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Elder Abuse: 

Financial Exploitation Served Up by a Trusted Friend

By: Dorothy Riggs, CFE

Susceptibility Gives Entrance to Maltreatment

Among the most unnerving types of fraud cases I’ve investigated is elder exploitation.  It’s gut-wrenching to discover that someone has purposely taken undue advantage of one of our most vulnerable citizens. The elderly have an elevated susceptibility to abuse due to the following details:

• Many elderly people are often lonely and treasure interaction with and attention from anyone.
• Elderly people are generally very trusting and generous.
• A lot of senior citizens are mentally and physically frail.

Abusers who use these circumstances to manipulate seniors are businesses, strangers, friendly acquaintances, caretakers, healthcare providers and family members.  YES, family members! At a time when they should be served kindness and compassion many seniors are presented with cruelty and dispassion.  Ill-treatment dished out by wrongdoers may include:  physical violence, theft, neglect, misappropriation of resources, mental control, verbal abuse, sexual assault and et cetera.  According to statistics, the average number of elder abuse cases each year is 2,150,000. Researchers report that 9.5% of the senior population will experience some type of abuse.   In 2015 the greatest number of reports was due to neglect.

A Transformation from Well-Serving Friend to Foe

To date my most memorable elder abuse case involved financial exploitation at the hands of a registered financial advisor.  The legally blind victim was a widower with no children and lived alone.  He was a former businessman who had been retired for years and had amassed substantial retirement funds.  During the last few years of his career a fresh-faced young man was hired for an entry-level position at his firm.  He took the newcomer under his wing and a bond of trust developed between the two. Notwithstanding the close bond, the young man turned out to be his would-be manipulator.

Due to quickly deteriorating eyesight, the victim retired almost four years into the neophyte’s employment.  After his wife’s death, the victim moved into a swanky assisted living retirement community.  The young man with whom he had developed a close bond almost fifteen years earlier attended his wife’s funeral and learned of his moving plans.  Upon hearing that the senior planned to sell his palatial estate, his old business acquaintance revealed that he switched career paths and had been a successful financial advisor for ten years with a well-reputed brokerage firm.  At the end of their brief conversation he indicated that he would keep in touch with the widower.

Several months passed.  The estate had been sold and the senior was still getting settled into his new living arrangement.  One day he received a phone call from his supposed friend, the financial advisor, asking if he could stop by for a visit.  The senior was eager to catch up and welcomed the company.  During the visit it became apparent from details revealed in chit chat that the elderly man had difficulty managing his mail and financial tasks, due to limited eyesight.  After hearing the younger man’s pitch to allow him to become his investment advisor, the elder man thought, who better for the job than a trusted friend?  So, at the end of the day he had a new investment advisor.

The two rekindled their close bond during frequent phone conversations and visits.  They became so chummy that the financial advisor volunteered to serve as the older man’s assistant by receiving and opening all mail (including financial account statements) and filling in checks for the widower to sign in order to pay financial obligations.  At some point the investment professional went rogue and committed the following acts:

• Had his client sign blank checks, which the client was told were being issued to pay the client’s living expenses, to buy stock, and to fund endowments for universities & charities on behalf of the client.  However, the financial advisor made the checks payable to himself, his wife and acquaintances.  
• Since the advisor had access to the victim’s financial account and personal identification data he was able to set up online banking which he used to transfer funds from the victim’s account to his own accounts, as well as accounts belonging to his friends and family members.
• He accepted checks in extremely generous amounts that the victim willingly made payable to the financial advisor in his own scribbled handwriting as birthday, vacation and Christmas gifts.

Either the investment advisor was simply greedy or obliviously had not been as successful in his profession as he would have liked.  In just over two years the victim had lost in excess of $850,000.00 to his trusted friend, who used the money to cover personal expenses for himself, his family and friends such as; lavish vacations, automobiles, mortgage payments, golfing, dinner parties, shopping trips, gambling debts and etc.  As a result he was fired by his brokerage firm and was barred from association with any FINRA member in any capacity.  Brokerage firms generally prohibit financial advisors from accepting cash gifts or loans from clients.  The investigation revealed that the advisor also victimized a second client. Due to their neglect to sufficiently monitor their employee, the brokerage firm paid out $225,000.00 to settle the victim's claim, which alleged that the advisor wrongly converted and misappropriated the victim's funds and assets.

If you suspect elder abuse, securities fraud, or want to research a specific broker here are some helpful resources:

• What If I Suspect Elder Abuse, Neglect, or Exploitation? (Visit the U.S. Department of Health and Human Services website to find the answer along with additional data about elder abuse.)
• If you suspect elder abuse contact the victim's local Department of Human Resources office.

• BrokerCheck by FINRA  allows you to research the background and status of financial brokers.
• Securities Helpline for Seniors:  844-574-3577 (Monday – Friday 9-5 ET)
• Investor Complaint Center (FINRA) allows you to file complaints regarding issues involving securities.
• Contact FINRA:  301-590-6500 for information about securities.