Two Illinois laws aim at more effectively prosecuting and preventing future cases of financial abuse of the elderly.
The state of Illinois – perhaps best known for the bribery scandals surrounding its two previous and now incarcerated governors – is taking the lead in preventing financial abuse of its elderly citizens.
New rules require bank employees to receive special training to recognize signs indicating their older clients may be victims of financial abuse. The rules apply to officers and other employees who interact with bank customers age 60 or older. Workers must be trained within six months of their employment and must receive a refresher course every three years, according to the Illinois Department of Financial and Professional Regulation. The training is designed to help bank employees both recognize symptoms of financial elder abuse – such as a sudden change in an elderly individual’s financial situation – and to learn how to report suspected cases.
A second Illinois law taking effect this year imposes harsher penalties on people who defraud the elderly and allows prosecutors to pursue scammers who steal as little as $5,000, according to Spotlight on Elder Abuse.
The elderly are vulnerable to many types of abuse, including emotional and physical harm. Financial abuse involves withholding or misusing a senior citizen’s financial resources for personal profit and, according to industry to industry experts, the problem is on the rise. Financial abuse of the elderly has increased 12 percent from 2008, according to the MetLife Mature Life Institute, which estimates senior citizens lose an estimated $2.9 billion a year to theft and fraud.
Judging from media reports, the financial service industry is rife with professionals willing to exploit vulnerable seniors. Earlier this year a Delary Beach, FL, loan officer was sentenced to 70 months in prison for masterminding a nationwide $2.5 million reverse mortgage fraud scheme, according to a statement from the U.S. Justice Department. The court also ordered the officer to pay more than $2 million in restitution.
According to the Justice Department, the scheme was design to lure financially distressed elderly homeowners to apply for reverse mortgage loans through fraudulent appraisals that created fictitious equity in the homes. The ultimate goal was to steal the false equity from seniors and their lenders.
“The stiff sentence the court imposed on the leader of this reverse mortgage fraud scheme sounds a cautionary note to those who prey upon elderly, distressed homeowners,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, in a statement. “We will not waver in our commitment to investigate, prosecute, and hold accountable those who try to victimize our nation’s most vulnerable consumers.”
Late last year Wells Fargo Investments, LLC, was fined $2 million by the Financial Industry Regulatory Authority for unsuitable sales of reverse convertible securities through one broker to 21 customers – 15 of whom were over the age of 80. According to FINRA, the reverse convertible products subjected the customers to inappropriate risk and resulted in an overly concentrated portfolio of the product.
Just last month a California insurance agent was ordered to spend 90 days in jail on a felony-theft conviction for selling a complex annuity product to an 83-year-old women who was alleged to have shown signs of dementia, The Wall Street Journal reported.
The elderly are also likely to be defrauded by relatives and trusted helpers, according to the MetLife study. More than one-third of financial abuse of the elderly involves children, caretakers and others who “forge checks, steal credit cards, pilfer bank accounts, transfer assets and generally decimate elders’ financial safety nets,” said the study, which was co-produced with the National Committee for the Prevention of Elder Abuse and the Center for Gerontology at Virginia Tech.