News

Don't be fleeced by frauds

It happens a lot: A smooth-talking con artist tries to pull the wool over someone's eyes. Outsmart the swindlers.

By Tom Valeo, Special to the Times
Published November 27, 2007

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She was so nice. All she needed was a little help so she could take care of her youngsters.

So Helen and her husband, Bill, decided to lend her money. She promised to pay it back with interest. Then they lent her more. They even took out a mortgage on their Pasco County home and gave her that money, too.

"We paid cash for our house; now we have a mortgage, a $500-a-month mortgage," Helen recalled recently. "Anyway, that's the last money she got from us."

Helen and Bill, both 89, are among a growing number of elderly victims of fraud. Helen and Bill even asked that their full names not be used here, lest they be targeted again.

Such victims lose thousands, sometimes their life savings, to deceptive investment advisers, dishonest contractors, identity thieves and other con artists.

People of any age can fall prey to deception, but the elderly seem particularly vulnerable. People 60 and older make up about 15 percent of the U.S. population, but they account for about 30 percent of fraud victims, according to Consumer Action, an advocacy group.

That means there are about 5-million elderly victims a year.

And that estimate is probably low, because many seniors are reluctant to admit they've been hoodwinked.

"When it happens, they're so embarrassed that they don't want to seek help," said Kathy Cornwell, senior victim advocate for the Area Agency on Aging of Pasco-Pinellas Inc.

"They'll say, 'If I tell my children, they'll think I'm ready for a nursing home.' They get really scared."

Helen and Bill don't have children, but they didn't want anyone to know they had given away what Cornwell estimates was $400,000, so they weren't going to press charges.

"My husband said we were so stupid to give her all that money, we should just forget about it," Helen recounted.

But then they confided in Cornwell, who helped them contact the Pasco County Sheriff's Office, which learned the woman was already in jail in Pinellas County, on another charge.

"Now we've got an investigator, and a lawyer," Helen said.

A place for her family

Helen and Bill got involved with the woman who bilked them after Bill had been in the hospital for surgery. The doctor said he could go home immediately if he let a nurse come by with equipment Bill would need.

The nurse turned out to be the woman who bilked them.

"She was so nice," Helen said. "She told us about her husband, who wasn't very good to her.

"When I walked her out to her car I saw she had her little girl in the car, and I said you should have brought her in.

"When she came back to pick up Bill's equipment she said, 'You've been so nice, I'd like to take you to lunch.' "

At lunch, the nurse revealed an "opportunity" she had to buy property, if only she could get the down payment. Helen and Bill decided to lend her the money.

Later they even bought her the house, so she'd have a place to live with her children.

"My husband was just crazy about her little boys," Helen recalled. "I felt sorry for her, too, because she didn't have a place to live."

Later, the couple dropped by the nurse's house to see how she was doing.

"A young girl came out in a swimsuit," Helen recalled. "She said, 'Oh, she's renting this place to a couple from Sweden.'

"Then (the nurse) sold it."

Exploiting vulnerability

Why are seniors such an easy mark for con artists?

One reason is loneliness.

"They're living alone," said Cornwell of the Area Agency on Aging. "Maybe they've just lost a spouse, or they don't drive, they don't have a lot of contact with others. And suddenly someone is on the phone trying to befriend them. That's how it starts."

In addition, seniors come from a generation of people who are open and trusting.

"They're used to executing a contract with a handshake," said Patty Suarez, vice president of development for the West Central Florida Area Agency on Aging Inc. "They expect you to honor your word. Scam artists understand this."

Senior scams will undoubtedly get worse as the estimated 78-million boomers age. That generation has more than an $8.5-trillion in investable assets, according to Cerulli Associates of Boston, a research company.

And the boomers stand to inherit at least $7-trillion more. Con artists focus on seniors in part because that's where the money is.

Cons get creative

Swindles come in all dimensions. Even officials who think they've seen them all are sometimes surprised.

For example, Terence McElroy, spokesman for the Florida Department of Agriculture and the Department of Consumer Services, is warning people about the "jury" scam.

"An older person gets a phone call from someone who claims to be a circuit court officer," McElroy explained. "They say, 'I thought I'd give you a heads-up because Judge Smith is about to issue an arrest warrant because you failed to appear for jury duty.'

"The person called says, "That's crazy, I never received a jury summons.'

"Then the caller says, 'Well, do you live at this address? Give me your Social Security number and I'll check it out.' It's just a con artist trying to get personal information."

Another popular scam is known as the "free lunch" investment seminar, often held at hotels, restaurants or retirement communities.

One survey found that nearly 80 percent of seniors have received such an invitation, which promises free advice by "experts" on how to gain a secure retirement or leave the maximum amount to heirs.

The Securities and Exchange Commission examined such events held between April 2006 and June 2007 in Florida and six other states. It found that these events invariably turn out to be sales presentations.

In addition, 59 percent of the events were only loosely supervised by the companies that supposedly sponsored them. Half included exaggerated claims, such as "How to receive a 13.3 percent return" and "How $100K can pay $1-million to your heirs."

The SEC added that nearly 25 percent of the sessions made unsuitable recommendations, such as risky investments for people who should follow a conservative strategy.

And 13 percent were so fraudulent that the examiners alerted regulators for possible disciplinary action.

Knowledge is power

How can you protect yourself or someone you care about?

Victims' advocate Cornwell stresses education.

"I do speaking engagements at churches, community centers, nutrition sites," she said. "We try to warn seniors that these things are going on."

Don Ravenna urges seniors to call his office. He is the executive director of Seniors vs. Crime Project, a volunteer organization operated by the office of Florida Attorney General Bill McCollum.

In one case, Ravenna said, an elderly woman had her house painted and called the painter back when the paint on one side of the house peeled. He said he would come back only if she paid him again for the work.

"We called him and said we were from the attorney general's office, and you know all he heard was 'the attorney general's office' and he came out and repainted that side of the house for free. That's the way we work."

Scott Solkoff, a board-certified elder law attorney with offices in Aventura and Boynton Beach, urges older people who have been victims of a scam to keep detailed notes of what took place.

"By the time they actually get to an agency they can complain to, they have forgotten a lot of details, so I tell people to keep very careful notes," Solkoff said.

"Get the names of the people involved, their position with company, their contact information. All of that will help agencies so much."

And if they're not satisfied with the response of the Seniors vs. Crime, or the Division of Consumer Services, or other agencies, there's one more option:

In Florida, a civil settlement can include your lawyer's fees. As Solkoff put it, "You have to pay an attorney, but in some of these cases, (if you win) the attorneys can get paid by the wrongdoer."

Tom Valeo is a freelance writer and frequent contributor to the St. Petersburg Times.

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Protect yourself

For advice, call the SEC's Office of Investor Education and Advocacytoll-free at 1-800-732-0330. To contact Seniors vs. Crime, call toll-free 1-800-203-3099 or go to www.seniorsvscrime.com.

The North American Securities Administrators Association Inc. offers tips to help you avoid becoming the victim of a scam:

- Don't be a "courtesy" victim. Con artists thrive on people too polite to hang up or slam the door.

- Don't judge a book by its cover. Con artists are more likely to look like a charming grandchild than a villain.

- Be wary of strangers touting strange deals. Keep saying "no" until you've had the opportunity to check out the "investment opportunity," the company and the person. Contact Florida's Office of Financial Regulation at (850) 410-9805 or www.flofr.com.

- Always stay in charge of your money. Don't trust anyone who offers to manage your finances for you.

- Watch out for salespeople who prey on your fears. Of course you worry about outliving your savings or losing everything to a catastrophic illness - but beware of anyone who keeps reminding you of these dangers.

- Don't make a tragedy worse with rash financial decisions. If the death or disability of your spouse suddenly puts you in charge of your finances, seek professional advice instead of responding to a solicitation.

- Monitor your investments, ask tough questions, get periodic written reports. Look for hidden fees. Don't let a false sense of friendship prevent you from asking "rude" questions.

- Look for any trouble in retrieving your principal or cashing out profits. If a stockbroker, financial planner or other "professional" stalls when you want to withdraw your principal or profits, beware. Any legitimate restrictions should be explained in advance.

- Don't let embarrassment or fear keep you from reporting suspected fraud. Contactthe Federal Trade Commission at toll-free 1-877-FTC-HELP (877-382-4357) or go towww.ftc.gov.

- Once you've lost money, don't let the con artist "reload" by promising to get it back through a new scheme. Quit immediately.

 

[Last modified November 26, 2007, 16:06:39]