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					                     FINANCIAL EXPLOITATION OF SENIORS

        This article will discuss the financial exploitation of seniors. Various types of

exploitation will be explored, using examples from the author's practice. The author will

discuss both civil and criminal remedies and will address some methods of prevention of

financial exploitation.



I. WHAT IS FINANCIAL EXPLOITATION?

        The definitions for financial exploitation vary from jurisdiction to jurisdiction. 1

One definition would be "the illegal or improper use of an adult's funds, property or

assets". 2

        Almost one half of the reported cases of financial abuse or exploitation in the

United States involve victims aged eighty or older. 3 Nearly one third involve victims

between ages 75 and 79. 4 While individuals over age sixty- five are about one eighth of

the U.S. population, they make up one third of the victims of reported fraud. 5

        It is generally accepted that only a portion of cases of abuse against the elderly,

including physical, emotional and financial abuse, are repo rted to authorities. The

percentage of total reported cases may be as little as sixteen percent, with the remaining

eighty- four percent unreported. 6 There are many theories regarding why cases of fraud

and financial exploitation go unreported, including social isolation, diminished capacity

of the victim and the victim's embarrassment or shame at being defrauded.



1. MISUSE OF THE ASSETS OF A SENIOR




                                                                                               1
        The classic case of misuse of the assets of a senior involves spending the senior's

money either without authorization and/or not for the benefit of the senior. This broad

category can range from the caretaker daughter accessing the mother's checking account

to pay her own bills to theft of cash or jewelry by a non- family caregiver or neighbor.

Approximately ninety percent of cases involving misuse of assets of a senior are the

result of exploitation by a family member of the senior or a friend of the senior. 7

        A common tool for financial abuse is the durable general power of attorney in

which the senior as principal appoints another individual as his or her agent to facilitate

assistance with financial affairs by providing the agent with authority to obtain

information and authorize transactions on behalf of the senior. The purpose is to

authorize another party to handle financial matters, without the expense, inconvenience

and lack of privacy that a court appointment creates, or the expense and formality of

creating a trust.

        While the power of attorney is a widely used instrument for the purpose of

financial management, this informal and unsupervised arrangement can lead to

problems. 8 These problems can vary from a misunderstanding of the role of a fiduciary

which causes the agent to commingle funds to blatant misappropriation of the senior's

funds, using the power of attorney as a tool to divest the senior of their assets. 9

Sometimes the abuser intends to use the power of attorney for exploitation, and facilitates

the execution of the document, but in other instances, the agent simply discovers that no

one is monitoring their actions and realizes that they have an opportunity. In still other

situations, the agent, over time, comes to believe himself “entitled” to the senior’s assets.




                                                                                                2
       Theft or exploitation by a fiduciary is not limited to agents under power of

attorney. The records of courts across the country are replete with cases involving theft

or misappropriation by trustees, guardians and conservators. In short, financial

exploitation of seniors is a widespread and growing issue in our society.

       Sometimes the financial exploitation is accomplished by other means, including

coercing an individual into signing a deed or placing another individual's name on a bank

account as a joint owner. Another practice is accompanying a senior to the bank to make

a withdrawal for the benefit of the perpetrator. Seniors can also be victims of theft by

family, friends or service providers, and others, who remove personal property from the

senior's residence. Some exploiters will approach the senior for a loan o f money, which

is never paid back.

       If a senior is dependent upon another for support services in order to remain in the

community, the senor may feel that he or she has no choice but to accede to the demands

of the individual, particularly if the senior is unable to drive and requires assistance in

managing errands. 10 A nonambulatory senior is particularly vulnerable to financial

exploitation.

       One common phenomenon in exploitation is the appearance of the "new best

friend". This is an individual who ingratiates himself or herself with the senior, often

times claiming that the senior is like their "mother" or "grandmother". The senior, who

may have been isolated and lonely, is flattered by the attention and over time comes to

rely on this new friend, trusting him or her more and more. The plan, of course, is to gain

the confidence of the senior and control the senior's assets. Often times this individual




                                                                                              3
will also attempt to isolate the senior from their family and friends, increasing the senior's

dependence on the new friend.



Examples of Exploitation By Individuals The Senior Knows

         The following are actual cases of financial exploitation of vulnerable adults from

the case files of the author, with necessary identifying data altered to protect privacy.

The material facts in each case are unaltered.



Mrs. A

         Mrs. A. was a 75 year old widow who lived alone. 11 None of her children lived

nearby, but they kept in touch by telephone. Mrs. A was befriended by a young woman

she met at a meeting of Alcoholics Anonymous. Within a few months, the young woman

was driving Mrs. A. to AA meetings and visiting her regularly. The young woman

visited Mrs. A nearly every day, and called her every day. Often, the young woman

would order flowers for Mrs. A, using a credit card which was billed to Mrs. A, and

which the young woman also used to pay many of her own bills.

         Mrs. A had other new friends as well. These were her "telephone friends"' who

would call her and talk to her for hours. Mrs. A really enjoyed having friends who

regularly called for long conversations. They were such good friends! They knew the

names of her children and remembered the events going on in her life, frequently

remembering to inquire as to how various grandchildren were doing with different

endeavors. These friends all worked for "non-profit" political organizations, and they




                                                                                              4
really appreciated the money that Mrs. A would send to support their causes on a regular

basis.

          When the family realized that Mrs. A had given nearly $100,000 to her telephone

friends in one year and that the credit card charges the young woman was incurring began

to increase as she grew bolder with her charges, the family decided to act. They filed for

conservatorship to limit Mrs. A's access to funds for her "telephone friends" and for a

restraining order against the young woman, who had a history of identity theft.



Mrs. B.

          Mrs. B. was 87 and recently widowed. 12 She has no children and no close

relatives. Mrs. B had a family friend, whose adult children began to take a strong interest

in Mrs. B after she was widowed. They eventually convinced Mrs. B that her agent

under power of attorney was not handling her affairs properly and took her to see an

attorney, who drafted a new power of attorney appointing one of the adult children as her

agent. The power of attorney stated that the agent was not authorized to make gifts.

          Mrs. B. became extremely ill after the new power of attorney was executed, and

she died three weeks later. During the last three weeks of her life, the agent wrote five

checks, which were the only actions he took as agent. Three were to the agent or his

siblings, and two were written to pay Mrs. B's bills. The last check written and cashed

before Mrs. B's death was a check by the agent to himself with the memo line indicating

it was for payment for his services as agent. His fee for writing five checks was $5,000.

          After Mrs. B died, the agent wrote a check for $75,000 which also indicated it

was for services as agent under power of attorney. The bank was not yet aware of Mrs.




                                                                                            5
B’s death. However, the check did not clear the bank because Mrs. B did not have

sufficient funds on deposit.



Mrs. C

         Mrs. C and her husband had no children. 13 They lived in a condominium complex

that was heavily populated with seniors. Mrs. C's husband had nieces who lived a few

hours away, and would visit the couple on occasion. Mrs. C and her husband were

befriended by a kindly middle aged neighbor who would bring them home cooked food

and run errands for them. This neighbor was a bookkeeper and tax preparer. Eventually

she began preparing the couple's tax returns. After Mrs. C was widowed, the neighbor

called the niece who was agent under power of attorney, and told her that Mrs. C had

asked her to take over as agent, because it was such a long drive (two hours) from the

niece's home to Mrs. C's town and Mrs. C didn't want to inconvenience her.

         The neighbor began paying Mrs. C's bills. Because Mrs. C and her husband had

very high income and many investments, as well as a long term care policy, there was

sufficient money to pay Mrs. C's bills for years, even as her health declined and she

required more care. One day, the niece received a call from the neighbor, informing her

that Mrs. C was "out of money" and "needed a nursing home". A review of the records

revealed that Mrs. C was nearly broke, and much of her money had disappeared in cash

withdrawals from Mrs. C's account to the neighbor's account. The neighbor had even

used Mrs. C's debit card to pay her own bills.




                                                                                          6
Col. D

         Col. D and his wife were retired, high ranking military officers. 14 They had a

beautiful home, built while they were on active duty. They eventually retired to their

dream home, and for many years while their health was good, they remained active.

They traveled regularly and filled their home with beautiful possessions. When Col. D's

wife died, he was eighty four and he began to decline. A laborer who did yard work for

Col. D befriended him. The laborer and his family began to cook meals for Col. D and

run errands, including making certain that Col. D had a supply of alcohol to drink. The

laborer took Col. D to the bank to sign a power of attorney so that the laborer could pay

the bills for him.

         The laborer befriended Col. D's only close relatives, a nephew and a niece who

both lived out of state. The laborer would call the relatives regularly and assured them

that Col D. was doing well and that he was being taken care of.

         After the laborer took over management of Col. D's finances, he began to deplete

his assets. Col. D had a sizable military pension and other income which was well in

excess of his needs. All of the money deposited into Col. D's bank account was

withdrawn each month, and his other accounts were liquidated. Eventually, the laborer

applied for a home equity loan on Col. D's residence, telling the banker the money was

needed to repair the home or else social services might make Col. D leave. The home

equity loan gave the laborer another $60,000. A year later, all the money was gone, other

then Col. D's monthly income. The house was in filthy disrepair, with the beautiful

landscaping overgrown.




                                                                                            7
Mrs. E

         Mrs. E suffered from bi-polar disorder most of her adult life. 15 She had no

relationship with her children for years and after she was widowed. She lived alone and

isolated. Mrs. E was befriended by her financial advisor who visited her regularly and

helped her to manage her investments, which totaled over one million dollars.

Eventually, the financial advisor took Mrs. E to see his lawyer, and a series of

amendments to Mrs. E's trust were drafted by the lawyer for Mrs. E. Mrs. E was so fond

of the financial advisor that she funded trusts for his minor children's college educations.

         Eventually, Mrs. E came under the protection of Adult Protective Services as she

began to suffer from cognitive decline. The social worker was able to make contact with

one adult child of Mrs. E, a daughter who quickly came out from out of state to visit her

mother. The daughter stayed in town long enough to take her mother to an attorney to

draft a new will, leaving her mother's estate to her, to the exclusion of her siblings. The

daughter contacted the siblings and told them their mother was fine, but didn't want to see

either of them. The daughter did not share contact information regarding her siblings

with the social worker. Before the daughter left town, she had her mother place her

brokerage account containing all of her investments under the daughter's management,

and the funds were transferred to the daughter's broker for "management".

         The transactions by the daughter were discovered, as well as contact information

for the other children. The county requested appointment of a professional guardian and

a professional conservator. The gifts to the first financial advisor's children were

discovered and the conservator filed an action to recover the funds. The financial




                                                                                               8
advisor's attorney entered an appearance on behalf of the advisor to defend the gifts,

despite having represented Mrs. E in drafting amendments to her trust.



Mrs. F

         Mrs. F was a widow in her eighties, who had one son. He would help Mrs. F with

her financial affairs. 16 When Mrs. F purchased her townhome, she didn't realize that the

title to the property was being placed in her son's name. When she sold her large home,

her son took to proceeds check to "invest" for her. Later, when Mrs. F asked her son to

place her home and the investment account in her name, he refused. He threatened to

transfer the townhome out of his name and told her that he would not pay to bury her

when she died, because of the trouble she was creating with these requests. Apparently

her son had been told that this was an effective way to shelter the money and the house if

his mother needed nursing home care. Mrs. F was afraid to take any action against her

son, because her children and grandchildren were very important to her.



Ms. G

         Ms. G was an elderly single woman, who lived in an apartment in a senior

housing complex. 17 Ms. G was befriended by her landlord, who convinced her to finance

his charity project. The landlord signed a promissory note obligating him to pay the

money back in one year. Ms. G also made the landlord the executor of her will. The

landlord later left the apartment complex, and failed to keep in contact with Ms. G. He

did not repay the money when it was due.




                                                                                            9
         Ms. G was critically injured in a fire in her apartment. While Ms. G was in the

hospital, the firemen sorted through the records in the apartment, found a friend to serve

as a medical proxy and provided the promissory note and other information to adult

protective services. A special conservator was appointed immediately. When the special

conservator contacted the former landlord about the promissory note, he claimed first that

it had been forgiven and then that he had paid it back, but he was unable to provide

evidence of either. Ms. G died as a result of injuries received in the fire.



Mrs. H

         Mrs. H was an elderly widow with no children. 18 She was living in an assisted

living facility and her agent under power of attorney stopped communicating with the

facility. A conservator was appointed and the power of attorney revoked. The

conservator requested the records from the agent. Along with the financial records was a

will, written by the agent, which appointed the agent as executor and left Mrs. H's estate

to the agent and her husband. The agent was a legal secretary, employed by an attorney

who had represented Mrs. H. The agent "felt sorry for Mrs. H" and had befriended her.

A thorough review of the financial records did not show any improper transactions. An

attorney was appointed for Mrs. H, who assisted her in revoking the will.

         Also included in the records was a promissory note from Mrs. H's former

accountant and former medical power of attorney. The borrower had been making

sporadic payments, which payments did not cover the interest on the note and had failed

to make a balloon payment three years prior. When the conservator co ntacted the

borrower, who lived in another state where Mrs. H used to reside, the borrower gave




                                                                                           10
several stories about the loan. First she said she had paid it off, but when asked to

provide documentation, then claimed it had been forgiven. Finally, she said that Mrs. H's

will left her estate to the borrower, so it didn't matter. It was finally resolved that the

borrower would resume making regular payments.



II. WHY ARE SENIORS EXPLOITED?

        There are many reasons why seniors are targeted. One reason is that many

seniors have at least modest wealth. Individuals over sixty five years old are more likely

to have money invested in certificates of deposit, investment funds and the stock market

than are individuals under aged forty five. 19 Individuals aged sixty five and over who are

home owners are less likely to have a mortgage than are younger individuals, and the

equity in the residence is an attractive target for fraudsters. 20 To quote the notorious bank

robber, Willy Sutton, when asked why he robbed banks, "Because that's where the money

is."21 So, why steal from seniors? Because that's where the money is. Even better for

the fraudster, some seniors have conditions which make them more vulnerable to fraud,

theft and exploitation.

        What do we know about the numbers of seniors being financially exploited? 22

        92% of victims of financial exploitation are women

        Elderly white females who live alone and are socially isolated are abused at a
        higher rate than are men

        Seniors who are age eighty and over are abused and neglected at a rate which is
        two to three times higher than their percentage in the total population

        The likelihood of becoming a victim increases with age, but there is not an
        increase in incidence noted with an increase in income




                                                                                              11
       Many elderly victims of abuse are physically dependent upon a caregiver for

assistance, making them vulnerable to abusive behavior. 23 The elderly person may be

reliant upon another individual for grocery shopping, banking and bill paying. The senior

may have physical limitations that make it difficult to walk, may be unable to drive or

may have vision or hearing loss. Any of these limitations could cause the senior to rely

on others for assistance. If the individual the senior relies upon is untrustworthy, there

may be little or no oversight.

       Another reason may be the appearance of a recent trend among adult children

who rely on their retired parents for financial support. 24 According to a study conducted

in the United Kingdom by Aviva Insurance Company, nearly 1/3 of adults questioned

state that they rely on their retired parents for financial support, while 18% of parents

polled for the study expected to have to continue to support their children. 25 Half of

those parents who expected to continue to support their children said they felt worried,

concerned or angry at the prospect. 26 This may be the most under-reported and

unrecognized area of financial exploitation, because the parents may feel they have to

continue to provide support or face abandonment by their adult children.

       Dementia, characterized as moderate to severe memory impairment, occurs in

roughly 1 to 2 percent of adults age sixty, with the rate doubling every five years to more

than 40% in adults age eighty-five. 27 Alzheimer's disease accounts for about fifty percent

of these dementia case, but there are other causes of dementia, including vascular

dementia and alcoholic dementia. 28 The memory impairment of an individual with

dementia can make that individual vulnerable to exploitation and abuse.




                                                                                             12
       Mental illness can also cause an individual to be more vulnerable to

exploitation. 29 Depression can affect an individual's cognitive functioning, while anxiety

can make someone prone to manipulation by arousing fear.

       These physical and mental conditions can also make a senior more vulnerable to

undue influence. One very real concern a senior may have is fear of institutionalization.

A common threat of an exploiter is that he or she will stop providing the necessary care if

the senior does not assist the exploiter by signing checks or a deed. If the senior requires

the care in order to live in the community, or believes that he or she will be forced to

move to a nursing home, they are likely to cooperate with the abuser.

       It is easy to understand how an individual with diminished mental capacity can be

subject to undue influence. However, undue influence can be difficult to separate from

the acceptable kinds of influence such as kindness, compassion, thoughtfulness or

friendliness. 30 In fact, the "new best friend" often appears to have a good relationship

with the senior, and any dependence the senior places in the individual may not look

troubling, until later when evidence of the exploitation comes to light.



III REMEDIES

       The discovery of the financial abuse or exploitation by others can happen in

several ways. Sometimes, family discovers that the senior has funds that have been

dissipated or transferred. In other cases, a bank employee, a nursing home employee or

another individual sees questionable behavior and makes a referral to adult protective

services. In still other cases, “welfare checks” by local law enforcement discover

conditions which warrant referral to adult protective services.




                                                                                            13
A. Civil Remedies

       Because civil remedies involve the employment of civil attorneys, such cases are

generally only pursued if there is a reasonable chance of recovery. If the case involves

the transfer of an asset to another individual and the asset can be recovered, a civil

remedy can be an appropriate choice. If the case involves a defendant against whom

there is a strong likelihood of recovery, a civil remedy may also be pursued.

       If the suspicious activity or fraud was done under authority of a power of

attorney, a request for accounting by the agent should be made if such accountings are

authorized under state law. Failure to account to the principal or to someone requesting

on behalf of the principal can be used as evidence to request that a court terminate the

authority granted under the power of attorney. Any documentation provided in an

accounting can be used in a civil proceeding against the agent. In Illinois, if an agent

serving on behalf of an incapacitated individual fails to provide an accounting within

twenty one days of a request by the Department of Human Services or the state long term

care ombudsman, the department or ombudsman can petition the court for an order

requiring the agent to produce his or her records. 31 If the court finds the failure to timely

account was without good cause, it may assess costs and fees against the agent.

       If the senior does not have sufficient capacity to handle their financial affairs, it

may be necessary to petition for appointment of a conservator or guardian, depending on

the title in the jurisdiction. A conservator, once appointed, can obtain the necessary

financial records to pursue a case against the perpetrator.




                                                                                               14
        In many jurisdictions, once a conservatorship case has been filed, a notice of lis

pendens can be recorded in the real property records, to place any potential purchasers or

lenders of a dispute as to title to the real property. This notice can allow the conservator

to defeat the claim of a later purchaser or lender that they are a bona fide purchaser or

lender in good faith, as the notice of lis pendens provided notice of dispute as to the

actual owner of the property.

        There are several investigative tools to use when preparing a civil case:

                Search grantor/grantee indexes in real property records - to view
                transactions involving real property going back in time

                Past tax returns - which can show income producing assets?

                If no returns have been filed, the past 1099's can be ordered

                Bank records

                Credit card records

                Medical records if there is a question regarding capacity

        There are several claims which can be pled in financial exploitation cases. Most

will be tried in a civil court of general jurisdiction, but in most jurisdictions, an action for

breach of fiduciary duty against a trustee, guardian or conservator could be brought in the

probate court as well.



BREACH OF FIDUCIARY DUTY

        A claim for breach of fiduciary duty is pursued against an individual who is

serving in a fiduciary capacity. Under the Uniform Probate Code, a fiduciary includes a

personal representative, guardian, conservator, and trustee. 32 The plaintiff alleges that the




                                                                                              15
fiduciary has failed to act according to the standard of care required by a fiduciary under

relevant state statute or common law.



CONVERSION

       Conversion is the most likely civil theft theory, based in tort. In most states, the

elements of conversion are 33

               1. The plaintiff either owned the property or had the right to
               possess the property at the time of the conversion

               2. The defendant converted the property by a wrongful act or
               disposition of the plaintiff's property rights; and

               3. The plaintiff suffered damages

In a conversion case, the plaintiff may seek recovery of the property or a recovery of the

value of the converted property. The plaintiff may also seek a constructive or resulting

trust over the property.



RECISSION OF CONTRACT

       Often, a party is seeking to enforce a contract against a senior which appears not

to be in the senior's best interests. This may be a contract for sale of property, which the

senior was induced to sign, or for purchase of an annuity product or a service which is not

an appropriate purchase for the senior.

       Capacity to contract is an important element of a recession case. The Restatement

Second of Contracts provides guidance on this issue.

       §12. Capacity to Contract 34
       (1) No one can be bound by contract who has not legal capacity to incur at
       least voidable contractual duties. Capacity to contract may be partial and




                                                                                              16
        its existence in respect of a particular transaction may depend upon the
        nature of the transaction or upon other circumstances.

        (2) A natural person who manifests assent to a transaction has full legal
        capacity to incur contractual duties thereby unless he is
        (a) under guardianship, or
        (b) an infant, or
        (c) mentally ill or defective, or
        (d) intoxicated.

        § 15 Mental Illness or Defect 35
        (1) A person incurs only voidable contractual duties by entering into a
        transaction if by reason of mental illness or defect
        (a) he is unable to understand in a reasonable manner the nature and
        consequences of the transaction, or
        (b) he is unable to act in a reasonable manner in relation to the transaction
        and the other party has reason to know of his condition

Capacity can be a variable state for seniors. Capacity can be influenced by reactions to

medication and by environmental factors. 36 Because all persons are presumed to be of

sound mind unless adjudicated otherwise, the plaintiff has the burden of proof regarding

lack of capacity. 37

        One remedy the plaintiff may seek is the voiding of the contract. The majority

rule distinguishes between void and voidable contracts. A contract entered into by a

person who was previously adjudicated as incapacitated is void, while a contract entered

into by a person alleged to be mentally ill or incompetent, but who was not adjudicated as

incapacitated prior to execution of the disputed agreement is voidable, rather than

absolutely void. 38



REPLEVIN

        Replevin is an action for recovery of the property, which can be brought against

the person holding the property and is usually pled as an additional remedy in another




                                                                                           17
action. 39 . In many states, after posting bond, a plaintiff can recover the property and

maintain possession until trial. The remedy can be very useful in situations involving

valuable personal property and the author has had experience with default by defendants

at trial on the merits, as a result of filing such a pleading.



FRAUD

        In many cases, the questionable transaction involves fraud. 40 In cases involving

fraud in the inducement, the victim is told a lie or mistruth in order to convince him or

her to enter into the contract. In cases of fraud in the execution, the victim is led to

believe that the transaction is not what it is, i.e. the document is not a deed and will not

transfer his property when the document is in fact a deed.



DURESS

        Duress is similar to fraud, but does not involve a claim of deceit. In a duress case,

the plaintiff gave consent, but only because a threat of harm if he or she did not do so.



UNDUE INFLUENCE

        Undue influence is a viable claim in instances where, although the victim did not

act of his or her own free will, the nature of the persuasion was not a threat. Sometimes,

the claim of undue influence is pled as part of a fraud claim, but undue influence is also

pled as part of a recession claim as well.

        § 177 When Undue Influence Makes a Contract Voidable 41
        (1) Undue influence is unfair persuasion of a party who is under the
        domination of the person exercising the persuasion or who by virtue of the




                                                                                               18
         relation between them is justified in assuming that the person will not act
         in a manner inconsistent with his welfare.

         (2) If a party's manifestation of assent is inducted by undue influence by
         the other party, the contract is voidable by the victim.

         (3) If a party's manifestation of assent is induced by one who is not a party
         to the transaction, the contract is voidable by the victim unless the other
         party to the transaction in good faith and without reason to know of the
         undue influence either gives value or relies materially on the transaction.


         Undue influence can be a factor in a situation where the senior has deeded

property to one of her children, in a case where she has several children. However, often

the nature of the relationship between the grantee and grantor is suc h situations can make

it very difficult to discern after the fact if the transaction was or was not the product of

undue influence. If the child is the care-giver child, who is providing many services to

the parent, it may not be unusual for the parent to provide more to that child than to the

rest of her children. Undue influence is a frequent claim in a will contest, when an heir is

unhappy with a testamentary plan. However, undue influence can be very difficult to

prove.



CONSTRUCTIVE TRUST

   A constructive trust is a remedy pled in equity, against an individual who by actual or

constructive fraud, or by duress, or abuse of a confidential relations, or some other

unconscionable conduct, has or holds title to property which he or she should not have. 42

The remedy is designed to prevent unjust enrichment.



CIVIL THEFT ACTIONS




                                                                                               19
        Some state criminal theft statutes provide for civil actions, often including

recovery of attorney's fees for cases involving the criminal elements of theft.



PREPARING THE CIVIL CASE

        In some states, an action involving a senior may receive expedited scheduling.

Plaintiffs may wish to avail themselves of this, unless the particular case involves a

number of financial records for which ample discovery time may be needed. Counsel

may wish to take depositions of elderly clients and witnesses, in order to preserve

testimony in the event a key witness is not available for trial.



B. CRIMINAL

        Criminal codes in many jurisdictions have criminal statutes that are age specific.

It may be that there is a specific charge for theft against a person who is a disabled adult

or an adult over a certain age, or that the age or disability of victim causes the penalty for

the theft to increase. 43

        Criminal cases against abusers are less likely to receive attention from law

enforcement for many reasons, including:. 44

                 A belief that financial crime is less devastating than other types of
                crime

                A belief that misappropriation by a family member, particularly
                under power of attorney, is not theft, but rather is a civil matter.

                Victims may not be viable witnesses, making cases harder to
                prove.

                Many financial abuse and exploitation cases are document
                intensive, requiring many hours of investigation.




                                                                                            20
               Few police officers and prosecutors have sufficient training to
               understand all of the issues present in a financial exploitation case
               (contract law, real estate law, and mental capacity)

               Statutes of limitations are not always long enough

       The result of these factors is that many cases of financial abuse are never

prosecuted. One problem that criminal prosecutors have is proving intent, particularly for

agents serving under powers of attorney. 45 Some states have actually criminalized

misuse of powers of attorney. 46 An Arizona statute creates a specific criminal charge of

theft for an individual who takes advantage of his agency under a power of attorney. 47



IV PREVENTION

BY THE SENIOR

       Some of the tools used for prevention are the same tools used by perpetrators,

including the power of attorney and the revocable trust. Both are useful alternatives for

management of property that can be set in place by the senior in the event assistance is

needed in the future. The keys for effective use are:

               Appropriate choice of agent or successor trustee

               Standards for the agent or trustee, particularly with respect to
               gifting of the principal's assets

               Requiring regular accountings from the agent or trustee and
               designating someone trustworthy to review them on behalf of the
               principal

       Daily money management programs can provide seniors with supervision of

routine financial matters, including bill paying, checking account management,

budgeting, and verifying bills for payment (including medical bills). 48 Fees for daily




                                                                                            21
money managers can range from between $25 per hour to $100. The Association of

Daily Money Managers can provide details and referrals. 49

       A senior can appoint a representative payee to receive his or her Social Security

income if they need help in managing the funds. 50 The Social Security Administration

will appoint a payee upon receipt of an affidavit from a physician. 51 The Social Security

regulations provide a priority list for appointment as payee: 52

       (1) A legal guardian, spouse (or other relative) who has custody of the
       beneficiary or who demonstrates strong concern for the personal welfare
       of the beneficiary;

       (2) A friend who has custody of the beneficiary or demonstrates strong
       concern for the personal welfare of the beneficiary;

       (3) A public or nonprofit agency or institution having custody of the
       beneficiary;

       (4) A private institution operated for profit and licensed under State law,
       which has custody of the beneficiary; and

       (5) Persons other than above who are qualified to carry out the
       responsibilities of a payee and who are able and willing to serve as a payee
       for a beneficiary; e.g., members of community groups or organizations
       who volunteer to serve as payee for a beneficiary.


Despite the priority list, the Social Security Administration will deviate from those

criteria, as they also consider the following:53


       (a) The relationship of the person to the beneficiary;

       (b) The amount of interest that the person shows in the beneficiary;

       (c) Any legal authority the person, agency, organization or institution has
       to act on behalf of the beneficiary;

       (d) Whether the potential payee has custody of the beneficiary; and




                                                                                           22
        (e) Whether the potential payee is in a position to know of and look after
        the needs of the beneficiary.

        The payee must use the funds only for the beneficiary and only fo r food, shelter,

clothing, medical care and personal items. 54


        Attorneys drafting powers of attorney and revocable living trusts bear significant

responsibility in counseling the client concerning the serious question of who they

appoint as agent or trustee. Too often, attorneys give little emphasis to the importance of

this question.



BY THE COURTS

        In guardianship and conservatorship, fiduciaries should be required to bond. For

higher asset cases, the majority of assets can be held in restricted accounts, which require

court orders for withdrawal, with a certain number of months of operating expenses held

in accounts under bond. The combination can keep bonding costs down, while protecting

assets. Orders for guardians and conservators should contain restrictions on sale and/or

encumbrance of real property and courts should require recording of letters with

restrictions noted in the real property records.



BY THIRD PARTIES

       Mandatory reporting of suspected abuse is the law in 42 states and the District of

Columbia, while eight states authorize voluntary reporting, including Colorado, Illinois,

New Jersey, New York, North Dakota, Pennsylvania, South Dakota and Wisconsin. 55 In

states with mandatory reporting, mandatory reporters are usually immune from liability




                                                                                           23
for reporting suspected abuse. Reporting generally triggers a mandatory investigation by

a state agency. Mandated reporters are generally doctors, nurses, psychologists and

social workers. In some states, including California, financia l institutions are among the

mandated reporters.

       Employees of financial institutions are often among the first individuals to notice

suspicious activity, as in the cases of Mrs. B and Col. D above. Mandatory reporting

statutes and training of bank employees can vent further exploitation of an individual

after the matter comes to the attention of bank employees. 56 Under Colorado law, an

individual over age sixty may request that their bank provide them with an informed

consent form waiving confidentiality to allow the bank to make the individual's banking

records available to the county department of human services for the purpose of

investigating a potential or known case of financial exploitation. 57



BY STATE LEGISLATURES

       Some of the examples of financial abuse and exploitation discussed are gifts and

loans to professionals who provide services to the senior. If professional organizations

are unable to police their membership to prevent exploitation, state legislatures should

enact legislation revoking professional licenses and criminalizing this conduct.

       State legislatures should also be prepared to provide adequate funding to adult

protective service departments, to allow proper training and timely investigation.



CONCLUSION

       The cases above have some common themes:




                                                                                           24
                   Isolated seniors make better targets, particularly seniors who have
                   been recently widowed

                   Sometimes the exploitation is not discovered until the money is
                   gone

                   Even when confronted with a promissory note, an exploiter may
                   deny that the debt exists or will claim it was paid or forgiven


The preventative measures listed above will not prevent all cases of financial

exploitation. However, some of them can reduce the vulnerability of a senior.

           There is a misconception that the only individual harmed is the senior, but that is

false. In many instances, when the senior lacks sufficient funds to pay for their care

needs, he or she ends up living in a skilled nursing facility with Medicaid assistance.

When the perpetrator is not pursued because a local prosecutor does not believe that they

can prevail in a criminal action and there are not sufficient resources to pursue a civil

case, the perpetrator is able to benefit from their actions and the cost is shifted to the

state. The lesson the perpetrator learns is to exploit the elderly because it is profitable

and there are no repercussions.




1
 Rose Mary Bailly, Elizabeth Loewy, Margaret Bo mba and James J. Lynch ; Financial Exploitation of the
Elderly; Civil Research Center, Inc.; Kingston, New Jersey 08528 (2007), § 1-1
2
 National Center on Elder Abuse, The National Elder Abuse Incidence Study (September 1998)
http://aoa.gov/eldfam/ Elder_ Rights/Elder_Abuse/ABuseReport_Full.pdf
3
    Supra, Note 2, Page 4-14
4
    Id.
5
 Richard A. Starnes, Consumer Fraud and the Elderly: The Need for a Unifo rm System of En forcement
and Increased Civil and Criminal Penalties, 4 Elder L. J. 201(Fall, 2007).
6
    Supra, Note 21, Page 5-1
7
    Supra Note 2, Page 4-29



                                                                                                      25
8
 Lisa Nerenberg, Forgotten Victims of Elder Financial Crime and Abuse, The National Center on Elder
Abuse (August, 1999) http://www.ncea.aoa.gov/NCEAroot/Main_Site/pdf/publication/fvefca.pdf

9
     Russ v. Russ, 734 N.W. 2d 874 (Wis. 2007); In Re Mueller, 853 N.Y.S. 2d 245 (N.Y. Sur. 2008).

In Russ, the son and mother had established a joint checking account six years before the execution of the
power of attorney. The power of attorney was procured and executed without the assistance of legal
counsel. The principal did not authorize the agent to be compensated for his services or to make g ifts of the
principal's property. Years later, a guardian was appointed and the power of attorney was terminated. The
guardian filed suit against the agent, seeking to recover funds deposited by the principal in the jo int
checking account and withdrawn by the agent for the agent's use. The court found that the agent did not
breach his fiduciary duty as the presumption of donative intent created by the establishment of the jo int
account overcame the presumption of fraud created by the transfer of funds into the joint account.
 The court in Mueller found that "Respondent's use of the POA is a classic example of how such an
instrument may be abused by an attorney-in-fact for his own benefit. At his deposition respondent admitted
that he had transferred to himself or h is mother virtually all of the decedent's liquid assets and secured a life
tenancy in the real p roperty. He used the decedent's assets to pay off his personal credit card deb ts, to
purchase a computer, clothes, CD's, DVDs, whisky and fund his Pay Pal accounts. According to the
respondents he does not have any records because after his review of decedent's bank statement he got rid
of them." Mueller, 853 N.Y.S.2d at 249.
10
     Lawrence C. Frolik and Richard L. Kap lan, Elder Law in a Nutshell, Thomson West, 2006
11
  The author represented the adult children as petitioners and conservators. A limited conservatorship was
granted, and Mrs. A continued to maintain a modest (by her standards) checking account.
12
  The author served as administrator of the estate, and in that capacity, was able to recover a portion of the
funds "gifted" to the agent and his family.
13
    The author served as conservator for Mrs. C and was able to locate sufficient funds in accounts that had
been overlooked by the agent to pay for skilled nursing care for the months remaining in Mrs. C's life. The
U S attorney declined to prosecute, despite the evidence of interstate wire transfers. Because Mrs. C died,
it is unlikely that the current local d istrict attorney will prosecute.
14
  The author was Co l. D's conservator. She determined that the laborer appeared to be an unlikely source
for recovery of the missing funds and declined to file a civil suit. The bank released the mortgage debt.
The local d istrict attorney did successfully prosecute the laborer.
15
   The author represented one of the adult children. The funds were eventually placed under the
management of the conservator. The financial advisor repaid th e funds, but refused to pay the additional
fees incurred for terminating the 529 p lans.
16
  Mrs. F is still unwilling to pursue her son. The letter she sent, requesting transfer of her assets back into
her name was met with such anger and hostility that s he is reluctant to go any further.
17
   The landlord actually tried to obtain appointment as executor, but the court appointed the conservator
instead. The district attorney declined to prosecute the landlord, because of lack of evidence. The author,
who was both conservator and admin istrator of the estate, determined that the landlord was not worth
pursuing civilly, as the cost of suit would have taken a large port ion of the funds devised to a charity, and
an investigation of his assets established that the likelihood of recovery of funds was not high, even if a
judgment was obtained.




                                                                                                               26
18
   The author was both conservator and executor. The most alarming part of this case was the absolute
assertion on the part of the agent who drafted the will and the accountant who borrowed money fro m her
client that they did nothing wrong.
19
  Table 1140 Financial Assets Held by Families by Type of Asset: 2001 and 2004, 2008 Statistical
Abstract, U.S. Census Bureau, http://www.census.gov/compendia/statab/tables/08s1140.pdf
20
  Table 961 Mortgage Characteristics - Owner-Occupied Units: 2005, 2008 Statistical Abstract, U.S.
Census Bureau http://www.census.gov/compendia/statab/tables/08s0961.pdf
21
     There is no evidence that Willy Sutton actually said this, but the quote is widely attributed to him.
22
     Supra, Note 2
23
     Supra, Note 1, Page 1-4.
24
  DailyFinanceUK “Third Rely on Retired Parents”, http://money-
news.dailyfinance.co.uk/article/2010/08/24/third_rely_on_retired_parents
25
     Id.
26
     Id.
27
     Richard M. Friedenberg, MD, Dementia: One of the Greatest Fears of Aging, 229 Rad iology 632 (2003)
28
     Id.
29
     Supra, Note 1, Page 10-14
30
   Lawrence A. Fro lik, The Strange Interplay of Testamentary Capacity and the Doctrine of Undue
Influence: Are We Protecting Older Testators or Overriding Individual Preferences? 24 Int'l J. of L and
Psych 253 (2001)
31
  Helen Gunnarsson, POA Amendments Help Protect Incapacitated Individuals, 94 Ill. B.J. 462
(September, 2006), citing amend ments to the Illinois Po wer of Attorney Act.
32
     Uniform Probate Code, National Conference of Co mmissioners on Uniform State Laws (1969), § 1 -201
33
     Supra, Note 1, Page 5-7
34
     Restatement (Second) of Contracts, § 12
35
     Id., § 15(1)
36
  Lawrence A. Fro lik, Science, Common Sense and the Determination of Mental Capacity, 5 Psychol. Pub.
Pol'y & L. 41 (March, 1999)
37
  Ann C. Kiley, Setting Aside the Grantor's Deed on Ground of Incapacity and Undue Influence , 36 Colo.
Law. 57 (May 2007)

38
  Hanks v. McNeill Coal Corporation, 168 P.2d 256 (Co lo. 1946); Bragdon v. Drew, 658 A. 2d 666 (Me
1995); Cameron v. State Teachers Retirement Board, 2000 W L 1753116 (Ohio App. 10 Dist.); Apfelblat v.
National Bank Wynadotte-Taylor, 404 N.W. 2d 725 (Mich. App. 1987).




                                                                                                             27
39
     C.J.S , Rep levin, § 2
40
     Supra, Note 1, Page 5-9
41
     Supra, Note 31 § 177
42
  Mancuso v. United Bank of Pueblo, 818 P.2d 732 (Colo. 1991; see also, 79 AM JUR Proof of Facts 3d
269
43
  See, Co lo. Rev. Stat. § 18-16.5-103 - Crimes against at-risk adults and at-risk juveniles-classifications;
Cal. Penal Code § 368 - Crimes Against Elder or Dependent Adults. These statutes provides penalty
enhancements for crimes against disabled or elderly adults.
44
     Supra, Note 8, Page 3.
45
     Ken Ransford, Financial Abuse of Elderly Adults, 23 Co lo. Law. 1077 (May, 1994)
46
  Jane A. Black, The Not-So-Golden Years: Power o f Attorney, Elder Abuse, and Why our Laws are
Failing a Vulnerable Population, 82 St. John's L. Rev. 289 (Winter, 2008)
47
     Ariz. Rev. Stat. § 13-1815
48
     Supra, Note 1, Page 11-4
49
     www.aadmm.co m
50
     20 C.F.R. § 404.2001(a)
51
     20 C.F. R. § 404.2015(b)
52
     20 C.F.R. § 404.2021
53
     20 C.F.R. § 404.2020
54
     20 C.F.R. § 404.2042
55
     Sey mour Moskowit z, New Remedies for Elder Abuse and Neglect 12 Prob. & Prop. 52 (Jan. 1998).
56
  Julie A. Lemke, Protecting the Gold in the Golden Years: Practical Guidance for Professionals on
Financial Exploitation, 7 Marq. Elder's Advisor 1 (Fall, 2005).
57
     Co lo. Rev. Stat. § 26-3.1-206


Author – Catherine Anne Seal




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