In 2017 the FBI opened 200 cases of financial fraud targeting elderly victims. According to the FBI, “The investigations covered a range of crimes, from investment frauds to reverse mortgage scams.”
Acting deputy of the FBI, David Bowdich, recently announced that elder fraud is a “serious and growing threat.”
What is elder fraud?
Defined, elder fraud is a broad umbrella of crimes committed against older members of society with the intention of reaping financial gain or financially exploiting the victim. Perpetrators of these crimes use a variety of tactics that can range from identity theft, to outright lies, or to more subtle forms of fraud, such as financial mismanagement.
Why target seniors?
For perpetrators of investment fraud, senior citizens seem like easy targets. Though there is strong data to suggest that digital literacy among today’s seniors is growing, some seniors are unaware of how technology can be used to defraud them of their money.
Robocalls paired with mass mailings allow fraudsters to create scams that produce extreme emotions in their victim. For example, in a lottery scam, a caller may generate excitement by declaring the senior the winner of a lottery. All the target has to do is provide his or her bank account information so that the money is deposited.
In cases of IRS imposter schemes, criminals prey on fear to claim that individuals owe the government money. The victims worry about potentially greater fines and are even told that they could end up in jail if they fail to pay up.
Scammers also know that elderly citizens are less likely to report their victimization because they feel embarrassed. Many seniors are so used to taking care of others and being fiercely independent that they worry about burdening their loved ones and about maintaining their independence.
Though robocallers and mailings present a growing threat to senior citizens, in many cases acts of fraud are committed against elders by the people they already trust.
Seniors who have invested money through brokers or their financial planners are at risk of fraud because they tend to have nest-eggs. Many have spent decades managing their income and building wealth for their retirement. Unlike younger generations just starting to save, seniors have money and assets to lose.
What are some (of the many) tricks shady financial advisors use to defraud their clients?
- Plain old stealing: Financial advisors may ask for money for an investment that they never invest in for their client. They use their client’s assets for their own personal wealth. (Think taking a client’s money to buy a boat or a beach house).
- Negligent fund management: Brokers have a fiduciary duty to actively monitor investments and notify their clients about account status. They can be held accountable if they fail to responsibly maintain and monitor investments.
- Making unsuitable investments: Many seniors are looking for long-term stability in their investments, so they can comfortably enjoy their golden years and live off their nest-egg. Brokers can be held accountable if they make overly aggressive or volatile investments that do not align with the client’s needs.
Discovering fraud is a challenge. Even if an advisor’s actions seem suspicious, many are unable to tell if these actions actually violated a client’s rights. The lines can be very blurry, which is why so often investment fraud goes unreported.
Lawyers experienced in securities and investment fraud know that the devil is in the details and can analyze financial records to note discrepancies. They also know from experience that even the most technically savvy and financially aware can be defrauded.
If you are a senior citizen and are concerned that you are the victim of fraud or negligence, you may be able to pursue a claim against your stockbroker. Contact Fishman Investment Fraud Lawyers to learn what actions you may be able to take.