Scams and scammers have been around for generations, but they seem to be more common these days and they seem to target seniors more often. The unwillingness of scammed people to report their loss or admit that they’ve been taken advantage of allows much of the abuse to go unreported.
The Myth of the Underground Scammer
It’s easy to think that financial predators keep a low profile, but they’re often putting ads in print, on the radio, and on the internet. California recently sentenced two people to prison for fraud against elders. One was sentenced to over 12 years and their partner was sentenced to 18 years. The two were ordered to pay $8 million in restitution to the victims, but the scammers claim to be destitute.
These con artists weren’t hiding. They were heavy advertisers who hosted their own financial radio program. They did many things that legitimate professionals do, and that’s often what makes the scammers so hard to spot. Often only an expert can tell the difference between a professional and a scammer.
What’s the Profile of an Investment Fraud Victim?
The Financial Industry Regulatory Authority (FINRA) and AARP did a joint study and determined that investment fraud victims tend to be college-educated, married males between the ages of 55 and 65. That’s a surprise to many people. But there’s more than just investment fraud to watch for. Fraud can take the form of telephone or mail solicitation, and even door to door solicitations.
When it comes to seniors, the FBI warns that “people who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits.”
It isn’t uncommon to hear of seniors who have been tricked out of $40,000 or $80,000 or even their entire life savings. Much of the fraud goes unreported because seniors are too embarrassed to let their friends and family know that they were conned, but seniors have been conned into sending thousands of dollars of cash through FedEx envelopes, and con artists working from other countries have used the telephone to talk seniors through the complex paperwork of wiring large sums of money directly overseas to the scammers.
Why are seniors often the victims?
Besides the fact that seniors tend to be more trusting in general, we know that our brains often slow down a bit as we age, and we know from studies that people’s math skills generally start to decline after age 70. From the cases that I’ve read, the victims are often single individuals who live alone, and that means that there isn’t someone with them to be watching what goes on and questioning what they’re doing.
One of my clients with substantial assets was recently conned out of $400 from a stranger who appeared at her doorstep. Once she realized what had happened, she made a decision to get her adult daughter more involved to protect herself from having it happen again.
What can seniors do?
Seniors need to have their independence and don’t want to have to ask their adult children for permission to spend their own money, but elder law attorneys often establish protection trusts where the senior gives up a substantial amount of control in order to ultimately protect the bulk of their wealth. This requires that the senior have a “trusted person” who can be named as trustee. We often name one or more of the adult children for this role, but if the senior can’t fully trust their children, we have to search for an alternative solution.
I often design Medi-Cal asset protection trusts to protect a senior’s assets. These trusts have the added protection of keeping the assets out of reach of people trying to scam seniors. We look for a balance between independence for the senior and protection of the assets. Once the senior and the rest of the family realizes what can be done, and how we can set the rules, things normally come together nicely to provide the senior and their loved ones with greater peace of mind.
Note: I recently wrote about “The Power of the Power of Attorney.” I recently attended an elder law class in San Diego where the well-known key speaker estimated that 70 to 90% of all existing Power of Attorney documents do not meet the potential needs of the person who established the document. Don’t let that happen to you. Get your Durable Power of Attorney reviewed and updated by someone who understands elder law and long-term needs and risks.
For questions or concerns on this topic or the topic of estate planning, please contact Jim Ward, 1-800-JIM-WARD.