As baby boomers age, they often accumulate a wealth of financial assets through inheritances or a lifetime of saving for their retirement years. For financial perpetrators, these facts make individuals 65 and older a prime target for financial fraud and abuse.
Robert Govenat knows this all too well. In November 2007, longtime friend and financial planner Algird Norkus told Govenat about an alternative investment for “select people.” Norkus promised that the investment would keep Govenat’s principal safe, while paying 13.5% in annual interest, according to an Aug. 12 story by the Chicago Tribune.
Fearful of what was happening in the financial markets at the time, Govenat agreed to invest with Norkus. That decision would eventually cost Govenat nearly all of his life savings: $225,000. To make matters even worse, Govenat introduced his mother to Norkus and into what ultimately turned out to be a Ponzi scheme. She lost more than $200,000 in the scam.
Norkus pleaded guilty to one count of mail fraud. In March, he began serving 63 months in prison. He also was ordered to pay $4.6 million in restitution to nearly 70 victims, many of them elderly.
Govenat and his mother are just two of thousands of seniors who find themselves the victims of financial exploitation in the United States. In 2011, the state of Illinois, where Govenat and his mother lived, received 6,205 reports of suspected financial abuse and exploitation of senior citizens. The numbers have increased in recent years and are up 14% from 2007. Financial exploitation accounts for nearly 60% of reported abuse cases against older adults.
To combat the problem, law enforcement and state securities regulators are ramping up their efforts to protect seniors. The Department of Health and Human Services recently announced a $5.5 million grant that will be distributed to states for elder abuse prevention. Some states, including Illinois, are enacting new laws aimed at providing better protection of the elderly from financial abuse and fraud. Other states like Maine are holding workshops and seminars to give tips and information to seniors and others on spotting fraud and exploitation.