The Shared Traits of Those Committing Fraud Against Elderly Family Members

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SPECIAL TO THE WEB

Annette Simmons-Brown, CFE

A MOTHER'S LOVE RUNS DEEPER THAN PLANNED
Let's examine the case of "William," the adult son of a victim. Since 1998, William's mother (we'll call her Debra) authorized him to manage her financial accounts that had a balance of $3 million to $4 million. However, she didn't authorize William to withdraw funds from these accounts, and she never initiated the execution of a power of attorney (POA) instrument.

Over the next 11 years, William systematically transferred funds from his mother's accounts to pay his bills and to supplement his accounts. He also opened at least two credit card accounts in his mother's name and tried to hide bank statements from her. By 2009, her accounts were overdrawn. Debra — and her other adult children — finally detected William's thefts and reported them to the police. William was ultimately charged with and convicted of one felony count of theft by swindle over $35,000; he was given a stayed prison sentence of 42 months and ordered to pay restitution of $110,500.

(This is one of many cases in Hennepin County in recent years criminally charged when a POA instrument was absent; thus, the lack of a POA instrument doesn't necessarily prevent criminal charges of financial crimes against the elderly.)

THE FEVA PLAYBOOK
The Hennepin County Attorney's Office (HCAO) in Minneapolis, Minnesota — for which I am a paralegal in its complex crime unit — has long had attorneys specifically assigned to the prosecution of financial exploitation of vulnerable adult (FEVA) crimes. A review of 15 intra-familial FEVA cases charged by the HCAO within the past three years, in which the victims were elderly and related by family to the defendants, reveals a depressingly uniform fact pattern:

  • The life circumstances of the defendants and the victims were similar.
  • The manner and speed with which the defendants accessed the victims' funds were similar.
  • The degree of the thefts was similar.
  • The mindsets of the defendants as revealed in case investigation, litigation and conviction were — you guessed it — similar.

In all 15 cases, the victims were single and either widowed or long divorced. The youngest was 58 years old — a man who had been injured by a car accident and then required assistance with daily living activities and transportation. The oldest was 90.

At least 12 of the victims required professional care for daily living and health problems, either in-home or in an assisted living facility. At least three of the victims experienced memory loss or other cognitive dysfunction.

These were the family ties:

  • Eleven of the victims were parents of at least one of the defendants (in two of the cases involved husband-and-wife defendants).
  • Two of the victims were the defendants' grandparents.
  • One victim was the defendant's aunt.
  • One victim was the defendant's sister.

FINANCIAL EXPLOITATION
Six of the 15 defendants — all of whom were responsible for paying the victims' home- or assisted-living care costs from the victims' accounts — defaulted on these payments, which resulted in the threatened termination of care or even the threatened eviction of the victims from their facilities. In six cases, the amounts stolen from the victims (within the date range of the charges) exceeded $100,000 — the lowest was $107,348 and the highest was $250,196. In eight other cases the defendants stole $14,046 to $71,500.

In every case, the defendants used the victims' funds to finance their lifestyles. They accessed the victims' bank accounts using checks, ATM withdrawals, debit card payments, counter withdrawals and online transfers from the victims' accounts straight into their own accounts.

They used the victims' credit cards for their purchases and accessed the victims' funds to pay the credit card balances. They also transferred money from victims' investment accounts into the victims' bank accounts and spent that cash.

In one egregious case, the defendant took out a mortgage on a real estate parcel that was part of her father's trust estate (for which she was co-trustee) that she and her brother were due to jointly inherit. She used the proceeds of that mortgage to pay off the mortgage on another real estate parcel within the trust estate that she was due to solely inherit. This devious move left her with an unencumbered property but left her brother with the shaft.

In 12 of the 15 cases, the victims executed a POA. Judging from the defendants' spending patterns after the POAs were executed, it's clear they all felt they "owned" the victims' funds or at least had joint ownership. They failed to remember, or deliberately disregarded, that the POA confers more responsibilities than rights. Most importantly, the fiduciary responsibility is to spend the principals' money to benefit the principals rather than themselves, always.

They also all failed to remember, or deliberately disregarded, that a financial transaction always leaves a paper trail. And when their conduct came to light, the paper trail told the story far better than an interview with an enfeebled, distraught victim ever could. And they all failed to realize that their conduct couldindeed come to light, the subtleties of modern-day money transfers notwithstanding.

In 10 of the 12 cases in which a POA instrument was present, the defendants were charged with at least one count of felony — financial exploitation of a vulnerable adult — and several received an additional felony of theft by swindle. In the remaining cases, the defendants were charged with a felony of theft by swindle of amounts over various thresholds. Seven of the cases have resulted in felony convictions, one case has been sent to diversion, two cases have been dismissed and five are pending disposition.

A GROWING PROBLEM
These examples are a fraction of elderly financial crimes cases charged worldwide. Financial crimes against the elderly are growing internationally because many countries are experiencing graying populations. I can easily see the day when crimes like these replace employee theft as the standard-issue blue jeans of fraud.

Read part one of this article on Fraud-Magazine.com, and read how Annette looked at the growing incidence of family members who defraud their aging relatives and the similarities of these miscreants to traditional occupational fraudsters.