Financial Abuse of the Elderly

After meeting Angela, a woman 50 years his junior, in a bank parking lot, Carl Fiosche, a 79-year-old World War II veteran, says his life began to change -- for the worse.

Testifying on Monday before the Senate's Special Committee on Aging at a special session devoted to financial abuse of the elderly, Fiosche revealed how Angela professed her love for him and drove him to doctor appointments and the bank. But four months into the courtship, he discovered that Angela had taken control of his finances, stealing $70,000 in assets and his $109,000 home, while also opening new credit cards in his name. Fiosche says that as a result, he was forced to file for bankruptcy.

Fiosche is not alone. He is among the growing ranks of seniors suffering various forms of financial abuse from relatives, strangers and caretakers. Indeed, the elderly, most of whom grow more dependent as they age, are easy targets for thieves attracted to the retirement wealth seniors have accumulated in cash, stocks and real estate.

And as the Baby Boomer generation ages, this problem will worsen. Data from the Census Bureau showed that in the year 2000, 35 million people were aged 65 and older, but by 2030, the Bureau estimates the over-65 population will double.

"As people grow older, they grow dependent on others for care, and part of that care means someone must help them with their finances," says Larry Pickard, who supervises the elderly financial abuse unit at San Francisco Adult Protective Services.

At Monday's hearing, Sen. John Breaux (D., La.), the chairman of the Senate's Special Committee on Aging, proposed legislation to help fight financial abuse of the elderly. Not yet formally introduced to Congress, Breaux's plan is the first comprehensive effort to address such abuse on the federal level. The bill would set up offices that would address elder abuse in the Justice and Health and Human Services departments. The legislation would also provide training for law enforcement, require background checks for nursing home employees and allocate much-needed funds for research.

Indeed, limited funds for research has made it difficult to gauge the scope of this problem, according to Lori Steigel, associate staff director for the American Bar Association's Commission on Legal Problems of the Elderly. For example, only $1.3 million of the National Institute on Aging's total $789 million budget in fiscal 2002 will go to researching elder abuse. "We can't answer the most basic questions, like how many people are abused each year," says Steigel.

During Monday's hearing, Sen. Breaux said that estimates for the number of elderly abuse cases run as high as 5 million annually. According to the National Center on Elder Abuse (NCEA), 407,709 reports of elder abuse were reported to state agencies in 2000. An estimated 13% of those cases involved financial abuse. "They're in the process of gathering data for 2001, but we expect that number will go up above 500,000 cases," says Steigel, whose organization helped produce the NCEA's research.

This total could be even higher because victims are often too embarrassed or scared to report crimes. "Only one in five cases is ever reported, so that means 2 million to 2.5 million people may have been victims of elder abuse this year," Steigel says.

A Rising Problem

The people elders trust most, such as caregivers and family members, are the most likely perpetrators. Indeed, according to the NCEA, family members commit half of the financial abuse crimes against the elderly.

Caretakers and loved ones typically start with small crimes, such as stealing jewelry and blank checks, before moving on to larger items: coercing confused seniors to sign over the deeds to their homes, change their wills or liquidate their assets. "Because of Alzheimer's, dementia or overmedication, [elders] don't know one document from another and sign whatever is in front of them," Pickard says.

Even when caught, prosecuting a family member can be extremely difficult. "Family members have a built-in defense if they get caught, which is 'Oh, she wanted me to have all that money'," says Paul Greenwood, head of the San Diego district attorney's elderly abuse unit. "It's hard to overcome that defense. We need to prove the individual didn't have the capacity to understand."

Reduce Your Risk! 10 ways to avoid becoming a victim

Never allow strangers into your home. They could attempt to steal checks or jewelry.

Never agree to have work done on your home without getting estimates from three reputable contractors. Scammers will promise to make home improvements, and take the money and run.

Ask banks and credit card companies to send duplicate copies of bills to a trusted adult child.

Shred unused credit card applications to avoid identity theft.

Never leave mail in your mailbox for the carrier to collect. Signed checks and information about bank accounts can be easily stolen this way.

Ask the bank to call you if a check over a certain amount is ever presented for payment.

Do not send money at the request of telephone solicitors, or give out a social security number or credit card numbers over the phone.

Perform a monthly overview of bank statements, and check credit history every three to six months.

Stay in touch with relatives so you aren't isolated, which makes you an easier target for criminals.

Perform a background check on caregivers. Make sure they come from a reputable agency.

Source: San Diego District Attorney's Office, San Diego Police Department

Strangers also prey on the elderly. At Monday's hearing, Justin Ray White, currently serving a 10-year sentence in Idaho for grand theft, said he would scam elders by offering to perform a service, such as fixing a roof or trimming trees, then do nothing and charge exorbitant fees.

Omar Valverde, a deputy investigator who specializes in financial abuse of the elderly and works with Sen. Larry Craig (R., Idaho), helped catch White. Valverde told TheStreet.com that he is concerned that most family members don't detect financial abuse until it's too late. "Of all the forms of elder abuse, it's the hardest to see," he says. "There are no bruises. The only time you see it is when elders [stop taking care of themselves]. By that time, the damage is pretty bad."

And once they've been victimized, Greenwood says elders have a difficult time recouping their losses because the money has already been spent.

Fight Back

But there are warning signs of abuse and ways to prevent it.

Make a plan as to how an elder's finances will be handled once it becomes clear they need assistance, advises Sara Aravanis, director of the National Center on Elder Abuse. "It's a tough thing to think about because it involves issues of incapacitation and dependence, but it needs to be on the checklist."

For example, concerned relatives, especially those who live far away, should ask to see monthly bank and credit card statements to keep a close eye on an elder's financial records, Greenwood says.

Look for large withdrawals, unauthorized ATM usage or new names added to bank accounts. And run a credit check every three to six months to see if new bank accounts and lines of credit have been opened without an elder's knowledge. "Elders have no problem going to the doctors for a check up every month," he says. "They need a financial check up every 30 days as well."

Red Flags! 10 signs of possible financial exploitation

Sudden changes in a bank account or banking practices.

Placing additional names on bank accounts or credit cards.

Abrupt changes in a will or financial document.

Changes in, or establishment of, a power of attorney.

Unpaid bills despite available funds.

Unnecessary home repairs and services such as new roof or yard work.

Sudden appearance of previously distant relatives.

Changes in financial routines.

Establishment of unusual or unnecessary credit, such as a second mortgage.

Disappearance of funds or valuable possessions, such as jewelry.

Source: Recommendations from the office of Sen. John Breaux, chairman of the Senate's Special Committee on Aging

Many times caretakers will isolate elders, limiting contact with family and friends to make it harder for them to detect crimes. "If strange voices start answering the phone, or [the stranger who answers the phone says that] the elder can't come to the phone because they're sleeping, that's a red flag," Greenwood says.