Protecting Mom & Dad’s Money – Part 2 of 3

What to Do When You Suspect Financial Abuse

Consumer Reports magazine: January 2013 (®)

Consumer Reports  wrote an informative article on the exploitation of seniors, “Protecting Mom & Dad’s Money”.   It will be included in their January 2013 edition.  Our Las Vegas law firm has been helping protect seniors from financial exploitation for nearly two decades, and we wanted to share this article with Nevada families to help bring awareness and to provide information on where to turn for help.

Caregivers and Freeloaders

In a classic elder-abuse scenario, the predator isolates the older person, creating an environment of manipulation, intimidation, and fear

Experts say it’s 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 she’d 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 savings—more than $300,000—of his widowed neighbor, Gwendolyn Swank, now 86. According to a court document and police reports, Chapman played on Swank’s 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 Swank’s 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 Scheming 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 Astor’s 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. “You’re not getting her the care she needs because you want the money for yourself.”

An archetypal exploiter is a ne’er-do-well son, nephew, or grandson, living on Grandma’s 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 charge’s 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, ‘I’m 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 Green’s attorney, Denis Culley, of the nonprofit Legal Services for the Elderly in Augusta, Maine. Instead, Bennoch and other family members moved into Green’s 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 agency’s help, Green says, “I’d 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 don’t want to admit that you were taken the first time,” says Jaye Martin, executive director of Maine’s Legal Services for the Elderly. “So you don’t say no when they keep coming back.”

As in domestic-abuse cases, victims may fear their abuser’s wrath if they report them—or they might be afraid of losing them. “Most of the time the person who’s exploiting her is her caregiver,” Smith says. “So if they go to jail, who’s 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. “We’re where domestic violence was about 20 years ago.”

Addressing the Problem

Those problems haven’t 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, Maine’s 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 state’s 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.

Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.