Family Finance: Investment scams target seniors
EILEEN AJ CONNELLY,AP Personal Finance Writer
NEW YORK (AP) — Bernie Madoff is the name everyone remembers, but shady investment "advisers" don't have to bilk billions to do real harm.
In just the last two weeks, The Associated Press reported on at least a dozen cases in which advisers were accused of stealing, on average, just over $416 million from unsuspecting investors. Their alleged frauds touched clients in as many as 22 states.
Senior citizens are especially vulnerable to con artists peddling Ponzi schemes and other dead-end deals.
Most victims are older and many of them have cognitive impairment, said Denise Voigt Crawford, the Texas state securities commissioner. The problem is going to get worse as baby boomers age, she said, adding that one new twist is that many of the newest hucksters are also elderly.
"The people who are vulnerable can't even trust people who are their own age," Crawford said.
And it's not just criminal schemes that can cost. Inappropriate investments, whether they're particularly risky or include products that lock up cash for long periods of time, may be perfectly legal but nearly as problematic for seniors. "They don't have the luxury of making mistakes," said Don Blandin, CEO of Investor Protection Trust, an advocacy group. "The suitability issue is very important here."
With market performance weak and interest rates even weaker, retirees concerned about running out of money or leaving a legacy for their families may be more susceptible than ever. They may fall too easily for promises of guaranteed gains or ways to recoup losses.
"There's nothing worse than seeing an elderly couple who's been scammed out of $50,000 or $60,000 or $70,000 — oftentimes their life savings," said Michael Kappas, CEO of Apprisen Financial Advocates in Columbus, Ohio.
Seniors who live alone may be the most vulnerable — the "elderly widow" is a con artist's classic target. And the rapid migration of seniors online may expose this population to even more fraud. Nielsen estimates the number of Internet users age 65 and older shot up 55 percent in the last five years.