Elder financial abuse described as ‘epidemic’

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By Tim Devaney

The Washington Times

Wednesday, August 15, 2012

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Here's a scary fact: Your grandchildren are more likely to rip you off than a stranger.

Investment fraud targeting older Americans is a growing problem for many senior citizens who have trouble picking honest financial advisers, according to a new survey of financial professional advisers and consumer advocates.

According to the survey of more than 750 experts -- including regulators, financial planners, social workers, law enforcement officials and lawyers -- the most common financial abusers of the elderly are family members and caregivers.

"Our new survey shows that financial swindles targeting older Americans are a bigger problem today than ever before," said Don Blandin, president and CEO of Investor Protection Trust, a Washington nonprofit created to promote financial education.

The IPT trains doctors and other medical professionals to be on the lookout for vulnerable senior citizens.

The experts warned that it's not just those elderly folks with dementia and Alzheimer's who risk being swindled out of their life savings -- and scammers can be quite persistent when it comes to stealing from elderly Americans, they warn.

"That guy's going to get to the victim no matter what," said Irving Faught, administrator of the Oklahoma Department of Securities and a trustee of the IPT.

The top three financial abusers of the elderly are family members, caregivers and strangers, according to the study.

Nearly four out of five respondents blamed family members for theft or diversion of funds or property, while 49 percent blamed caregivers and 47 percent blamed strangers.

Sixty-five percent of the financial professionals who were surveyed said they have dealt with elderly victims of financial fraud.

Some senior citizens, the experts said, have trouble distinguishing an honest financial adviser from a con man. More than half the survey respondents said the resources available to help older Americans make sound financial decisions are not effective.

Three out of four experts said that senior swindles are a "very serious" problem, and 78 percent said older Americans are "very vulnerable."

Mark Lachs, a professor of medicine at Weill Cornell Medical College and director of geriatrics at New York-Presbyterian Healthcare System, said senior citizens are being exploited by scammers who steal deeds to houses, take out new credit cards in their names and gain control of their bank accounts.

Even well-meaning financial advisers can lead elderly clients astray, Mr. Faught explained. "What about the legitimate guy who doesn't know what he's doing? The legitimate good guys also need to be trained."

Mr. Lachs called the growing problem an "epidemic."

"Elder financial abuse is not only about financial exploitation: It is a major public health problem," he said. "I am an epidemiologist and what we are looking at here qualifies as an epidemic."

Mr. Lachs said senior citizens who are defrauded of their life savings have a risk of dying that is three times higher than it otherwise would be.

"It's just a huge problem," he said. "When older Americans are financially exploited and there are no resources left for their care, these individuals effectively become wards of the state. In these cases, all Americans end up paying."

"Older adults that are financially exploited weigh heavily on our system of public entitlements at a time when the system is already very much strained," he said.

About the Author

Tim Devaney
Follow @timdevaney

Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at tdevaney@washingtontimes.com.