Slides from a presentation on financial exploitation of the elderly delivered by Certified Fraud Examiner Don Rudisuhle at the 25th Annual Conference of the Colorado Organization for Victim Assistance in Keystone, Colorado on October 30, 2013.

1. Overcoming Impediments to Effective
Protection of Elderly Victims’ Assets
25th ANNUAL COVA CONFERENCE
October 28-30, 2013
Keystone, Colorado
Presenter: Don Rudisuhle CFE
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3. Presentation Major Points
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What is Elder Financial Abuse
Causes and consequences
Indicators that signal abuse
The Elder Fraud Triangle
Ways that seniors are defrauded
Obstacles to recovery of assets
Organizing the investigation
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4. Definition of Elder Financial Abuse
• Financial Abuse or Exploitation is the unauthorized
or improper use of the resources of an elder for
monetary or personal benefit, profit, or gain.
Examples include forgery, misuse or theft of money
or possessions; use of coercion or deception to
surrender finances or property; or improper use of
guardianship or power of attorney.
– United States Centers for Disease Control and Prevention
• Virginia Tech adds an age qualifier: “the unauthorized
use or illegal taking of funds or property of people
aged 60 and older.”
– Committee for the Prevention of Elder Abuse, and the Center for
Gerontology at Virginia Polytechnic Institute and State University
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5. It’s getting worse. Why?
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Aging Boomers increase the senior population
Longer lifespans and attendant fragility
Breakdown of traditional retirement vehicles
Diminished returns on savings instruments
Relatives are stressed by the weak economy
Widespread moral decay in society
Inadequate resources to pursue perpetrators
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6. Elder Theft Consequences
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Compromises elder’s financial security
Degrades their quality of life
Engenders fear and anxiety
Limits access to health insurance and care
Contributes to homelessness
Causes depression and despair
Increases costs to the state
Destroys relationships and harmony in the
family
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7. Mandatory Reporting in Colorado
On May 16, 2013, Governor Hickenlooper signed Senate
Bill 13-111, Require Reports of Elder Abuse and
Exploitation. The main provisions are:
– Persons observing abuse or exploitation of person 70 years
or older must report it to law enforcement within 24 hours
– An observer who willfully fails to report the fact commits a
Class 3 misdemeanor
– A person reporting in good faith enjoys immunity from
civil suit or criminal action
– Members of the clergy are exempt under certain
circumstances
– The Peace Officer Standards and Training (POST) Board
should establish a training curriculum for law enforcement
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8. Medical Personnel Who Must Report
• Physicians, surgeons, physicians
assistants, osteopaths, physicians in
training, podiatrists, occupational therapists, physical
therapists, medical examiners and coroners, registered
nurses, licensed practical nurses, nurse
practitioners, psychologists, mental health
practitioners, chiropractors, dentists, pharmacists and
hospital and long-term care facility personnel
engaged in the admission, care, or treatment of
patients
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9. Other Professionals Who Must Report
• Social work practitioners, clergy members, law
enforcement officials and personnel, court-appointed
guardians and conservators, fire protection
personnel, community-centered board staff, personnel
of banks, savings and loan associations, credit unions
and other lending or financial institutions, a
caretaker, staff member, employee of or volunteer or
consultant for a licensed or certified care
facility, home care placement agency, home, or
governing board, including but not limited to home
health providers
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10. Mandatory Reporting
• The Good
– The cycle of abuse can be interrupted
– Victim will have access to professional help
– Recovery of assets can be initiated sooner
• The Bad
– Embarrassment before peer group
– Loss of personal decision making authority
– May be ostracized from family and friends
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11. Recognizing Elder Theft Symptoms
• Observation by third parties reveals that he or she:
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Has recently made a new “best friend”
Often makes large bank or ATM withdrawals
Sends checks or wire transfers overseas
Is unaware of his/her financial status
Has difficulty paying bills and buying everyday necessities
Receives mail for lotteries, prizes and contests
Gets frequent calls from telemarketers
Is isolating him/herself from family and friends
Demonstrates fear or submissiveness towards caregivers
Caregiver tends to intercede and speak on behalf of victim
Living under squalid and unsanitary conditions
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12. The Fraud Triangle
Donald Cressey was a sociologist and criminologist
who was a recognized expert in white-collar crime.
During his research for his doctoral thesis, he proposed
a framework for examining a perpetrator’s motivation to
commit fraud using a concept he called The Fraud
Triangle. It is comprised of three elements, which when
taken together, can explain how a person is led to
committing a fraudulent act. These are:
• Perceived unshareable financial need
• Perceived opportunity
• Rationalization
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13. Donald Crecy’s Hypothesis
• According to Donald Crecy’s Hypothesis:
– Trusted persons become trust violators when they
conceive of themselves as having a financial problem
which is non-shareable, are aware this problem can be
secretly resolved by violation of the position of
financial trust, and are able to apply to their own
conduct in that situation verbalizations which enable
them to adjust their conceptions of themselves as
trusted persons with their conceptions of themselves as
users of the entrusted funds or property.
– Donald R. Cressey, Other People's Money 1973
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14. The Fraud Triangle
Motivation
Factors
contributing
to risk of fraud
Opportunity
Rationalization
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15. Fraud Triangle Elements
• Motivation
– The various factors that drive the perpetrator to
commit the illegal act
• Opportunity
– The conditions that exist that facilitate the
commission of the act
• Rationalization
– The mindset that allows the perpetrator to justify
his or her actions
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16. Motivation
• Economic need
– Perpetrator is financially stressed
• Greed
– Perpetrator desires material things
• Retribution
– Perpetrator feels victim wronged them
• Convenience
– “Just because its there”
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17. Rationalization
• “I am entitled to the money”
– Aunt Rose promised it to me
– It’s just an advance on my inheritance
– Dad gave my brother more than he gave me
– I have been Mom’s caregiver for years
• “Grandma doesn’t need really it”
– Victim is perceived as wealthy
– Can’t use it due to physical or mental impairment
– Victim is not expected to live much longer
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18. Opportunity
• Perpetrator has a fiduciary role
– Is a trustee or guardian
– Has power of attorney
– Is a signatory on financial accounts
• Perpetrator has access to victim’s assets
– Personal property
– Real estate and vehicles
– Credit cards
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19. The Elder Theft Triangle
Desperation
Types
of elder
financial abuse
as per the 2011
Met Life study
Occasion
Predation
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20. Elder Theft Triangle Elements
• Occasion (Opportunity)
• Victim is an obstacle to the perpetrator’s ability to acquire material
things he/she desires
• Desperation
– Family or friends are very desperate for money
– Will do whatever is necessary to obtain it, even if illegal
• Predation
– A false trusting relationship exists or is created
– The friendship becomes the vehicle for exploitation
– Perpetrator has a sociopathic personality and does not feel guilt
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21. Crimes of Desperation
• Generally involves family or friends
• Need for money can be a result of:
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Loss of employment
Health crisis or medical bankruptcy
Addiction to drugs or alcohol
A gambling habit
Compulsive shopping
A need to “Keep up with the Jones’”
Being in trouble with the law
• Perpetrator believes that he/she is entitled to
compensation for caregiving services
• Men are typically the perpetrators
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22. Crimes of Occasion
• The victim has money and property
• The assets are accessible
• Victim is careless or unaware
– Door unlocked
– Money or valuables left in plain sight
• The perpetrator takes what is available
– Generally by stealth
– Less frequently by violence
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23. Crimes of Predation
• Involves building a trusting relationship
– Social
– Romantic
– Professional
• Assets stolen by stealth or subterfuge
– Younger woman approaches lonely, elderly man
– Dishonest broker deceives victim on investments
– Contractor provides unneeded, shoddy or overpriced
home repairs
– Health care provider marries incapacitated person
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24. Motivation
• Economic need
– Perpetrator is financially stressed
• Greed
– Perpetrator desires material things
• Retribution
– Perpetrator feels victim has wronged them
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25. Characteristics of a Perpetrator
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Is a wheeler and dealer
Is domineering and controlling
Doesn't like people questioning their judgment or actions
Has a strong desire for personal gain
Has a “Beat the system attitude”
Lives beyond his/her means
Has a close relationship with the victim
Is unable to relax
Outwardly, appears to be very trustworthy.
Often display some sort of drastic change in personality or behavior
Appears incapable of feeling guilt or remorse
– Adapted from The Certified Accountant, 1st Quarter 2009, Issue #37
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26. Addressing Elder Theft
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Know the signs
Document the abuse
Contact proper authorities
Obtain legal counsel
Search for the looted assets
Charge perpetrators in civil or criminal court
Recover assets on behalf of the victim
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27. Vehicles for Defrauding Elders
There are many ways unscrupulous individuals
gain access to vulnerable individuals’ assets:
• The most common perpetrators are members
of the victim’s own family
• Trusted professional sometimes stray from
their fiduciary responsibilities
• Unscrupulous individuals seek vulnerable
targets to deceive and defraud
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28. The Victim’s Family
Unlawful conversion of the victim’s assets via:
• Misuse of a Power of Attorney
• Trusteeship – abuse of fiduciary responsibility
• Quitclaim deed to real estate
• Adding themselves to a bank account
• Persuading the victim to change their will
• Forging checks and other documents
• Depositing retirement checks “less cash”
• Stealing valuable property or cash
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29. Trusted Professionals
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Lawyers
Accountants and bookkeepers
Financial and investment advisers
Brokers and securities dealers
Bankers
Professional conservators and guardians
Less frequently, judges
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30. Telephone and Internet Scams
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Halo, I am calling from Microsoft. You have virus…
Good News!!! You have won the Costa Rican lottery!!!
I am the Oil Minister of Nigeria. I have some funds…
Grandma, I’m in jail in Hungary. Send bail money…
I’m terminally ill. Can you help distribute my estate?
We need you to deposit checks from our customers and
wire us the money. You can keep a commission…
• This Rachel from Card Services. Your eligibility to
lower your interest expires soon. This is your final…
• Our church’s roof is leaking...
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31. Tradesmen and Contractors
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Prey on those who appear to vulnerable
Go door-to-door soliciting business
Most often are unlicensed
No references
Perform unnecessary home repairs
Shoddy or incomplete in work
Create trust with victims, steal their property
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32. Obstacles to Pursuing Recovery
• Human
– Can be psychological or sociological
• Financial
– Incapable of funding costly litigation
• Legal
– Law enforcement and prosecutors uninterested
• Logistical
– Travel time and expense for all parties
• Reality
– Perpetrator may already have dissipated the assets
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33. Human Obstacles
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Lack of cooperation from the victim
Interference from the perpetrator
Lack of information about what to do
Reluctance to accuse anyone of wrongdoing
Fear of abandonment by the family member
Victim may be dependent upon the abuser
Unwillingness to harm the perpetrator
Victim with dementia can’t articulate facts
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34. Financial Obstacles
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High cost of litigation
Unwilling to commit scarce retirement funds
Uncertainty as to potential for recovery
Perpetrator may have depleted available cash
Can’t take time off work to pursue the case
Threat of retaliation by the accused in the form
of a countersuit that could be costly to defend
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35. Legal Obstacles
• Statute of limitations
– 3 years in Colorado
– Can be tolled in some instances
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Multistate jurisdictions
Law enforcement doesn’t see it as priority
Prosecutor is not sympathetic
Prosecutor is busy with more serious crimes
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36. Logistical Obstacles
• Plaintiff, victim and perpetrator all live in
different states or countries
• Depositions might require expensive travel
• One or more parties are disabled and travel to
attorney’s office and court is problematic
• Victim is housebound
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37. Reality Obstacles
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Cash most likely has been dissipated
Perpetrator has left the state or the country
Assets have been transferred to a third party
Assets have put in a trust or corporation
Real estate has been retitled to someone else
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38. Asset Recovery Steps
The Goal: Stop the hemorrhage and recover stolen assets
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Collect as much documentation as possible
Confront the perpetrator, request voluntary restitution
Try to remove perpetrator from custody of the assets
If that fails, retain legal counsel
Initiate discovery - Request for Production of Documents
Retain the services of a forensic accountant, if appropriate
Analyze documentation
Prepare interrogatories and deposition questions for counsel
Analyze the products of discovery
Conduct deep web searches or concealed property
Prepare courtroom exhibits
Ask counsel if a pursuing criminal action is appropriate
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39. Transmittal of Documents
Security must be observed when paper or electronic
documents are exchanged between parties.
• They often contain active bank account and credit
card information.
• Data should not be transmitted in emails as email
attachments
• Consider using a secure cloud platform.
– Dropbox – uses server-side encryption
– Spideroak– uses client-side encryption (better)
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40. Preparing Courtroom Exhibits
Your courtroom exhibits are instrumental in
persuading the judge or jury to rule in favor of
your client
• Each exhibit should be concise and to the point
• Layer backup exhibits for each primary one
• Use charts and graphs where appropriate
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41. Obtaining Data Using Discovery
• Discovery is a process used prior to trial
whereby litigants request information from
each other using vehicles such as:
– Requests for production of documents
– Interrogatories are written questions submitted to
the opposing party regarding facts of the case
– Depositions are interviews of a litigant conducted
by a lawyer in an out-of court-venue
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42. Which Recovery Approach to Use?
• Egregious, destructive fraud
– Use the scorched earth, steam roller method
– Initiate concurrent civil and criminal actions
• Low grade fraud with minor harm to the victim
– Negotiate, persuade perpetrator to return funds
• Somewhere in between
– Consider arbitration
– Appointment of a guardian or conservator
– Nominate a trustee to manage the assets
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43. Increasing Awareness
• Training for:
– Advocates
– Health care workers
– Sworn law enforcement officials
– Officers of the court
– Family caregivers
– Bankers, brokers and financial advisers
– CPAs and bookkeepers
– Attorneys
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44. Ongoing Elder Theft Study
Elder Financial Exploitation via Power of
Attorney Abuse: What Family Members’
Experiences Reveal about this Problem, Its
Causes, and Consequences"
• We are still seeking multiple participants from
families with
– 1) successful family member POA agent experiences
– 2) families with allegedly exploitive POA experiences
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