In 1959, people 65 or older had the highest rate of poverty than any other generation according to the U.S. Census Bureau. Today, older Americans are better off financially than any other generation. Bank robber Willie Sutton once famously said that he robbed banks because, “That’s where the money is.” If Willie Sutton were alive today, he would find it easier and more rewarding to prey upon senior citizens. Although awareness of senior financial fraud is increasing, cases involving elder investment fraud and financial abuse are on the rise. Early detection and prevention are your best defense. Elder financial abuse typically occurs when someone exploits a position of influence or trust in order to gain access to the elderly person’s assets. Examples of financial abuse may include:
- Unexpected changes in wills, trusts or powers of attorney
- Sudden or unexplained check cashing, transfers or withdrawals
- Opening of a new new brokerage account (or multiple accounts) or changing brokerage firms
- Unusual increase in investment activity or change in investment style
- Overly secretive or reluctance to discuss financial matters
In my experience, frequent changing of brokerage accounts can be a big “red flag.” More than once, I have seen elderly clients move their accounts and follow a stockbroker from firm to firm only to discover that the broker had been fired by a previous employer because they were suspected of mishandling client accounts. Unfortunately, many cases of elder financial exploitation go unreported. According to one report, each year senior citizens lose an estimated $36.5 billion due to financial fraud and elder abuse. The onset of financial exploitation is often undetectable starting out slowly and gradually increasing over time as the client’s cognitive abilities continue to deteriorate. In many cases, a financial institution or brokerage firm neglects to act despite obvious signs that their elderly client is suffering from diminished capacity or that their financial assets are being misused. In more severe cases, the elderly customer may be a victim of outright securities fraud by a stockbroker.
If you suspect that someone has been the victim of elder financial abuse or senior investment fraud, it is important to seek legal help as soon as possible. Many states have elder abuse statutes that allow for the recovery of punitive damages and legal fees in specific instances. However, because the deadline for filing claims under these statutes are often fairly short, any delay in taking legal action could be costly. Also, in cases where the elder client has significant diminished capacity, the victim may not be legally competent to file a claim directly and a conservatorship may be necessary.