His dad is rich, and dying. He's facing huge credit card bills and unemployment. His inheritance is just sitting there. And sitting in the desk drawer is a power of attorney document Dad signed for him years ago, giving him the right to do anything he wants with the father's money. The temptation is too powerful, and the crime is too easy, to stop.
The story plays out thousands — perhaps hundreds of thousands of times — every year across the country, a scourge of old age.
America's vulnerable, graying population, and the concentration of wealth among older adults, has created a massive opportunity for fraud. Hard statistics are not available, but experts suspect that perhaps half a million elderly adults are ripped off by family members, lawyers and accountants every year, potentially taking $2.6 billion from infirm older Americans. The crime is known as elder financial abuse. Financial expert and consumer advocate John Wasik has called it "the crime of the 21st century."
"This is something that's rarely explored because the victims are rarely in a position to report the abuse," said Wasik, author of 13 books on personal finance issues.
This story will discuss the warning signs of elder theft and offer tips on what to do if you suspect a family member or friend is suffering financial abuse.
The tool used by the criminals who steal from the elderly is a legal document called a "power of attorney," which enables a designated adult to make financial decisions on behalf of another. Because power of attorney decisions are rarely reviewed, the document has been called a "license to steal." In legal circles, the crime is called "power of attorney abuse."
High-profile cases of elder financial abuse have helped shine a light on this age-old problem. In 2009, Brooke Astor's son and attorney were convicted of stealing $10 million from the socialite's $100 million fortune.
But Astor's estate is dwarfed by that of 104-year-old Huguette Clark, a reclusive heiress worth half a billion dollars who's been the subject of several msnbc.com stories by my colleague Bill Dedman. He's discovered suspicious transactions involving priceless paintings, musical instruments and a New York City apartment, and his reporting has led to a criminal investigation headed by the Manhattan district attorney's office. Thanks to inquiries from more than 100 msnbc.com readers, the New York office of Adult Protective Services is looking into the case. Many writers were prompted by their own personal encounters with elder theft.
Authorities are investigating potential theft of heiress Huguette Clark's fortune in her old age by trusted advisors, but elder financial abuse can happen to anyone.
That's the first and most important tip, experts say: Get involved. Report the crime. Many criminals get away with siphoning off cash because other relatives have detached from the older adult's life, assuming someone else is doing their job and taking care of end-of-life details.
"Keeping involved, active and in touch with the older person, staying aware of how they are doing and asking a lot of questions, that's very important for prevention and early intervention," said Sharon Merriman-Nai, co-manager of the National Center on Elder Abuse. "It can take next to no time for someone's assets to be depleted, so the quicker you can act, the better."
That means calling your state's Adult Protective Services officer, as msnbc.com readers did in response to Clark's story. You can find a state-by-state list here.
One serious challenge for family members who want to step in and help out: Frequently, local police will interpret elder theft as a civil, rather than a criminal, matter. That's why it's important to report suspicions to the Adult Protective Services office, which knows how to handle such incidents.
Reporting the crime is also critical because financial abuse is often accompanied by other forms of abuse, Merriman-Nai said.
"Physical abuse may be present, too. And if there's financial abuse, there's almost certainly some kind of psychological abuse going on," she said. "Quite often, they are being physically intimidated." In extreme cases, victims won't be able to afford the health care they need because their funds are depleted.
Calling to accuse a relative or a formerly trusted advisor is a big step, however, and one many family members are reluctant to make. It's also possible, Merriman-Nai said, that disputes or rivalries might cause one family member to misinterpret the actions of another. So it's important to ask questions and, if possible, obtain paperwork detailing alleged abuse, such as bank statements.
Wasik said: "You really kind of need to have something in hand to show this stuff is going on. It's not easy to prove without documents."
Garage sales hide theft
But elder financial abuse, particularly when committed by professional financial advisers, can be hard to spot and even harder to prove, said Jerry Walker, a Seattle-based lawyer who specializes in estate planning.
"There's all sorts of ways to liquidate items and have no record of it," Walker said. "I've seen big garage sales, for example, where a lot of property is sold and there are no receipts ... or they form a company and funnel money to the company. They can change beneficiaries or even hire relatives to do easy jobs. There's lots of crazy ways to get money out of an estate."
Elder financial abuse can be brutal and obvious, as in the Astor case. Or it can be much more subtle, Wasik said. In many cases, the issue is greed brought on by a sense of entitlement.
"Some cases are really egregious, such as a wayward son or daughter who comes into the picture and cleans out the accounts. But there are any number of scenarios," he said. "Other times, there are children who know the money is there, and the temptation for some is too great. A lot of people who lost their homes or are going to lose their homes have no financial assets at all. They are technically impoverished, but they see Mom and Dad sitting on a nest egg and they say, 'Hey, they're going to give it to me anyway, so why not use the money now?' "
Some cases are even more sinister, Merriman-Nai said.
"It's called 'undue influence,' and it's far more sophisticated, a very well-plotted-out, strategy to separate older individuals from their assets," she said. "It begins with someone gaining the trust of an elderly person, then separating them from their support network, isolating them from other people. Then they are able to exert tremendous influence on the elderly person."
That influence can extend all the way to bank teller windows. Elder financial thieves can have such hypnotic power over their victims that they transport the elderly person to the bank and stand nearby while he or she withdraws thousands of dollars in cash — and then hands the money over.
Most cases aren't reported
In fact, a report by MetLife Mature Market published in 2009 found that bank teller training is among the more effective ways to spot and stop elder abuse. In a test, tellers correctly identified suspicious transactions 7 out of 10 times, the report said.
"All by themselves, alert and well-trained bank tellers could have significant impact on financial abuse, especially if their numbers were to grow," the report found. By extrapolating from newspaper accounts of elder abuse, the report's writers estimated that $2.6 billion is stolen from older Americans every year and that only 1 in 14 cases are reported.
There is no national accounting of abuse cases, said Merriman-Nai, and that has blunted efforts to draw attention to the problem. But a paper published by AARP in 2008 (PDF) found that Adult Protective Services agents around the country report an "explosion of financial exploitation cases," particularly those involving power of attorney abuse.
The AARP report concludes that there are three main reasons that power of attorney abuse is so rampant: Receivers of the power, sometimes called the "attorney in fact," have exceeding broad powers. There is a nearly complete lack of monitoring of the attorney in fact. And there are unclear standards for dealing with those who abuse the power.
But perhaps most discouraging is this conclusion from the report:
Power of attorney "abuse may not be detectable until the principal has died."
One bright spot for those concerned about elder abuse: Tucked into the omnibus health care bill Congress passed earlier this year was the Elder Justice Act, which set aside nearly $800 million to expand efforts to investigate elder financial theft during the next four years. Advocates had been attempting to get the funding from Congress in the form of the Elder Justice Act for years.
Still, the fast-growing elderly population has Merriman-Nai concerned about the future.
"The problem is probably going to get worse before it gets better, the way the population is aging," she said. "But one hope we have is that the Baby Boomers are a generation of activists, and they will not go quietly. If we have an opportunity to put this issue on the map, it's now. The resources this generation can bring to resolve these problems can have quite an impact."
IF YOU SUSPECT ABUSE
As financial abuse can take many forms, it can leave many hints. The clearest: If an elderly friend or family member is not getting the medical treatment you think he or she should be able to afford.
Withdrawal or depression are also warning signs, Merriman-Nai said. If the older person is suddenly reluctant to talk about finances, that could also be a sign. But even a gradual withdrawal from normal conversations might be a hint that something is wrong — or that someone is trying to isolate the person from people who might spot the crime.
Unexpected dramatic financial transactions, such as a surprising sale of property or a large cash transaction, should also raise red flags.
HOW TO PREVENT ABUSE
One key to prevention is to stay involved in the elderly person's life well before there is a need to invoke a power of attorney. Maintaining a good relationship — including frank discussions of financial matters — will create a bond of trust that could be all the difference later in life when questions arise about finances.
Also, it's critical to make plans early on, when the elderly person is capable of being fully involved in the decision-making process.
"It's when you aren't taking the bull by the horns that things get out of control," Wasik said.
In many cases, the seeds for abuse are sown when an older person — trying to do the right thing, and preparing for the inevitable — signs what's called a "springing" power of attorney. Such a document takes force only when some trigger is reached, such as confirmation from a doctor that the individual is incapable of making his or her own financial decisions. The power of attorney might not spring into force for five or 10 years. Circumstances, as well as trust levels, can change a lot during that stretch of time.
While it makes sense to give a family member that kind of power over your finances, many older adults trust their accountants or lawyers more than their children. But in either case, Walker recommends not giving too much power to one person.
"You can split power of attorney up among two or three people, so they have to agree on decisions," he said. "That can provide some checks and balances. Of course, they might disagree, and you have to have a method for resolving deadlocks."
Wasik recommends something similar — give one family member the power of attorney, but require that person to provide regular reports to a council of other family members where financial decisions must be justified.
Walker strongly recommends against picking an attorney or accountant to receive the power of attorney.
"They are the ones that know how to play the game and work the rules," he said.
Ultimately, Walker said he wished that attorneys and accountants who exercised power of attorney were responsible to some higher authority, such as a social agency, in order to provide checks and balances.
"If you are an attorney, you are not accountable to anyone," he said. "The only way I can see it working is if you have to prepare an accounting and justify it to someone."
A court-appointed conservatorship is a more expensive option, but it does provide a facility for court review and other safeguards.
Finally, if you suspect elder financial abuse but aren't sure, or you are reluctant to involve law enforcement, Merriman-Nai recommends contacting an elder law attorney. The National Academy of Elder Law Attorneys is one place to look for such a specialist.