Fraud Schemes Bilk Elderly out of Savings

This is the first of a two-part blog on elder fraud. Part two will be posted on Saturday.

CNN Money reported the results of a study last week that senior citizens have been getting swindled out of billions of dollars a year, and the trend is only getting worse.

The majority, or 84%, of experts who deal with financial fraud of elders -- including financial planners, medical professionals and social workers -- have noticed an increase in financial abuses this year, according to a survey released by nonprofit organization Investor Protection Trust.

About 58% of the 762 respondents reported that they encountered investment fraud or financial exploitation of seniors "quite often" or "somewhat often." And 96% of experts said elderly fraud is a serious problem.

Meanwhile, research from insurance provider MetLife has found that Americans over the age of 60 lost about $2.9 billion to financial abuse in 2010 -- up 12% from the $2.6 billion lost in 2008.

About half of that fraud was perpetrated by complete strangers, while family, friends and neighbors accounted for about 34% of financial abuse, according to the report. In many cases, fraudsters stole seniors' Medicare or Medicaid benefits -- resulting in losses of $38 million in 2010.

Childhood actor, Actor Mickey Rooney, now in his 90s, elevated the profile of the problem earlier this year when he won a restraining order against his stepchildren. He claimed they used intimidation to get access to his money and later told Congress how that can happen to a vulnerable senior.

According to the Richard Cordray, director of the Consumer Financial Protection Bureau, "Many seniors have routines, and their predictable patterns make them easier targets for predators. They can be lonely or overly trusting, and we now have many methods by which perfect strangers can communicate with them, often anonymously or posing as someone they are not."

A MetLife Mature Market Institute study also found that elderly women are nearly twice as likely to be victims as men. The majority are between 80 and 89 years old, lived alone and were dependent on some sort of help around the home or with their health care. Caregivers are often in a position where they can easily take advantage of seniors, especially if they have access to their finances, said Cordray.

Most elderly victims of financial abuse don't report fraud because they are either too ashamed, don't realize they are being duped until it's too late to get their money back, or their adult children fail to recognize the problem in time to intervene.

The case of Donna and Jim Parker illustrates how easy it is to scam seniors. The couple ended up on what people in the industry call the "sucker list" perhaps because of donations to some group. Then the scammers proceeded to "reload" them. You've won this multimillion-dollar lottery, they'd say. All you need to do is send us money to cover taxes, and we'll send you your prize.

So on Dec. 8, 2004, Miriam Parker – then 80 – drove herself to the Wal-Mart down the road to send a MoneyGram to Montreal, Quebec.

And so, over a series of calls, Howard Clark – a man with a warm voice who called her "dear" and "sweetheart" – had learned enough personal information about Miriam to convince her that he was the family's ticket to riches.

Other MoneyGrams followed. Then, on Jan. 12, 2005, Miriam sent a Federal Express package to a "Mr. Stewart" on Papineau Street in Montreal. Inside, as instructed, was a magazine with $12,550 in cash sandwiched between its pages.

By May 2005, the Parkers had blown through their savings. They had tapped into their home equity line and had maxed out several credit cards. They were running out of things to give.

Unwittingly, their children had contributed to the problem. When Miriam asked Donna for a $7,000 loan, the daughter thought little of it.

Through most of their marriage, Charles Parker had taken care of the couple's finances. But in 1989, shortly after his retirement, he suffered a heart attack. That was followed by colon cancer. As her husband's health declined, Miriam stepped to the fore.

Faced with mounting debt – and clinging to assurances that a big payday was coming – she was determined to right their financial ship. That's when she became a "money mule." Clark told Miriam that she'd been "hired" by the Canadian sweepstakes company.

On May 5, 2005, a package from Bloomingdale, N.J., containing $8,275 in cash arrived at the Parkers' home. Others followed and in about a week, Miriam Parker would receive and repackage $60,000 in cash for delivery to Mr. Stewart.

Sometimes, there would be two stacks of bills tucked into magazines. The smaller pile was Miriam Parker's "commission."

Howard said she wasn't to tell her children about their dealings. But the kids had already become alarmed by changes in their mother's behavior.

During visits, her son, Jim, noticed that Miriam would race him to the phone, then prevent him from listening to the conversations.

And then there was the need for loans. When Donna asked what for, her parents were evasive.

When the children finally persuaded their mother to get a credit report, the news was jaw-dropping. Their thrifty parents were nearly $200,000 in debt.

The daughter went to the state Attorney General's Elder Fraud Unit. In April 2006, sitting around the family table, the door-bell rang. A FedEx driver handed Jim a crinkly envelope. He knew without opening it what was inside and turned it over to Kirkman, manager of the Elder Fraud Unit in the Attorney General’s office.

When authorities opened the envelope, they found an old issue of Martha Stewart Living magazine. It contained $5,725 in cash from a Visalia, Calif., widow.

Kirkman called a contact at Federal Express, who ordered a stop on deliveries and pickups at the Parker home. But the crooks just switched to United Parcel Service.

And now, in addition to money, they were delivering and picking up car tires and custom rims, and laptop computers worth thousands of dollars — all purchased by other elderly victims.

Ultimately, with the help of the Royal Canadian Mounted Police, a visit was paid to Dave Stewart. The Jamaican native acknowledged accepting numerous packages from the American lady on behalf of a man whom he knew as "Roger." Stewart said he was paid $100 per package. Professing ignorance of any illegal activity, Stewart agreed to cooperate.

Howard, meanwhile, gave Miriam a new address to which she should forward items. On Aug. 17, 2006, laptops valued at more than $7,200 arrived from Hayward, Calif. She sent them to a "Joseph Reid" in Montreal. Parcels kept coming.

In December 2006, the Parker kids persuaded their parents to grant Donna a limited power of attorney. A month later, she accompanied them to the credit union, where they took out a 30-year, $179,000 mortgage on their home.

The scam unraveled when the FBI ran a sting operation on Howard.

In Raleigh, North Carolina, a federal grand jury handed up a 35-count indictment against Clar, whose real name was Clayton Atkinson, and two co-defendants – Dave Stewart and Jamaal McKenzie, aka "Joseph Reid." The three were charged with one count each of conspiracy and interstate transportation of stolen property, seven counts of wire fraud and 26 counts of mail fraud.

In my next blog I will address the issue of what seniors can do if they feel targeted by elder fraud.

Blog posted by Steven Mintz, aka Ethics Sage, on July 3, 2012