Elder Fraud and Financial Abuse


Dear Fellow Investors and Friends,

I recently listened to a presentation by three CPAs, one was a former FBI agent and another who was also an attorney. The subject was elder fraud and financial abuse. Whether considering your own status or those of your loved ones, I thought a few key takeaways could be helpful to you.

A number of examples were shared primarily involving criminals, adult children/family members, and health aides. In all cases, they attempted to identify soft targets with some wealth. The soft targets included those with cognitive or physical issues, elderly, chronically ill, lonely people, as well as those who have a need to invest due to fear of running out of money, wanting to “beat the market,” or whose assets have been depleted. Another common element included starting out by stealing small amounts that increased over time.

For criminals, the internet scams are a favorite. They are also interested in gathering personal identifying information. Adult children may lean on parents for financial help that can turn into financial abuse when loans are never repaid or they feel entitled to help themselves to assets for providing care. Home healthcare workers may feel similar entitlement. Often there can be verbal intimidation and/or isolation from family involved.

Investment fraud often involves products that neither the seller nor the victim understand. The victim only hears of all the benefits without the true costs and risks. The seller’s greed propels him to return for more.

As people age, they can become too trusting, their defenses come down, and they become more vulnerable to financial abuse. It is also interesting that the peak age for financial decision-making capability is 60 (which then declines), but the perception of one’s abilities doesn’t diminish and may even increase. This creates a dangerous gap.

Some suggestions:

  • Plan now for the time when physical or cognitive decline will begin.

  • Watch for signs of the issues outlined above.

  • Make finances more transparent to trusted family or friends and consolidate accounts into fewer financial institutions so they are easier to monitor.

  • Have regular times with family and friends away from caregivers so honest discussions can take place.

  • Have trusted advisors of loved ones (attorneys, CPAs, etc.) collaborate periodically to compare notes and observations.

  • Watch for changes (a changed will, a new internet friend, new accounts opened).

  • Use bill pay (easier to monitor and less information accessible to bad actors).

  • Go paperless (there are services that will scan and file all of your voluminous records).

  • Involve your accountant to watch for unusual activity and prepare simple reports to share with family members or other trusted parties.

These are just a few, simple ideas. There are more complicated options as well, such as using various types of trusts. I hope you find these helpful.

Thank you, as always, for partnering with ADF, the churches we serve, and the worldwide work of the Alliance. 

Please share your thoughts by contacting me at presidentscorner@orchardalliance.org. They are always welcome.

Lawrence L. McCooey, CPA, PFS, CGMA President

Lawrence L. McCooey, CPA, PFS, CGMA

Larry McCooey