Slides from a presentation on financial exploitation of the elderly delivered by Certified Fraud Examiner Don Rudisuhle at the 23rd Annual Conference of the Colorado Organization for Victim Assistance in Keystone, Colorado on October 18, 2011.

1. Increasing Awareness of
Financial Exploitation of
At-Risk Individuals
23nd ANNUAL COVA CONFERENCE
October 16-19, 2011
Keystone, Colorado
Presenter: Don Rudisuhle CFE
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2. Presentation Outline
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What is Elder Financial Abuse
Causes and consequences
The MetLife Studies
Three typical cases
Indicators that signal abuse
Is morality on the decline?
Colorado and Federal legislation
The Fraud Triangle
Perpetrators: Why do they do it?
Preparing a court case
Summary and conclusion
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3. Definition of Elder Financial Abuse
• Defined as “the unauthorized use or illegal
taking of funds or property of people aged 60
and older.”
– Committee for the Prevention of Elder Abuse, and the
Center for Gerontology at Virginia Polytechnic Institute and
State University, March 2009
• This definition can be extended so as to
include persons who are physically or
cognitively impaired as a result of injury or
illness
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4. Roots of the Problem
• Vulnerability of the victims
• Moral decay
• Rise of impunity
• Unprecedented financial stresses
• Substance abuse
• Lack of awareness
• Denial on the part of family and friends
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5. Wrestling with the Problem
• Pervasiveness of fraud
– Ubiquitous and growing
– Public is unaware of severity
• Contributing factors
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Bad economy
Decline in morality
Substance abuse and addiction
Aging population means more victims
• Solutions
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Strong advocacy
Education of the general public
Comprehensive legislation
Effective prosecution of perpetrators
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6. Vulnerability to Deceit
• Elderly victims trust the perpetrator
– Are lonely and yearning for social interaction
– May be financially unsophisticated
– Are ignoring what their instincts tell them
– People with intent to deceive are clever
– Perpetrators mix half-truths with lies
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7. Consequences
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Reduces financial security
Destroys family harmony
Engenders fear
Limits access to health care
Contributes to homelessness
Degrades quality of life
Causes depression and despair
Increases costs to the state
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8. Elder Financial Abuse-MetLife 2009
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The annual financial loss by victims of elder financial abuse in 2008
was estimated to be at least $2.6 billion dollars
Elders’ vulnerabilities and larger net worth make them a prime target
for financial abuse
The aging population and technology advances will lead to a
dramatic increase in the opportunity for a growing level of elder
financial abuse
The perpetrators of elder financial abuse are generally people who
have gained the trust of the older individual, including business and
service professionals and family members
The victims of elder financial abuse come from all walks of life, and
this type of abuse affects elders regardless of gender, race, or
ethnicity
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Key findings of the study by the MetLife Mature Market Institute, the National Committee for
the Prevention of Elder Abuse, and the Center for Gerontology at Virginia Polytechnic
Institute and State University “Broken Trust: Elders, Family and Finances” March 2009
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9. Elder Financial Abuse-MetLife 2011
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Annual loss by victims is 2010 is now estimated at $2.9 billion,
up 12% from 2008
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Stranger fraud accounted 51% of published articles between
April-June 2010, followed by:
– Family, friends and neighbors (34%)
– Businesses (12%)
– Medicare and Medicaid fraud (4%)
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However, Medicare and Medicaid fraud had a larger financial
impact than all the others put together: $38.2 million.
• The MetLife Study of Elder Financial Abuse: “Crimes of Occasion,
Desperation, and Predation Against America’s Elders” June 2011
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10. Three Representative Cases
• Dr. Robin Motz
– A prominent New York physician takes $800,000 from
his elderly, infirm mother. Pleads guilty and is
sentenced to community service
• An Elderly Person with Dementia
– An elderly person suffering from dementia deeds
property to a friend. Court finds no undue influence
• Mary Coleman
– An elderly woman falls and is left to languish and die
by her sister, who years later is charged with
homicide and fraud
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11. Dr. Robin Motz
• A prominent New York physician accused of stealing $832,453 from
his elderly incapacitated mother
• Used a power of attorney to take control of his mother’s assets
• Went on vacations to the Bahamas, Mexico and Hong Kong.
• Paid $400,000 of his own credit card bills
• Paid a contractor $200,000 for working on his vacation house
• Gave cash gifts to his children, including $25,000 to his son
• Transferred $140,000 to his wife
• Depleted his mother’s assets, forcing her to survive on a small pension
and Social Security.
• A social worker contacted the District Attorney's Elder Abuse Unit
• Arrested and indicted on felony charges of second-degree grand
larceny and second-degree money laundering.
• Pleaded guilty in exchange for a sentence of 150 hours of community
service and restitution of more than $540,000.
[New York Supreme Court Docket #00009-2008]
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12. An elderly person with dementia
Summary:
– Spouse dies and surviving spouse makes a new friend
– Individual deeds the family home to this friend
– A new will is executed in favor of the new friend
– Individual is diagnosed with Alzheimer’s
– Relatives file for conservatorship
– Individual passes away
– Relatives sue claiming undue influence
– Trial court fails to find a confidential relationship
• Individual was not dependent on friend for care
• Friend did not pressure individual to convey property
• Friend persuaded individual to engage an attorney
– Higher court upholds lower court ruling
[A 2009 Wyoming Supreme Court Case]
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13. The Mary Coleman Horror
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Mary dedicated her life to helping her sister and troubled nephew
A widow, age 70, Mary falls down in her bedroom and can’t get up
She cries out for help. Her nephew tells her to shut up
Concluding it’s too late for a doctor, they leave Mary on the floor.
The two proceed to eat pizza and watch TV for two days.
Mary dies on the floor. Her body is moved to the garage.
Her sister withdraws $6,437 from Mary’s joint bank account
Months later, police discover Mary’s mummified body in the garage
The district attorney refuses to file charges
Judge approves paying Mary’s $66,000 life insurance policy to sister
A new prosecutor arrives and re-opens the case
Sister and nephew are charged first-degree reckless homicide,
financial fraud, subjecting an at-risk person to abuse and hiding a
corpse.
Associated Press, October 11, 2011
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14. Increasing Awareness
• Training for:
– Advocates
– Health care workers
– Law enforcement
– Officers of the court
– Family caregivers
– Bankers, brokers and financial advisers
– CPAs and bookkeepers
– Attorneys
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15. To Prevent Financial Exploitation
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Know the signs
Document the abuse
Contact proper authorities
Obtain legal counsel
Search for the looted assets
Charge perpetrators in civil or criminal
court (or both)
• Recover assets on behalf of the victim
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16. Indicators of Financial Abuse
The elderly victim:
– Has recently made a new “best friend”
– Often makes large bank or ATM withdrawals
– Sends checks or wire transfers overseas
– Is unaware of his/her financial status
– Has difficulty buying everyday necessities
– Receives mail for lotteries, prizes and contests
– Gets frequent calls from telemarketers
– Is isolating him/herself from family and friends
– Demonstrates fear or submissiveness towards caregivers
– Caregiver tends to intercede and speak on behalf of victim
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17. Gallup Annual Values & Beliefs Poll
Public Perceptions Regarding the Nation's Morals
May 5-8, 2011
Positive
Mixed
Negative
National All Adults
14%
18%
65%
Men
14%
19%
63%
Women
13%
16%
66%
18-34 years
22%
21%
53%
35 to 54 years
12%
18%
67%
55 and older
8%
15%
72%
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18. Transparency International
TI is a non-governmental organization based in Berlin that monitors
and publicizes corporate and political corruption in international
development. It is the leading global civil society organization
leading the fight against corruption, bringing people together in a
powerful worldwide coalition to end the devastating impact of
corruption on men, women and children around the world
United States Corruption Index Rating 1995-2010
1995 - 15
1999 - 18
2003 - 18
2007 - 20
1996 - 15
2000 - 14
2004 - 17
2008 - 18
1997 - 16
2001 - 16
2005 - 17
2009 - 19
1998 - 17
2002 - 16
2006 - 20
2010 - 22
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19. Colorado Statutes – Part 1
Restrictions on Exercise of Certain Fiduciary Powers
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(1) (a) Due to the inherent conflict of interest that exists between a trustee
who is a beneficiary of a trust and other beneficiaries of the trust, any of
the following powers conferred upon a trustee shall not be exercised by
such trustee:
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(I) To make or cause to be made discretionary distributions of either
principal or income to or for the direct or indirect benefit of such trustee;
except that such a power may be exercised by such trustee to the extent
that it may be exercised to provide for that trustee's health, education,
maintenance, or support as described under sections 2041 and 2514 of
the federal "Internal Revenue Code of 1986", as amended;
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(II) To make discretionary distributions of either principal or income to
satisfy any legal obligations of such trustee;
[ § 15-1-1401 C.R.S ]
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20. Colorado Statutes – Part 2
Definition of a Caretaker
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"Caretaker" means a person who is responsible for the care of an
at-risk adult as a result of a family or legal relationship, including,
but not limited to, a conservator or a guardian or a person with a
fiduciary duty to an at-risk adult. [§ 26-3.1-203 (2) C.R.S ]
Definition of a an At-Risk Adult
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"At-risk adult" means an individual eighteen years of age or older
who is susceptible to financial exploitation because the individual is
unable to perform or obtain services necessary for the individual's
health, safety, or welfare or lacks sufficient understanding or
capacity to make or communicate responsible decisions concerning
the individual's person or affairs. [§ 26-3.1-203 (1) C.R.S]
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21. Colorado Statutes – Part 3
Definition of Financial Exploitation
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"Financial exploitation" means the illegal or improper use of an atrisk adult's financial resources for another person's profit or
advantage. [ § 26-3.1-203 (4) C.R.S]
Crimes Against At-Risk Adults
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Any person who commits theft, and commits any element or
portion of the offense in the presence of the victim, as such crime
is described in section 18-4-401 (1), and the victim is an at-risk
adult or an at-risk juvenile, commits a class 5 felony if the value of
the thing involved is less than five hundred dollars or a class 3
felony if the value of the thing involved is five hundred dollars or
more. Theft from the person of an at-risk adult or an at-risk
juvenile by means other than the use of force, threat, or
intimidation is a class 4 felony without regard to the value of the
thing taken. [ § 18-6.5-103 (5) C.R.S. ]
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22. The Elder Justice Act of 2010
Key Provisions:
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Authorizes $777 million over 4 years
Establishes an Elder Justice Coordinating Council and a 27-member
Advisory Board on Elder Abuse, Neglect and Exploitation
Provides $400 million for Adult Protective Services
Provides $26 million for establishment and support of Elder Abuse,
Neglect and Exploitation Forensic Centers
Provides $32.5 million to support the Long-Term Care Ombudsman
Authorizes $67.5 million to enhance long-term care staff training
Authorizes $48 million for a National Training Institute for Surveyors
Requires the immediate reporting to law enforcement of crimes in a
long-term care facility and establishes penalties for failure to report
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23. The Elder Justice Act (cont’d)
Key Provisions:
• Provides for penalties for long-term care facilities that
retaliate against an employee for filing a complaint
• Authorizes a $500,000 study on establishing a national
nurse aide registry
• Authorizes $15 million (over 4 years) for the Department
of Health and Human Services to improve data collection
and dissemination
• Authorizes the Secretary to make grants to long-term
care facilities for the purpose of assisting such entities in
offsetting the costs related to purchasing, leasing,
developing and implementing certified HER technology
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24. The Fraud Triangle
Motivation
Factors
contributing
to risk of fraud
Opportunity
Rationalization
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25. Fraud Triangle Elements
• Motivation
– The various factors that drive the perpetrator to
commit the illegal act
• Opportunity
– The conditions that exist that facilitate the
commission of the act
• Rationalization
– The mindset that allows the perpetrator to justify
his or her actions
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26. Motivation
• Economic need
– Perpetrator is financially stressed
• Greed
– Perpetrator desires material things
• Retribution
– Perpetrator feels victim wronged them
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27. Rationalization
• “I am entitled to the money”
– Aunt Rose promised it to me
– It’s just an advance on my inheritance
– Dad gave my brother more than he gave me
– I have been Mom’s caregiver for years
• “Grandma doesn’t need really it”
– Victim is perceived as wealthy
– Can’t use it due to physical or mental impairment
– Victim is not expected to live much longer
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28. Opportunity
• Perpetrator has a fiduciary role
– Is a trustee or guardian
– Has power of attorney
– Is a signatory on financial accounts
• Perpetrator has access to victim’s assets
– Personal property
– Real estate and vehicles
– Credit cards
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29. The Financial Abuse Triangle
Desperation
Types of elder
financial abuse
as per 2011
Met Life study
Occasion
Predation
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30. Abuse Triangle Elements
• Occasion (Opportunity)
• Victim is an obstacle to the perpetrator’s ability to acquire
the things he/she desires
• Desperation
– Family or friends are very desperate for money
– Will do whatever is necessary to obtain it
• Predation
– A false trusting relationship is created
– The friendship then becomes the vehicle for exploitation
– Sociopathic personalities
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31. Crimes of Desperation
• Generally involves family or friends
• Need for money can be a result of:
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Loss of employment
Health crisis or medical bankruptcy
Addiction to drugs or alcohol
A gambling habit
Compulsive shopping
A need to “Keep up with the Jones’”
Being in trouble with the law
• Perpetrator believes that he/she is entitled to
compensation for caregiving services
• Men are typically the perpetrators
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32. Crimes of Occasion
• The victim has money and other assets
• The assets are accessible
• Victim is careless or unaware
– Door unlocked
– Money or valuables left in plain sight
• The perpetrator takes what is available
– Generally by stealth
– Sometimes using violence
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33. Crimes of Predation
• Involves building a trusting
relationship
– Romantic
– Professional
• Assets stolen by stealth or subterfuge
– Younger woman approaches lonely, elderly man
– Dishonest broker deceives victim on investments
– Contractor provides unneeded, shoddy or
overpriced home repairs
– Health care provider marries incapacitated person
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34. Vehicles for Financial Fraud
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Withdraw cash “for Mom”
Ask victim to sign a check
Forge the victim’s signature
Use the victim’s credit cards
Divert victim’s income checks
Deposit checks “less cash received”
Persuade the victim to sign quitclaim deeds
Persuade the victim to guarantee a loan
Victim pays to employ perpetrator’s family
True destination of funds concealed by obtaining a
cashier’s check
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35. Trusted Perpetrators
• Family, Relatives and Neighbors
– Siblings, children, cousins, neighbors
• Trusted Advisors
– Brokers, accountants, lawyers
• Caretakers
– Guardians, conservators, trustees, nurses
• Strangers
– Contractors, mechanics, telemarketers, door-to-door
solicitors, new romantic interests
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36. When Does Incapacity Occur?
• Family, caregivers and advocates need to
recognize the signs of diminishing mental
capacity in a person
• At what point should there be an intervention to
request the court to declare the person
incompetent?
• Complication: Momentary instances of lucidity
can be misleading
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37. Conservatorships
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Conservator is appointed by the court
Authority limited by the court
Considerable paperwork is involved
Sometimes the court must approve decisions
All records become public
Conservators often must be bonded
They can charge reasonable fees
Professional conservators can be abusive
Avoid a conservatorship by preparing a Durable
Power of Attorney
– (but these can be subject to abuse)
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38. Undisclosed Liabilities
• Obtain the victim’s credit report
– Look for unrecognized credit cards and loans
• (Proper authorization required)
• Search the county recorder’s website
– Look for contracts, mortgages, deeds, liens etc.
• Search the county assessor’s website
– Look for real estate in the perpetrator’s name
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39. Making Your Case Attractive
For both civil and criminal cases:
• Ease the burden for investigators
– Law enforcement and prosecutors are very busy
– Offices are underfunded and understaffed
– Higher profile crimes get priority
– A well-documented case will attract their attention
• Help the attorney build the civil case
– Prepare financial exhibits, graphs and genograms
– Help draft questions for depositions/interrogatories
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40. Presenting a Persuasive Case
• Thorough investigation of the facts
– Checks, bank statements, contracts, dates etc.
• Accurate compelling documentation
– Simple exhibits easily understood by judge/jury
– Increasingly detailed layers of supporting documents
that can brought out as required
• Flash cards for the victim’s attorney
– Make a list of opposing counsel’s likely defenses
– Prepare color-coded two-sided cards with countering
arguments to disarm the defense
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41. Potential Pitfalls
• Statute of Limitations can kill a case
– A civil case can be filed by a lawyer in a relatively
short period of time
– Criminal allegations could take a busy district
attorney’s months to investigate before an indictment
can be filed
• Avoid charges of extortion
– Do not threaten the perpetrator with filing a criminal
complaint if he/she fails to comply with requests to
cease the abusive behavior
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42. Summary
1. The problem is getting worse
2. There are laws on the books
3. Municipalities lack resources to enforce
4. Victims’ families can’t afford civil litigation
5. Congress has not funded the Elder Justice Act
6. Perpetrators routinely escape punishment
7. It is necessary to raise public consciousness
8. Advocates need to be proactive
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