Elder abuse can take many forms. One of the most devastating and costly forms of elder financial abuse – investment fraud – is often perpetrated by trusted financial advisers or even family and friends. Senior consumers are increasingly targeted by con artists using investment related pitches, often in what the senior believes is a safe setting like church, a social club, or as part of a so-called “free lunch” seminar.
You can help seniors spot and stop financial abuse and exploitation by knowing what to look for. However, first you must put the problem into focus.
- 75% of the nation’s consumer wealth is held by people are 50 or over.
- Financial losses suffered by seniors are higher with investment fraud scams than with other forms of financial abuse.
- Many common investment scams can be quickly discovered and avoided by checking with securities regulators before sending money.
- Only an estimated 1 out of 3 investors using a financial adviser has ever checked the background of that person with regulators.
- Investment fraud complaints from the elderly account for nearly one half of all fraud complaints received by state securities regulators.
- As with other forms of elder abuse, officials estimate that only a small percentage of cases of financial abuse and exploitation is reported.
- The decline in mental faculties for some seniors makes them more vulnerable to fraud and may make cases harder to prosecute.
- Seniors are less likely to report fraud because they are embarrassed or fear loss of freedom if seen as unfit to manage their own finances.
- Seniors who are abused or mistreated are three times more likely to die earlier than seniors who are not.
Next, you have to recognize the “red” flags of investment fraud.
- Mail piled up or unpaid bills.
- Excitement about winning a sweep-stake or lottery.
- A new companion, adviser or power of attorney making financial decisions.
- A senior who is fearful, distressed or depressed.
- A senior has received information or was asked to invest in unregistered or start-up companies.
- A senior was asked to sign blank paperwork on an investment, or gave an adviser discretionary authority over their account.
- A senior has unopened investment account statements, missing account statements, or missing documentation for an investment.
- A senior is missing checks from their checking account, or made checks for the purchase of an investment directly to the adviser or salesperson.
- A senior complains that he or she is unable to get in touch with the adviser or broker and has difficulty remembering the terms of the investment.
- A senior has lost money in other scams.
Obviously, the above list is not exhaustive. Over the years, we have had to deal with unbelievable factual scenarios in an attempt recoup seniors stolen funds. One example that stands out in my mind related to an elder husband and wife whose son was an investment adviser. The couple turned over their life savings to their son to manage. The son though the use of commissions, including those generated by high risk investments, depleted all of his parents funds. The husband and wife did not know what was happening because the son was sending the parents fake statements, while the real statements were being sent to his home address. I asked the parents what their son said when they confronted him with what he had done. The answer was “sue me.”
Consequently, we urge you to do something if you see this abuse. If you have any questions concerning what to do, please feel free to send me an email with your questions, which I will be glad to answer.