Financial Exploitation of the Elderly

The population in America is aging with over 52.5 million persons over the age of 65. Every day 10,000 Americans turn 65 and will continue to do so until the year 2030. By 2030, one in five people or 74 million Americans will be over the age of 65.  Americans over 85 is the fastest growing segment of the population and will represent 2.5% of the 2030 census.

This population controls a tremendous amount of wealth.  Baby boomers by far are the wealthiest group in the U.S. and control more than $50 Trillion in assets or 1/3 of the wealth of the country. Those over 85 have over $30 Trillion in assets.  Thus, elderly Americans are an ideal target for an unscrupulous relative or fraudster.

Given their age those over 65 are at high risk of financial exploitation.  This occurs when a person misuses or takes the assets of a vulnerable adult for his/her own benefit.  This frequently occurs without the explicit knowledge or consent of a senior or disabled adult, depriving him/her of vital financial resources for his/her personal needs.  Older Americans lose $30 billion a year to financial exploitation.

Unfortunately, older Americans are more at risk due to the following reasons:

1. A high percentage of senior citizens live alone and as a result may be more vulnerable to scams.
2. Seniors tend to be more trusting and readily believe sales pitches they hear.
3. One of the key factors is cognitive decline, in fact, 10% of the 65 and over population have Alzheimer’s typed dementia and about 15 – 20% of American seniors have a mild cognitive impairment.
4. Another key factor is dependence on someone, in fact, 63% of senior Americans need assistance with their activities of daily living and therefore rely on others for care.
5. Unfortunately, individuals who need care are more likely to be targets of financial exploitation and abuse by family members.

The late criminologist, Donald Cressey studied embezzlers and formulated what is now referred to as the “fraud triangle”. The fraud triangle consists of three elements: pressure, opportunity, and rationalization.  Cressey theorized that embezzlers get themselves into a financial pressure that they cannot solve through legitimate means. Embezzlers due to their job or position are in a position of opportunity to steal the funds needed.  Finally, the embezzler needs to rationalize their actions as something other than theft.  The fraud triangle is particularly pertinent in today’s pandemic environment. We can easily apply the triangle to financial exploitation of the elderly as follows:

1. Pressure
   • Family caregiver duties and loss of work
   • Loss of job or reduction in pay due to Covid – 19
2. Opportunity
   • Access to funds as a fiduciary
   • Ability to hide the transactions
3. Rationalization
   • Fiduciary believes they “deserve” or are entitled to the money
   • Says the elder gave it as a gift
   • Thinks of it as a loan against an inheritance
   • Thinks they will find a way to pay it back in the future

In addition to the pressures listed above other pressures also exist on a family fiduciary or caregiver that can lead to them committing malfeasance including:

1. 1 in 5 Americans are caregivers
2. Approximately 66 million Americans provided unpaid caregiving to a loved one each year.
3. More than $470 billion a year in uncompensated long-term care is provided by family members
4. Family Caregivers spend approximately 24 hours a week on caregiving for approximately 4 years
5. Family caregivers spend $7,400 a year of their own money on caregiving
6. Family caregivers lose wages, pensions, and jobs due to caregiving duties.

The most common forms of financial exploitation reported to Adult Protective Services agencies include:

1. Theft: involves assets taken without knowledge, consent or authorization; may include taking of cash, valuables, medications other personal property.
2. Fraud: involves acts of dishonestly by persons entrusted to manage assets but appropriate assets for unintended uses; may include falsification of records, forgeries, unauthorized check-writing, and Ponzi-type financial schemes.
3. Real Estate: involves unauthorized sales, transfers or changes to property title(s); may include unauthorized or invalid changes to estate documents.
4. Contractor: includes building contractors or handymen who receive payment(s) for building repairs but fail to initiate or complete project; may include invalid liens by contractors.
5. Lottery scams: involves payments (or transfer of funds) to collect unclaimed property or “prizes” from lotteries or sweepstakes.
6. Electronic: includes “phishing” e-mail messages to trick persons into unwittingly surrendering bank passwords; may include faxes, wire transfers, telephonic communications.

If you or a client is concerned that a parent or loved one may be a victim of financial exploitation, then look for the following signs of financial exploitation:

1. Out of character charges or payments
2. Extravagant purchases when basic needs are not met
3. Checks or withdrawals in round amounts ($500. $1,000, etc.)
4. Fiduciaries withholding money or payments
5. Transactions with significant detrimental consequences to the Elder
6. Transfers of assets or income to a fiduciary or caregiver
7. Inexplicable changes in the fiduciary
8. Duplicative payments to a person for the same service
9. Missing personal property
10. Termination of vital utilities such as telephone, water, electricity / gas, or garbage
11. Unpaid bills and liabilities despite adequate income
12. Oversight of finances surrendered to others without explanation or consent
13. Transferring assets to new “friends” assisting with finances
14. Checks written to “Cash”
15. Does not understand his/her current finances, offers improbable explanations
16. Unexplained disappearance of cash, valuable objects, financial statements
17. Unexplained or unauthorized changes to wills or other estate documents
18. Giving-away money or spending promiscuously
19. Appearance of property liens or foreclosure notices

GFAS has extensive experience in performing financial examinations, identifying fraudulent activity, and testifying to the same.  GFAS has been retained by legal counsel and others in numerous matters where financial exploitation has been alleged.  If you or your clients need our services, please reach out to us by clicking here.