Paul O. Dillon, Attorney at Law

Elder Financial Abuse on the Rise during Pandemic

The same isolation that is keeping seniors safe during the pandemic is also making them easier targets for scammers, reports WKYC in a news report “Northeast Ohio family warns of elder financial exploitation during the pandemic.” While this report concerns a family in Ohio, seniors and families across the country are facing the same challenges.

Two brothers enjoyed spending their time together throughout their lives. However, for the last three years, one of them, Michael Pekar, has been trying to undo a neighbor’s theft of his brother Ronnie’s estate. A few months before Ronnie died from cancer, a neighbor got involved with his finances, gained Power of Attorney and began stealing Ronnie’s life savings.

The money, more than a million dollars, had been saved for the sons by their mother. Pekar went to see an attorney, who helped uncover a sum of about $1.6 million that had been transferred from Ronnie into other accounts. A civil complaint was filed against the woman and $700,000 was eventually recovered, but nearly $1 million will never be recovered.

How can you prevent this from happening to your loved ones, especially those who are isolated during the COVID-19 pandemic?

An elderly person who is isolated is vulnerable. Long stretches of time without family contact make them eager for human connection. If someone new suddenly inserts themselves into your loved one’s life, consider it a red flag. Are new people taking over tasks of bill paying, or driving them to a bank, lawyer, or financial professional’s office? It might start out as a genuine offer of help but may not end that way.

The possible financial abuser does not have to be a stranger. In most cases, family members, like nieces, nephews or other relatives, prey on the isolated elderly person. The red flag is a sudden interest that was never there before.

Changes to legal or financial documents are a warning sign, especially if those documents have gone missing. Unexpected trips to attorneys you don’t know or switching financial advisors without discussing changes with children are another sign that something is happening. So are changes to email addresses and phone numbers. If your elderly aunt who calls every Thursday at 3 pm stops calling, or you can’t reach her, someone may be controlling her communications.

According to the CDC, about one in ten adults over age 60 are abused, neglected, or financially exploited.

Be sure to check in more frequently on elderly family members during the pandemic because increased isolation can lead them to rely on others, making them vulnerable to abuse.

Reference: WKYC (Nov. 19, 2020) “Northeast Ohio family warns of elder financial exploitation during the pandemic.”

Is It a Call from Social Security or a Scam?

If you get a call allegedly from the Social Security Administration, the chances are good that it’s a scam. Prior to disclosing any information or money, there are some steps you want to take.

CNBC’s recent article entitled “Social Security scams have caused millions of dollars in losses in 2019 alone. How you can avoid becoming a victim” explains that it’s common for an unknown caller to say that your Social Security number has been suspended or canceled.

This is the latest version of a robocall scam that the IRS warned people about in early 2019.

Other criminals attempt to convince people to pay up with cash or gift cards, in order to avoid getting arrested.

In the first six months of 2019, people filed 73,000 reports about Social Security fraud, according to the Federal Trade Commission. The losses from these calls was more than $17 million.

However, Congress is trying to stop these practices.

The House of Representatives passed a bill in early December to restrict robocalls by requiring carriers to block the numbers, without charging consumers extra money. The Senate passed a similar bill earlier this year.

Several lawmakers also asked the Social Security Administration to review scam calls purporting to come from the agency.

“While SSA has taken steps in recent months to prevent and raise public awareness about these imposter calls, we are alarmed that the scams continue to be widespread and severe,” the congressmen wrote in a letter to Andrew Saul, commissioner of the Social Security Administration.

The Social Security Administration also won’t send you an email with a “click here” link.

It is important to limit when you give out your Social Security number. You should think twice before revealing that information on healthcare forms, for example, where that information is usually unnecessary.

Reference: CNBC (Dec. 16, 2019) “Social Security scams have caused millions of dollars in losses in 2019 alone. How you can avoid becoming a victim”

How Do I Protect My Elderly Parent from Scams?

According to a 2015 study by True Link Financial, seniors lose $36.48 billion each year to elder financial abuse. The FINRA Investor Education Foundation reports that more than 8 in 10 seniors are solicited for potentially fraudulent offers, adding that “Americans age 65 and older are more likely to be targeted and 34% more likely to lose money once targeted than respondents in their 40s.”

Kiplinger’s recent article, “Defrauding the Elderly: Watch for These Danger Signs,” explains that advancing age can have some impact on an individual’s emotional and physical health that may lower their defenses against abuse and fraud. Let’s look at some common frauds.

Wire transfer scams: A retired 80-year-old businessman contacted by fraudsters who said they wanted to do business with him. He wired them $400,000, and when he found out he’d been defrauded, he complained to the scammers. They had him contact some new crooks who said they could get his money back if he would wire them $400,000—which he did.

Gift card scams: These can be used to launder money, without even having to physically send the cards anywhere. A scammer convinces the elderly victim to get several cards and load them with money. They then have the victim scratch off a protective strip on the back of the card to reveal its code number, take a picture of the number and then text the picture to a cellphone number.

Computer-hacking scams: A common scam designed to victimize seniors is a contact from someone who says they’re a Microsoft employee. The scammer says the senior’s computer has a virus or some other problem, which they’re happy to fix. The senior just has to click on an email link or download an attachment the rep sends them and pay a fee. The scammer thus gets control of the victim’s computer.

Door-to-door scams: A scammer knocks on a senior’s door and says her trees need to be trimmed or gutters need to be cleaned. There are numerous cases where seniors have paid upwards of $30,000 to trim the hedges at their house. There are no service rendered: the crooks just wait and reappear to help the elderly person write a check for their services.

Family member financial abuse: Financial fraud in a family can be hard to resolve. It’s hard to know if an elderly parent voluntarily gives gifts to a family member, or if fraud is involved.

Prevention is always the best course of action, so speak to your elderly parents or grandparents about scams.

Reference: Kiplinger (October 24, 2019) “Defrauding the Elderly: Watch for These Danger Signs”

Should I Add My Elderly Dad as a Co-owner of My Checking Account?

There are several issues to consider when you add an elderly parent as a co-owner of your checking account, says nj.com in its recent article, “Is having a joint bank account with my father going to cause any problems?”

The father is still a named joint holder of the account, so he can withdraw some or all of the funds in the checking account at any time. As a result, the transfer is neither a completed gift nor a payment from the father to the adult son, until the son withdraws funds.

If the elderly father predeceases the adult son, the checking account would be included in his taxable estate. There may be taxes due on the estate, depending on the size of the estate and the state in which he lives, since some states have their own estate taxes at much lower levels than the federal thresholds. In New Jersey, there is a procedure where a tax waiver would need to be obtained to release the funds to the son in this case.

If the adult son dies before his father, the checking account funds would automatically pass to the father by operation of law, and not pursuant to the terms of the son’s will, nor to his children or spouse.

In light of the fact that the father can withdraw the funds during his lifetime as a joint holder of the account, those funds in the checking account are subject to him being a victim to scams.

To safeguard these funds, the adult son should take the time to properly title the checking account. If the transfer of funds was a gift to the son in excess of $15,000, the father would also need to file a Form 709, U.S. Gift and Generation-Skipping Transfer Tax Return, even if no tax is due because the federal gift and estate tax exemption is at $11.4 million per person.

If the transfer was made by the father to qualify for Medicaid, it is important to understand that the Medicaid five-year look-back period and penalty could be an issue. The look back is from the time of the application. Any gifts or transfers made within this period, are subject to a penalty, that is equal to a period for which Medicaid benefits are denied. Since the transfer isn’t complete until the son removes his father’s name from the account, for purposes of Medicaid qualification, it would be best to remove the father’s name ASAP.

A joint account may also be subject to legal judgments, collections and other debt collection efforts.

Reference: nj.com (September 25, 2019) “Is having a joint bank account with my father going to cause any problems?”

Arizona Passes Financial Exploitation Legislation

The Queen Creek Independent reports in the article “New Arizona law helps protect vulnerable adults, seniors from financial exploitation” that Senate Bill 1483 went into effect at the end of August.

The new law lets securities dealers and investment advisory firms report suspected or attempted financial exploitation of a vulnerable adult and delay a questionable disbursement or transaction.

The new law lets these financial firms impose an initial delay of disbursements from an eligible adult’s account for up to fifteen business days, if financial exploitation is suspected.

The firms must report the delay within two business days to the Commission or the Department of Economic Security—Adult Protective Services. The government can then extend the delay for an additional ten days or longer.

If additional delay is required, a judge can extend the time even further.

It’s important to note that the law provides immunity from administrative or civil liability to qualified individuals for taking preventative actions that are permitted under the law.

The 2010 Investor Protection Trust Elder Fraud Survey reports that one out of every five citizens over the age of 65 has been a victim of financial fraud.

Arizona’s new law aims to help protect individuals who are over 65 years old or who are unable to protect themselves from abuse, neglect, or exploitation by others, due to a physical or mental impairment.

“Protecting senior investors has long been a top priority for the Corporation Commission,” Arizona Corporation Commission Chairman Bob Burns said in a news release.

“Early detection and reporting of financial exploitation are critical to help prevent elder financial abuse and the devastating financial and emotional impacts that ensue.”

Reference: Queen Creek Independent (September 16, 2019) “New Arizona law helps protect vulnerable adults, seniors from financial exploitation”

How Will a New Illinois Law Protect Seniors?

In an attempt to protect senior citizens to a greater degree, a bill by Illinois State Senator Rachelle Crowe (D-Glen Carbon) to deny inheritance to anyone convicted of assaulting their elderly family members was signed into law recently.

Wealth Advisor’s recent article, “New Illinois law denies inheritance to those who abuse elderly family members,” says with the current Elder Abuse and Neglect Act, an individual who is convicted of financial exploitation, abuse, or neglect of an elderly person is prohibited from benefitting from the victim’s estate.

Senator Crowe’s proposed legislation broadens the law to include assault, aggravated assault, battery, and aggravated battery against anyone over the age of 60.

“It’s disheartening that we need legislation such as this to prevent family members from taking advantage of their elders,” Crowe said.

“Seniors are targeted every day for their estate, and I’m proud to put this legislation forward to prevent abusers from benefitting after committing this serious crime.”

“Every day, we see the devastating effects of abuse of senior citizens, often by family members,” said Tom Gibbons, Madison County State’s Attorney. “I’m thankful to Senator Crowe and our legislators passing this important measure to prevent abusers from profiting from their abuse.”

Crowe has worked on other protective legislation for the elderly. She has created Illinois’ Elder Abuse Task Force. The state senator plans to be a member of the task force and to study senior mistreatment and protective services and laws. The task force will then report the findings back to officials.

“We hope not to merely punish cruelty, but to deter it with this law,” said Crowe. “The message for abusers should be clear: You get nothing.”

House Bill 347 passed the Senate and awaits the governor’s signature to become law. It would go into effect on January 1, 2020.

Reference: Wealth Advisor (August 6, 2019) “New Illinois law denies inheritance to those who abuse elderly family members”

What is San Diego Doing to Combat Elder Abuse?

Finance professionals who serve senior citizens “are some of our best eyes and ears for spotting and preventing the exploitation of older and dependent adults,” District Attorney Summer Stephan said during a news conference at the San Diego Hall of Justice.

Fox 5 San Diego’s recent article, “County battles financial elder abuse with new campaign,” says that under California law, employees of financial institutions, including all banks and credit unions, are required to report suspected elder and dependent adult financial abuse.

This applies whether they have direct contact with a potential victim or even just witness an incident they suspect may be financial abuse.

“Employees in financial institutions can make a real difference in the lives of some of the most vulnerable in our community to help protect them from losing their life savings,” Stephan commented.

The new program, launched in conjunction with Financial Elder Abuse Awareness Month, gives finance workers examples of warning signs to watch out for and details on how to report any suspected abuse of the elderly.

The training materials include a video featuring industry representatives from the Credit Union League and Western Bankers Association, as well as Marlene Ruiz, a longtime local bank employee who helped prevent a financial elder-abuse crime.

When Ruiz saw that one of her older clients was the victim of an obvious scam, she intervened. As a result, she was able to prevent the victim from having thousands of dollars stolen from his bank account. In honor of those actions, the District Attorney’s Office named Ruiz one of its “Citizen of Courage” in 2018.

An estimated $36.5 billion is lost every year in the U.S. from elder financial exploitation. Last year, U.S. banks reported nearly 25,000 suspected cases of elder financial abuse to the Treasury Department. That’s more than double the amount of five years earlier.

In fiscal 2017-18, San Diego County Adult Protective Services fielded 4,563 referrals about financial-abuse allegations. Nearly 15% of those reports came from financial institutions, according to Stephan’s office.

Reference: Fox 5 San Diego (June 18, 2019) “County battles financial elder abuse with new campaign”

What is Congress Doing for Seniors?

House Majority Leader Steny Hoyer, a Democrat from Maryland, informed the House Democratic Caucus in an April 25^th “Dear Colleague” letter that he intends to bring H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, to the House floor in May.

Think Advisor’s recent article, “SECURE Act to Get House Vote in May,” explains that the SECURE Act passed the House Ways and Means Committee on April 2. There’s been action on the companion bill—the Retirement Enhancement and Savings Act (RESA) of 2019. That legislation has yet to be scheduled by the Senate Finance Committee.

In discussing the actions taken during the first 100 days of the 116th Congress, Representative Hoyer said that the House will soon take up H.R. 9, the Climate Action Now Act, “to affirm the principles of the Paris Climate Agreement, in spite of President Trump’s pledge to withdraw the United States.”

Hoyer signaled that a vote on the SECURE Act would follow “over the coming work period,” and noted that with the flood insurance program set to expire at the end of May, “I expect the House to take action to address that as well.”

Hoyer said in the next few weeks, “as committees continue to markup legislation, the House will also take up legislation to strengthen the Affordable Care Act and to address rising prescription drug costs.”

Another possibility for consideration in May by the full House is Financial Services Committee Chairwoman Maxine Waters’ Consumers First Act, H.R. 1500. That bill passed out of that committee on March 28. Waters’ bill is aimed at reversing the damage done to the Consumer Financial Protection Bureau, under former acting director Mick Mulvaney.

The Senior Security Act of 2019 would require the SEC to create a Senior Investor Taskforce. That bill could be up for a House vote very soon. The House docket also has a resolution on Supporting the Protection of Elders Through Financial Literacy.

The bill includes a provision requiring law enforcement and regulatory agencies to work together to understand and detect elder frauds and scams.

Reference: Think Advisor (April 29, 2019) “SECURE Act to Get House Vote in May”

How are Financial Advisors Trying to Prevent Financial Exploitation?

The next time you see your financial adviser, you may be asked to provide a trusted point of contact, such as a relative or friend to call, if the adviser has a reasonable belief that you might be a victim of financial exploitation.

Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. When money leaves an account, it’s hard to get it back.

Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.

Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.

Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines of spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.

Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.

Nineteen states have enacted some version of a NASAA model act that provides registered investment advisers and broker-dealers with guidance on telling a trusted point of contact and putting a temporary hold on a client’s account to investigate financial fraud.

Reference: Kiplinger (April 3, 2019) “New Rules Battle Financial Scams, Elder Abuse”

Pennsylvania Falling Down in Care for the Elderly

The Pennsylvania State Office of the Inspector General noted numerous failures by some county-level agencies to properly investigate complaints under timelines required by state law and inadequate staffing of the state office that monitors those agencies. The IG’s report also said investigative practices are not standardized across counties. It further criticized training requirements for caseworkers as far too weak, particularly compared to model states.

Pittsburgh CBS Local’s article, “Pa. Criticized for How it Handles Elder Abuse Cases,” also reports that complaints can involve physical abuse, self-neglect or financial exploitation. Pennsylvania, like other states, is experiencing a fast-growing number of complaints that has forced some counties to hire more caseworkers to keep up with the workload.

Pennsylvania Governor Tom Wolf’s administration said it has started to address the report’s findings. Just before the report was released, the governor fired the top two officials in the Department of Aging, which oversees what is called protective services for people who are 60 and older.

The Associated Press reviewed hundreds of pages of Department of Aging records in 2017 and discovered that the performance of the county-level agencies varied significantly. The department’s reviewers had told some counties that they’d failed, in some cases multiple times, to meet regulations and expectations over properly investigating complaints and logging casework. In addition, the AP also found wide discrepancies in the way in which a county deemed a complaint to be worthy of a full investigation and action. The details of complaints, investigations and the identity of the person whose situation is in question remain confidential.

Caseworkers handled almost 32,000 calls about potential elder abuse in the 2017-18 fiscal year, which is an increase from 18,500 five years earlier. Beginning in 2011, the Department of Aging has been led by people who came from a county-level agency. The department has no oversight from an outside, independent agency or reviewer.

Because of the frustration with the issues identified in elder-abuse investigations, department staff in 2017 started grading counties on a more aggressive compliance schedule. Since that time, more than 33% of the 52 county-level area agencies on aging have at one point received a substandard red or yellow rating, according to information from the department.

Reference: Pittsburgh CBS Local (January 9, 2019) “Pa. Criticized for How it Handles Elder Abuse Cases”