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The Final Indignity
By Susanna Schrobsdorff, Newsweek
July 19, 2005
Kerry Sprague didn't have a clue that her mother-in-law, Eleanor Sprague, was giving thousands of dollars to phony charities. Then one day, Eleanor, who was 82, told Kerry that she was upset because a charity was asking her to leave big donations under her doormat. "That was a red flag," explains Kerry. "We checked up on her a lot, but it wasn't until she started complaining that we knew something was wrong."
Eleanor had been living independently in a three-bedroom ranch-style house in Lafayette, Colo., five minutes away from her son and daughter-in-law. A former bookkeeper, she was good with money, but sometime during the summer of 2003, vascular dementia impaired her judgment and she was taken advantage of by scam artists who conned her out of $24,000, according to her daughter-in-law.
"They just happened to get her at the right time," says Kerry, who says she verified her fears by checking the phone numbers on the fake receipts from phony charities. "We had mom over to dinner every week, you would think we would have seen the signs of the dementia, but we didn't," she adds.
There are millions of older victims like Eleanor Sprague. The nonprofit National Center on Elder Abuse estimates that there are 5 million cases of elder financial exploitation annually, with most going unreported by seniors either too embarrassed about being duped or unaware the theft is happening.
With an asset-rich bubble of baby boomers heading into their golden years, advocates are preparing for what could be the perfect setup for elder fraud on a massive scale.
By 2030, the number of elderly is expected to nearly double to 71.5 million people--a whopping 20 percent of the total U.S. population, according to the U.S. Administration on Aging. Many of these aging boomers have money.
Currently people over 50 control 70 percent of the nation's wealth. In their later, vulnerable years, they will be obvious targets for corrupt telemarketers, lottery scammers and worse yet, unethical relatives and friends.
"There is going to be a criminal explosion in the next 10 years in this demographic," says Paul Greenwood, a deputy district attorney in San Diego and an expert on elder fraud. The ominous statistics are worrying lawmakers enough that new measures are being proposed to track and prevent financial scams against seniors.
At the moment, there is a patchwork of state and federal legislation and very little national data. Even the definition of "elderly" varies from state to state, and many law-enforcement agencies, including the FBI, don't have statistics on financial fraud victims' ages.
"We just don't have these numbers," says FBI crime-victim advocate Debbie Deem. "But anyone who is working crimes like telemarketing fraud or investment fraud would tell you that these crimes impact [the elderly]. I can mention only two telemarketing victims that were not elderly in my years of investigating thousands of cases. That's just who they target."
According to the FBI, telemarketing fraud across all age groups costs the nation about $40 billion annually.
The trend has prompted Sens. Orrin Hatch, Republican of Utah, and Blanche Lincoln, Democrat of Arkansas, to sponsor the Elder Justice Act for introduction in the next Congress. The act proposes elevating elder crime (financial, physical and emotional) to the same importance nationally as crimes against women and children.
"I don't think Americans talk about elder abuse or are really aware that these egregious acts are occurring every day to our senior citizens," says Senator Hatch. "This bill will raise that awareness, which is almost half the battle right there."
Those working for passage of the bill hope that it will result in better tracking of the problem on a federal level, better funding for overburdened adult protective services units in each state, as well as training for law enforcement so that the crimes against the elderly can be better recognized and prosecuted.
And, as advocates point out, even if the federal government doesn't come up with funds to prevent elder financial exploitation, we are likely to be paying anyway since seniors who've been bankrupted often become dependent on government programs.
Some states faced with large elderly populations are taking action now. This month, financial institutions, prosecutors and elder advocates in California, which is home to the nation's largest elderly population, reached agreement on a bill that would require employees in financial institutions to report suspicions of exploitation of the elderly and dependent adults.
Other professions like clergy and even animal-control officers are already required to report suspicions of elder abuse under threat of criminal penalties. The compromise requires the bank employee to make the report but holds the institution, not the individual employee, subject to civil fines (rather than criminal) for failing to report.
Fewer than half of all states have passed laws requiring this kind of reporting by financial institutions.
Proponents hope for a vote on the banking bill in September. "Sometimes the monthly trip to the bank is the only social contact the elderly have," says Frank Mecca, executive director of the County Welfare Directors Association, which represents human-services directors in California's 58 counties. "Banks can provide early warning that a senior is being victimized. Once they've been fleeced it's almost impossible to get the money back."
Mecca's group says that reports of elderly financial abuse in California have increased by 47 percent over the last five years.
Besides legislative efforts, California is using the judicial system in new ways to pursue those who defraud elders.
In a groundbreaking case, Melissa McKowan, a deputy district attorney in San Mateo County, won a larceny conviction in August 2004 against Ronald Brock who stole approximately $661,000 from a 76-year-old man who was suffering from cognitive impairment. McKowan convinced the court that Brock knew that the elderly man lacked the capacity to resist Brock's request for the money. She charged that Brock used "undue influence," a definition usually used in civil court, to defraud a vulnerable citizen.
"In civil court when you have undue influence, you simply rescind the transaction and return everyone to their original positions, but what we're saying is that's not enough," McKowan explains. "We're saying that the impairment was so obvious that it is larceny."
Brock's lawyers are in the process of preparing an appeal. If the conviction holds, it may open the door for other cases where law enforcement might want to challenge questionable gifts by an impaired elderly person to an acquaintance, relative or friend. The National Center on Elder Abuse reports that "non-stranger" exploitation makes up a majority of elder fraud cases.
One of the problems for prosecutors is that elderly victims often die or lose the capacity to testify before a case gets to trial. To help elderly witnesses, San Diego Deputy District Attorney Paul Greenwood provides wheelchairs, walkers, oxygen machines, hearing devices and specially equipped vans.
"I love putting a 95-year-old witness on," he says. "If they are forgetful, the jury sees their vulnerability." Greenwood says enforcement can't keep up with the cases they're seeing. "I think the crooks are winning. We need the Elder Justice Act desperately." Greenwood is also pressing for mandatory background checks of all caregivers for the elderly.
No one knows how difficult it is to prosecute these crimes better than the family of Eleanor Sprague. With the help of AARP ElderWatch, a Colorado group that coordinates services for elder abuse victims, Kerry Sprague organized a sting operation whereby the alleged charity scammers came to her mother-in-law's house and were arrested by waiting detectives.
But charges of theft originally levied against the two men, Rhett Cline and Jay Wyss, in 2003 were dismissed in 2004 pending further investigation by the Boulder County district attorney's office.
"This is a very active investigation," says Timothy Johnson, deputy district attorney. "But these are not simple cases like someone goes into a store and steals money out of a register. It takes a tremendous amount of time to put together evidence like bank records."
Kerry says that immediately after the scam, the family had to make the heartbreaking decision to get power of attorney so they could restrict access to Eleanor's bank accounts. "Everything snowballed after that," remembers Kerry. "She was very angry when we had to take her checking account away. The whole thing was humiliating for her, but she spoke to [investigators] so that no one else would have to go through this." Eleanor has since died.
The FBI's Deem expects to see an increase in these cases. "The opportunities for fraud are so much more than 20 years ago. Now [criminals] can get you so many ways. It's not like the old days when they used to go by with their wagons of snake oil. Now they can find you through the mail or through their [phone] databases or through the Internet."
Fraudulent telemarketers may spend months cultivating their victims with daily phone calls. Some even send birthday cards. So, when the betrayal comes, it's all the more wrenching.
Deem says that many of the elderly victims she deals with get extremely depressed. "This can destroy them emotionally as well as financially," she says. "Some tell me they want to commit suicide. It's such an insidious evil to drain them of everything in their last years. I call it the final indignity."
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