Understanding Elder Financial Abuse in California

What is Elder Financial Abuse?

Elder financial abuse arises when a senior citizen suffers financial exploitation, the retention of funds against the will of the victim, or the wrongful appropriation of an elderly person’s funds, while in a position of trust with such person. Financial abuse of the elderly occurs more often than one might think. Approximately 90% of elder financial exploitation is committed by family members, caregivers, friends, acquaintances and/ or confidence persons.
The prevalence of elder abuse may be higher than many would like to believe. Conflicting estimates put the occurrence of elder financial abuse at anywhere between 1% to 10% (and some estimates are even higher). A study conducted in 2009 by MetLife found losses due to elder financial abuse to exceed $2.6 billion dollars. The current global economic downturn has caused a serious rise in elder financial abuse cases.
According to the U.S. Department of Health and Human Services , "The elderly are particularly vulnerable to financial abuse and exploitation due to diminished physical or cognitive capacity that limits the ability to manage financial affairs, or to protect oneself from fraud. In some cases, older adult victims are disengaged from their finances, put their trust in others, or are reluctant to report abuse due to shame, fear of losing financial resources or elderly-only housing, or fear of losing one’s independence." Elder financial abuse can be particularly complicated and disturbing because, it often involves family members or other loved ones as the perpetrator.

California State Laws Against Elder Financial Abuse

In addition to common law remedies for elder abuse, the California legislature has enacted three statutes that provide further remedies for elder abuse: Elder Abuse and Dependent Adult Civil Protection Act, the Assisted Persons with Developmental Disabilities Assistance Plan Act, and the Omnibus Adult Protective Services Act. The Elder Abuse and Dependent Adult Civil Protection Act (EADACPA) is a broadly construed statute that protects elder and dependent adults from abuse and neglect. It allows for recovery when there is evidence that the elder or dependent adult suffered abuse; the elder or dependent adult is harmed as the result of financial abuse, neglect or deprivation by a caregiver; or the defendant knew or should have known that he or she was handling property for someone who was substantially likely to be abused, and failed to take reasonable steps in protecting the property. The EADACPA creates a statutory cause of action for abuse resulting in harm, pain, distress, or mental suffering if "the conduct was done with recklessness, oppression, fraud, or malice." The statute also extends special rules for attorneys’ fees based on the situation and the amount of the recovery.

Indicators of Elder Financial Abuse

The signs of elder financial abuse can be both subtle and obvious. With the recent advances in technology, many of the commonly used methods of stealing from the elderly have evolved. However the same indicators are often present whether it was $50,000 emptied from a single bank account, or a series of smaller amounts taken from numerous accounts.
Common Signs of Elder Financial Abuse
If relatives or caregivers observe sudden changes in financial circumstances that cannot be explained they should ask questions. For example, "why is she suddenly giving $1,000 per month to a complete stranger?" Or "dad suddenly has 3 ATM cards on him, why?" In California, you can call for a welfare check at the police department and they can send out someone to get a statement. People are hesitant to do this as they feel it will strain the relationship with the elderly person. However, it is important to understand that sometimes the accounts are not joint so the elderly person is not a signer, and the bank will not speak with the adult child who may be privy to the elder’s finances.
All too often perpetrators will write checks to "cash" or "bearer" making them by law negotiable. Most banks will cash these without questioning if the witness to the elder’s signature is over 18, understands what he or she is doing, and is not under duress. If the witnesses were 16, or somehow coerced to sign, the bank has no obligation when the true owner of the account realizes what has happened.
An example of financial abuse of an elder client in California. The perpetrator opened over 50 certificate of deposits in the elderly client’s name. While the elderly client was a joint account holder, she did not understand what certificates of deposits were, how they differ from your ordinary checking and savings account. The perpetrator aggressively marketed the product, making sure to tell the elderly client she was getting a great return. Without advice of an attorney or financial advisor the CD’s were co-mingled and sold as "joint accounts" allowing the perpetrator to take most of the money when it matured. After $800,000 had been deposited without notice, we were able to stop the pre-mature cashing of the CD’s based upon undue influence and lack of capacity. By then nearly $300,000 had been lost.

The Legal Ways to Seek Reparation

Legal interventions, such as conservatorship, may be sought in the civil courts. A court-appointed conservator may take over financial management, until either the conservatorship is terminated, or the older adult’s health and capacity improve enough to allow for a return to independent living.
Victims and their families may also report elder financial abuse to the California Department of Health and Human Services, which makes referrals to law enforcement agencies and other government agencies . Many cases of elder financial abuse are tried as Class D felonies, to punish those who exploit older adults for their financial gain.
Victims of neglect may earn the right to financial compensation for their damages under California’s Elder Abuse Law. (W&I §§ 15600-15675). This law seeks to enhance the penal code and provide additional protection from elder abuse. Victims may receive compensation for their injuries, but they must wait until criminal charges have been filed against the offender.

Prevention and Helpful Resources

In California, there are a variety of preventive measures that can be taken to ensure the financial protection of elderly individuals. A proactive approach to preventing financial elder abuse includes understanding the types of situations that may arise, seeking legal advice, and submitting voluntary reports of suspected abuse to the proper authorities.
To prevent financial elder abuse, the best strategy is simple: be aware of the possibilities. Common financial abuse scenarios include: impoverishing an elder for the benefit of someone who feigns a close relationship with them; creating an undue influence, either directly or through coercive methods, over an elder so that they make financial decisions benefiting others; and deception and fraud to unlawfully steal an elder’s property or money. By being aware of these practices, you can be more vigilant about protecting the elderly by closely monitoring finances to ensure that the elderly person is fully informed and understands the financial transactions being made.
Be aware that the law provides a mechanism to submit voluntary reports of suspected elder abuse to the proper authorities. You can also assert a Civil No Contact Order, which may keep the perpetrator away from the victim without filing a criminal complaint.
California also has several resources that can assist you in spotting financial elder abuse. The Elder Abuse Prevention Program is a State Department program designed to prevent elder financial abuse and to ensure the proper distribution of government resources. The California Department of Justice provides a website for local information, resources, publications, and assistance to help recognize, report, and combat elder financial abuse.
Another vital resource in California is the California Ombudsman Association. With more than 70 California Ombudsman cities listed on its website, the association is a statewide network of official government-sponsored local units providing services for the elderly that includes a senior financial website.
Senior Sites has a page dedicated to Helping the Elderly with Finances. The page lists warning signs to help protect elderly loved ones from scams and other dangers to their financial well-being. It also includes several links to useful sites. The resources include guides on how people can help elderly loved ones, websites that track senior financial information, state-specific websites, and local communities that help elderly citizens with finances.

Conclusion and How You Can Help

As we have seen, elder financial abuse is a growing and dangerous problem in California. It is all too easy to defraud the elderly, as many elderly persons are isolated from their friends and family, are less likely to be familiar with current technology, and also simply believe the best of most other people, including people they do not know well.
It is up to all Californians to help prevent and detect elder financial abuse. When you see a person or company engaged in conduct that might be considered abuse or undue influence , pass that information to the local authorities. Insist that the company or person you know and love take steps to keep him or herself safe. Where elder financial abuse occurs, it is the elderly that suffers the most. Suing those who commit financial abuse will not stop the behavior. The best deterrent is increasing awareness of the risks of elder financial abuse. Perhaps then, elder abuse attorneys will not be needed, because consumers will stop falling prey to financial predators.