Kicking the cane

Intra-familial financial exploitation of the vulnerable elderly, part 1 of 2


By Annette Simmons-Brown, CFE

On Jan. 16, Martin Thibodeaux of Arnaudville, Louisiana, was arrested and booked on the charge of "financial exploitation of the elderly." Thibodeaux, according to a Jan. 20 KLFY article by Brittany Altom, had been listed as an authorized user of his 86-year-old grandmother's bank account for the purpose of caring for her. However, within six months, he made ATM withdrawals 12 times, cashed checks and made in-person direct cash withdrawals, and visited her bank 22 times to open her safety deposit box. According to the article, Thibodeaux accessed his grandmother's account 34 times and stole more than $36,000.

Financial crimes that target the elderly are increasing. According to The Wall Street Journal, "People 60 years and older made up 26% of all fraud complaints tracked by the Federal Trade Commission in 2012, the highest of any age group. In 2008, the level was just 10%, the lowest of any adult age group." (See, Financial Scammers Increasingly Target Elderly Americans, by E.S. Browning, Dec. 23, 2013.) Investigators estimate that only 10 percent of such frauds are reported, according to the article.

This underreporting of financial crimes against the elderly makes it difficult to get reliable statistics. It's possible that the aggregated financial impact on elderly victims — and society in general — will get much worse before a comprehensive national research and intervention response is entrenched.

Much of current popular and professional discussion on financial fraud that targets the elderly focuses on perpetrators outside victims' social nexus — shady investment promoters, faux home-improvement crooks, telemarketing scammers, identity thieves — who have built actual businesses and use the elderly as a conveniently vulnerable victim pool.

However, within this matrix there's another growing class of criminals: relatives of the elderly who steal from their own vulnerable family members under the guise of assisting them in their midnight years. And it's highly prevalent. According to a Consumer Report PDF, "Steven Peck, an elder-law attorney in Van Nuys, Calif., estimates that 75 percent of elder abuse is done by someone in the immediate family. …"

This two-part article will look at intra-familial elderly financial fraud, which is highly challenging to combat. In part one, we'll look at the growing incidences of this type of fraud. We'll use The Fraud Triangle to look at the similarities of these fraudsters to traditional occupational fraudsters. In part two, we'll look at actual criminal case summaries that demonstrate this category of fraud.

The two parts will outline these fraudsters' patterns of behavior and the difficulties of identifying, investigating and prosecuting crimes within families.

ELDERLY FINANCIAL FRAUD AND THE FRAUD TRIANGLE

Family members often have to assist their aging grandparents, parents, aunts and uncles as they become less able to take care of themselves. Frequently, these helpmates need access to their assets to assist effectively. They need to pay the elderly's bills, execute decisions on the disposition of real and personal property, manage their assets, and help make or implement medical decisions.

Frequently, helpmates are placed onto the elderly's financial accounts — and real property titles — as joint owners specifically so they can manage the elderly's financial matters both small and large. And very often, a helpmate is appointed as an attorney-in-fact through a power-of-attorney instrument that gives him or her specific responsibilities and capacities regarding the elderly's assets. At this point, a helpmate often is given direct and legal access to an elderly person's property and credit, and the ability to steal is remarkably amplified. The Fraud Triangle now comes into play.

Donald Cressey's Fraud Triangle teaches us that there are three interrelated elements that enable someone to commit fraud:

  1. Perceived pressure to commit and conceal the dishonest act.
  2. Perceived opportunity to commit the crime without being caught.
  3. Some way to rationalize the fraud as not being consistent with one's values.

(Excerpted and adapted from the 2014 ACFE Fraud Examiners Manual, 4.240, 4.247, copyright 2014.)

Though Cressey developed The Fraud Triangle within the context of occupational fraud — to represent the embezzler, the cash-register skimmer, the insurance scammer, the bid rigger — it also perfectly captures the framework of the crooked family member who now has access to the cookie jar containing the elderly's assets.

PERCEIVED OPPORTUNITY

Familial relationships and kinship bonds create a perceived opportunity to commit fraud. There are often feelings of trust and affection not just between the helpmate and the elderly but also between the helpmate and other family members. Relatives are just grateful for the helpmate's altruism and relieved to avoid a familial burden.

Helpmates have face-to-face access to the elderly that enables them to maintain and control emotional and practical relationships. Sadly, victims are increasingly vulnerable — physically, emotionally and mentally. They've become dependent on helpmates. A helpmate also realizes that he or she possesses the key to becoming the power of attorney or could at least be added to the elderly's accounts. The helpmate has spotted an opportunity to commit fraud.

PERCEIVED PRESSURE

There are self-perceived, non-shareable needs infect both the occupational fraudster and the family helper:

  • Habitually living beyond one's means.
  • A lackadaisical attitude toward credit.
  • A sudden, unexpected financial burden, such as a medical bill or a property repair.
  • Substance abuse or addiction problems.
  • Gambling habits.
  • A fundamentally corrupt moral character.

The list is as long as the number of fraudsters.

An example is the case of a sporadically employed, alcoholic, gambling niece whose elderly aunt needs help managing her daily affairs. The niece agrees to help her aunt manage her finances, and is placed on the aunt's bank accounts as a joint owner. This enables her to write checks to pay her aunt's bills, and she becomes the agent of the aunt's power of attorney.

Soon, the niece's trips to the casino triple, and she habitually withdraws cash there several times per trip. She also uses her access to her aunt's accounts to pay her own bills. The niece's perceived pressures here are clear: no steady income of her own and alcohol and gambling habits that caused her to live for the next drink or slot machine. And because it's her aunt's money, she doesn't feel like she's stealing. It's just so easy.

RATIONALIZATION

The intra-familial fraudster shares much with the occupational fraudster. He justifies himself before he commits his crimes but abandons his justification after he begins his dirty deeds — the unconsciousness of habit takes over where rationalization leaves off.

The nuances of the intra-familial fraudster's rationalization are most often rooted within the family: "Mom would have given me this money anyway." "Uncle Pete was a real jerk to me when I was a kid and he owes me this." "Dad won't miss this money because he has more than enough already and I need it." "It's not that much and it's just for a little while." "This is just to hold me over until next month." And, most frequently, "I'm going to inherit this money anyway, so why wait?"

Familial fraudsters often, and far too ghoulishly, ineffably expect that the victims will die before the money runs out. Or, even if the money does run out, some magical "someone" (often taxpayers in the form of public assistance) will step in and take over the financial costs of the victim's needs.

THE PERPETRATOR'S NEXT STEP

We have a needy elderly. And we have a family member subject to the temptations of easy money. They've connected, and the elderly trustingly gives the helpmate a power of attorney to perform tasks for the elderly principal's benefit. The helpmate successfully has gained access to the accounts. Now what?

All hell breaks loose.

The stage has been set. In part two, we'll look at these fraudsters' behavior patterns by outlining various criminal cases charged by one prosecuting authority's specialized team.

Annette Simmons-Brown, CFE, is a senior paralegal in the Hennepin County Attorney's Office in Minneapolis, Minnesota.



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