Study: Seniors defrauded out of $37B a year
Marjorie Jones trusted the man who called to tell her she’d won a sweepstakes prize, saying she could collect the winnings once she paid the taxes and fees. After she wired the first payment, he and other callers kept adding conditions to convince her to send more money.
As the scheme progressed, Jones, who was legally blind and lived alone in a two-story house in Moss Bluff, Louisiana, depleted her savings, took out a reverse mortgage and cashed in a life insurance policy. She didn’t tell her family, not even the sister who lived next door. Scammers often push victims to keep promised winnings a secret, says an investigator who helped unravel the sinister effort to exploit an 82-year-old woman.
Her family didn’t realize something was wrong until she started asking to borrow money, a first for a woman they admired for her financial independence. But by then it was too late, says Angela Stancik, one of Jones’s granddaughters. Jones had lost all of her life savings-hundreds of thousands of dollars.
About one week after calling Stancik at the family business in Texas to borrow $6,000, Jones committed suicide.
That was May 4, 2010. When family members went to her home, they found a caller-ID filled with numbers they didn’t recognize and three bags of wire transfer receipts in her closet. Jones had $69 left in her bank account.
Some 5 million older Americans are financially exploited every year by scammers like the ones who targeted Jones or by greedy, desperate or drug-addicted relatives or friends. The number of victims is increasing as baby boomers retire and their ability to manage trillions of dollars in personal assets diminishes.
One financial services firm estimates seniors lose up to $36.5 billion annually. But such assessments are “grossly underestimated,” according to a 2016 study by New York State’s Office of Children and Family Services. For every case reported to authorities, as many as 44 are not. The study found losses in New York alone could be as high as $1.5 billion.
In 2016 the U.S. Centers for Disease Control and Prevention drew attention to elder exploitation as a public health problem, citing groundbreaking research two decades earlier by Mark Lachs. Now co-chief of the Division of Geriatrics and Palliative Medicine at Weill Cornell Medicine and New York-Presbyterian Hospital, Lachs says elder abuse victims-including those who suffer financial exploitation-die at a rate three times faster than those who haven’t been abused. It’s a “public health crisis,” he warns.
“I knew these crimes were killing people,” says Elizabeth Loewy, who directed the elder abuse unit at the Manhattan District Attorney’s Office. As her exploitation cases steadily rose to hundreds per year, “so many family members told me, ‘I can’t prove it, but this killed him.’ ”
Bente Kongsore, a retired accountant in Creswell, Oregon, says her parents’ mental and physical decline accelerated after an assistant manager at a local bank, Susan Paiz, befriended the octogenarians and stole $100,000 from them in 2014. Paiz pretended that Kongsore’s father, who had been diagnosed with Alzheimer’s at 85, gave her the money. The lie soured the last two years the couple had together as Kongsore’s father questioned himself and his wife questioned him. “It was a total violation of the type of feelings we would want to share with each other at the end of their lives,” Kongsore says.
Her mother died in June 2016. Her father died in December 2017, just weeks before Paiz was sentenced to 10 months in jail. Paiz was caught thanks to a dogged detective in Bellevue and the King County prosecutor’s office in Seattle, which had established an elder abuse unit in 2001. When Kongsore saw Paiz in the courtroom, she says, she thought, “How could you do that to older people who could not protect themselves?”
The bank where Paiz worked, Union Bank in Bellevue, didn’t return the money until Kongsore emailed an incriminating letter that Paiz wrote to her parents to a bank investigator, and the bank still hasn’t formally apologized, Kongsore says. Union Bank didn’t immediately respond to requests for comment. Paiz couldn’t be immediately reached.
Financial exploitation is “a huge problem in the sense that it’s so profoundly destructive,” says Page Ulrey, a senior deputy prosecutor who became the Seattle unit’s first member. Most of her cases are financial, involving victims who rarely get their money back. “They’re usually emotionally devastated as a result of having been betrayed.”
In many cases, it may appear the victim gave consent, but it’s often based on manipulation or deception. Like Kongsore’s father, victims often “have some level of cognitive impairment, which makes it really difficult for them to figure out the truth of what’s going on,” Ulrey says.
As a result, many of her cases hinge on showing incapacity. “Obviously, you have the right to give your money to who you want, even if your family disapproves,” Ulrey says. But someone suffering from dementia may no longer have the ability to judge another person or understand the consequences. If an evaluation shows a victim lacks capacity to make financial decisions, “we potentially have a stronger criminal case.”
But capacity assessment by adult protective services investigators and police is uneven across the country. “Law enforcement doesn’t have good tools to assess capacity,” Ulrey says, adding that most jurisdictions lack people who can conduct thorough evaluations.
In 2015, Weill Cornell’s Lachs coined the term “Age-Associated Financial Vulnerability,” or AAFV, to sound the alarm. He defined it as a “pattern of imprudent financial decision-making that begins at a late age and puts older adults at risk for material losses that could decimate their quality of life.” Financial judgment can falter before normal cognition does, regardless of whether the person was savvy with money when they were younger, Lachs says. In other words, it can happen even when the person seems normal.
Federal response has been frustrating, according to practitioners and public officials. Joe Snyder, former director of older adult protective services at the Philadelphia Corporation for Aging, says he doubts that needed funding will arrive in his lifetime. Before he retired, he oversaw 27 investigators with limited resources handling about 3,500 cases a year – like using water pistols to fight a forest fire, he says.
The first comprehensive legislation to address abuse of senior citizens, the Elder Justice Act, was enacted in 2010 but remained unfunded until 2015, when it was allocated only $4 million. “Dollars appropriated since then have, in Congressional terms, been dribbling,” says Marie-Therese Connolly, a former Justice Department attorney who championed the law, working with the Senate Special Committee on Aging. Originally, the allocation was to be closer to $1 billion, she says.
“Financial exploitation causes large economic losses for businesses, families, elders and government programs, and increases reliance on federal health care programs,” warned a 2014 elder justice report Connolly helped prepare.
Three years later, a Congressional Record Service report bemoaned a lack of progress: “As a result of this limited federal funding, the federal government has not substantially developed and expanded its role in addressing the prevention, detection, and treatment of elder abuse.”
“It’s a fundamentally reactive system,” Connolly says. “The big story is the dearth, the complete nonexistence, the shameful scandalous absence of any credible prevention or intervention research.”
Some progress is being made. In February, the Justice Department announced “the largest coordinated sweep of elder fraud cases in history,” charging more than 250 defendants with schemes that caused 1 million mostly elderly Americans to lose more than $500 million. The alleged perpetrators include people who targeted Marjorie Jones, according to one investigator.
The yearlong dragnet is part of an ongoing effort “to detect and infiltrate these criminal organizations that are trying to exploit the elderly,” says Antoinette Bacon, a career prosecutor who serves as the DOJ’s national elder justice coordinator. Her position was created through the Elder Justice Prevention and Prosecution Act, a law signed by President Donald Trump in October meant to improve coordination among federal, state and local agencies.
States have been stepping up as well. Thirty-nine and the District of Columbia addressed financial exploitation of the elderly in last year’s legislative sessions, according to the National Conference of State Legislatures. More than half enacted legislation or adopted resolutions. Still, Snyder worries that the federal block grant many states rely on to pay for such services could be cut dramatically under Trump: “If that goes away, programs will be crushed overnight.”
The financial industry says it’s doing more, too. On Feb. 5, the Financial Industry Regulatory Authority, an industry body, put into effect “the first uniform, national standards to protect senior investors.” It now requires members to try to obtain a trusted contact’s information so they can discuss account activity. It also permits firms to place temporary holds on disbursements if exploitation is suspected. Loewy, who left her job as a prosecutor in 2014 to join EverSafe, a startup that makes software to monitor suspicious account activity, is underwhelmed by the industry projects.
“They may say they’re focused on it, but they aren’t really doing much more than training employees,” she says. “Exploiters know what they’re doing. They take amounts under $10,000 that they know won’t get picked up by fraud and risk folks at banks. And they steal across institutions over time.”
The dirty little secret about elder exploitation is that almost 60 percent of cases involve a perpetrator who is a relative, according to a 2014 study by Lachs and others. It’s an especially fraught situation in which victims are often unwilling or unable to seek justice. Such manipulation sometimes involves force or the threat of force, says Daniel Reingold, chief executive officer of RiverSpring Health, a nonprofit providing care to about 18,000 seniors in the New York City area. In 2005, Reingold helped establish the nation’s first elder abuse shelter.
While many families don’t intervene when they suspect a relative is abusing an elderly relation, Philip Marshall did in a famous example of elder exploitation. “I was a family member who acted,” Marshall says. “And that’s huge. Because people don’t act. They say, ‘We don’t want dirty laundry out there.’ “ Marshall wanted his grandmother, famed socialite Brooke Astor, to enjoy her final years at her country home as she had wished. When his father wouldn’t let her, Philip sought guardianship, setting off a legal battle. Philip says he discovered that his grandmother, who had been diagnosed with Alzheimer’s, was enduring various forms of neglect, “all in an effort by my father to gain her money.”
The dispute culminated in the conviction and prison sentence in 2009 of his father, Anthony Marshall, for siphoning off millions of dollars from Astor. At first, Philip Marshall says: “Our goal was just to stop my grandmother’s isolation and manipulation. We didn’t really care about money.” A separate legal proceeding over the neglect allegations was eventually resolved. Last year Marshall quit his job as a professor to become a full-time advocate in the fight against elder abuse. He speaks to government officials, financial institutions and people dealing with exploitation. “So many times, it’s family,” he says. “I don’t think people realize that.”
At the Harry and Jeanette Weinberg Center for Elder Justice, the shelter Reingold helped start in the Bronx, many versions of Astor’s story are unfolding daily, albeit for smaller sums. More than 70 percent of the center’s clients are victims of financial abuse, with most also suffering from emotional and physical abuse.
“It’s often a slow and steady and unrelenting experience,” says center director Joy Solomon, a former New York prosecutor. She says her team is seeing an increase in seniors showing up in housing court-because they’re being evicted: “A lot have been financially exploited and they don’t even know what’s happening until they get that notice.”
Loss of housing usually accelerates mental and physical decline, Solomon says. Unless the assets of senior citizens are protected from this epidemic, “we’re going to come to a place where we’re seeing a lot of homeless elderly people on the street.”