privacy laws also may make them unwilling to release bank records to investigators, the report found.

On the federal level, the Consumer Financial Protection Bureau, established by the 2010 financial-reform law, houses the Office of Financial Protection for Older Americans, which works to prevent abusive and fraudulent financial practices related to seniors. Several agencies publish material on preventing and avoiding identity theft, phone scams, consumer frauds, investment cons, and other swindles for seniors and others.

But a potentially powerful federal weapon against financial elder abuse remains stuck in neutral. The Elder Justice Act, part of the 2010 health-care reform law, authorized more than $700 million over four years for preventing and dealing with elder abuse, neglect, and exploitation, mostly by funding state adult protective-services agencies. Congress, however, has failed to fund the discretionary expenditure despite a sharp rise in need. According to a 2012 report by the National Association of States United for Aging and Disabilities, almost 70 percent of state adult protective-services agencies reported a rise in caseloads of up to 20 percent in the past five years; 16 percent saw rises of 20 to 30 percent.

That lack of funding could backfire. Without timely intervention, victims stand a greater chance of becoming indigent and dependent on government support. A 2012 study by the Utah Division of Aging and Adult Services, for instance, found that older financial-abuse victims in 2010 who resorted to the states Medicaid program for their care had lost an average of $480,000. Such victims could cost the program almost $9 million, the study projected. It costs victims, families, financial institutions, and the taxpayer, says Quinn at the National Adult Protective Services Association.

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