Elder financial fraud by trusted relatives on the rise
By JEFF VICTOR
Laramie Boomerang
Laramie, Wyoming
Saturday, July 1, 2017
Elderly people often delegate control of their finances to a trusted relative, by giving a son, daughter or in-law power of attorney. Unfortunately – and much to the surprise of the elderly individual – this power is often abused, the bank account is often drained and the rest of the family is often left wondering what happened. Most perpetrators of elder financial fraud are never prosecuted, in part because of the difficulty involved with investigating such crimes, and in part because most of those perpetrators are members of the victim’s own family, said Virginia Vincenti, a UW professor of human development and family studies.
Many more than are reported are expected to be unreported and occurring,” she said. “We realize that because of the complexity of family relationships, it’s very hard to prosecute even if someone is reported and found to have exploited. It’s really hard to prove they did it without the permission of the older relative.”
Vincenti is working with an interdisciplinary multistate research team dedicated to studying the financial exploitation of elders. The team includes researchers from universities across the U.S., as well as non-academics.
“We are looking at power of attorney right now, even though there are multiple ways that exploitation occurs,” Vincenti said. “But power of attorney is often used because that gives so much power to the person that’s appointed. They can do anything that the elder could do.” Power of attorney is only one financial management option available to the elderly, but is right now the most popular. Appointing a guardian was once the standard option, but guardianship is costlier and less efficient than power of attorney because it has more restrictions and more regulation.
An individual with power of attorney for their elderly relative is allowed to manage that relative’s finances – often including investments and real estate – and spend money on their behalf. The individual with power of attorney is expected to spend the elder’s money how the elder would have chosen to spend it had they been capable of making their own financial decisions. But how someone would or would not hypothetically spend their money is difficult for outside investigators and lawyers to prove, so a person with power of attorney is granted wide discretion. Given this power and this access to cash, many people buy themselves luxury items – cars, vacations, houses or more – knowing at the end of the day, Grandma is footing the bill.
“If there were patterns of giving resources to this person over a lifetime, it’s hard to say this is not something the elder would have done anyway,” Vincenti said. Power of attorney was created to be an easier option for the elderly and, at its inception, had regulations similar to guardianship, Vincenti said.
“The accountability measures were removed from powers of attorney because family members were mostly chosen and it was assumed that family members would be more responsible than strangers for their relatives,” she said. “By the ’80s, this was a very popular means of end-of-life planning.”
This paved the way for exploitation, which has remained a problem ever since, Vincenti said.
“The parallel of the popularity (of using power of attorney) and the removal of the accountability measures increased the problem of elder financial exploitation,” she said.
The research group is looking specifically at the family dynamics that either increase or decrease the risk of elder exploitation. The group is doing this by interviewing families who have experienced elder fraud and families who did not.
“We’re trying to identify those risk and protective factors with the hope that by making that information public, people (will) recognize they need to think about these factors in their family before they make decisions about who should have what responsibilities,” Vincenti said.
By identifying the family dynamics that tend to precede elder fraud, Vincenti said she hopes families can be more aware of the warning signs – which is important because most people do not think it could happen in their own family.
Don Rudisuhle, a certified fraud investigator working with the group of academics, said he brings a “reality check” to the team, sharing his perspective and expertise as someone who has actually investigated several instances of elder financial fraud.
“They always seem to get away with it, in my experience, either because the money has been dissipated and squandered or they’ve left such a complicated trail through multiple jurisdictions that it just isn’t financially viable to chase them down,” Rudisuhle said. “We’re trying to figure out how to prevent this.”
While the team is still investigating risk factors Rudisuhle said he noticed some similarities between the families he helped during investigations. In families who experience elder financial fraud, Rudisuhle said there is usually someone who feels they were wronged or not loved equally or someone who feels entitled to the elder’s inheritance. People with greedy tendencies or a love of consumption are also more likely to be perpetrators, he said.
Elder fraud is a difficult and costly crime to prosecute because Victims are often unwilling to accept a member of their own family would betray them or they are embarrassed about it happening, Rudisuhle said.
“I think the important thing is that as soon as there’s a suspicion on somebody’s part, you’ve got to start intervention quick because it goes from taking $500 to taking $5,000 to taking $50,000 very quickly,” he said.
Elder financial exploitation is a widespread problem.
Once an elder’s bank account is drained, they are often pushed onto Medicaid. According to a MetLife study, this care costs taxpayers $2.9 billion a year and that number is only going up as the Baby Boomer generation increases the percentage of Americans 65 and older.
The 2016 National Elder Abuse Incidence Study found that, in 1996, 21,427 incidents of elder financial abuse were reported to Adult Protective Services agencies across the U.S. The same study estimates only one in 10 – and maybe as few as one in 44 – incidents are actually reported.
The research group is still looking for more participants in its study – both from families who experienced financial fraud and families who did not. Participation involves filling out a survey and taking part in a more in-depth, follow-up interview with the researchers.
The team is looking for participants 18 or older with at least one family member 60 or older who appointed a power of attorney. Individuals wishing to take part in the study can contact Vincenti at vincenti@uwyo.edu or (307) 766-4079.
“We have some preliminary results but we need more participants to check out whether a larger group of people come up with the same kind of risk or protective factors,” she said.