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Home > Blog > Elder Investment Fraud: A Booming Business for Scam Artists

Elder Investment Fraud: A Booming Business for Scam Artists

It’s become an increasingly common crime: Elder investment fraud. Every day, there are more stories about elderly individuals – many suffering from dementia – who have been taken advantage of financially by an unscrupulous family member, stranger, friend, or even an investment adviser.

Fortunately, more attention is being paid to the issue of elder investment fraud. After a recent fact-finding initiative spearheaded by the Consumer Financial Protection Bureau (CFPB) last year, the non-profit Investor Protection Trust produced a survey about elder exploitation. Among the report’s findings: About 20% of Americans 65 years of age and older have been the victim of a financial swindle.

Criminals often target senior citizens because they manage a significant percentage of the nation’s liquid assets. They also are more likely to be vulnerable to fraud and deception because of age-related medical-conditions such as dementia, memory loss or Alzheimer’s disease. In many cases, the assets stolen from victims of elder fraud represent the individual’s life’s savings.

The scam artists behind these schemes and swindles often pose as “friends,” gaining the elderly victim’s trust. The perpetrators may be strangers or have a relationship with their targeted victim. The intent, however, is the same: To scam the intended victim out of his or her money.

Scammers who target the elderly can be difficult to detect. That’s because many of these fraudsters sound knowledgeable about the bogus product, scam or investment they are touting.  Moreover, they often have official-looking documents about the so-called investment, as well as information regarding the supposed professional credentials they possess.

Examples of common elder fraud schemes and investment scams include the following:

  • Telemarketing or mail fraud. Every year, thousands of people lose money to telemarketing scams – from a few dollars to their life savings.  Fraudulent telemarketers are good at what they do. According to the Federal Trade Commission, dishonest telemarketers make an estimated $40 billion each year off of their victims. In many cases, scammers who operate by phone don’t want to give victims time to think about their pitch; their goal is just to get you to say “yes” to whatever they’re selling. Other unscrupulous telemarketers may ask for more personal information, such as checking and credit card numbers. Never provide this information via the telephone.
  • Charity scams. Older Americans are especially generous when it comes to helping someone in need. And that generosity is exactly what appeals to scammers who call on unsuspecting consumers and ask for a donation or credit card information in order to help victims of recent natural disasters or tragedies. Case in point:  Type in “Boston Marathon Bombings,” and you’ll see a myriad of Web site pages appear. Some of these pages are legitimate; others may not be. Following the Boston Marathon tragedy, the Massachusetts Attorney General warned the public not to give into emotional appeals without first checking the charity in question and ensuring that any Web site visited actually belongs to a legitimate, established and registered charity.
  • Redemption/strawman/bond fraud. Perpetrators of this fraud typically claim that United States Government or the Treasury Department holds a bond on every U.S. citizen and that  by submitting the proper paperwork, you can access to these “U.S. Treasury Direct Accounts.” Individuals promoting this scam frequently cite various discredited legal theories and may refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and Web sites will often charge large fees for “kits” that teach individuals how to perpetrate this scheme. They will often imply that others have had great success in discharging debt and purchasing merchandise such as cars and homes. Failures to implement the scheme successfully are attributed to individuals not following instructions in a specific order or not filing paperwork at correct times. According to the FBI, this scheme predominately uses fraudulent financial documents that appear to be legitimate. These documents are frequently referred to as “bills of exchange,” “promissory bonds,” “indemnity bonds,” “offset bonds,” “sight drafts,” or “comptrollers warrants.” In addition, other official documents are used outside of their intended purpose, like IRS forms 1099, 1099-OID, and 8300. This scheme frequently intermingles legal and pseudo legal terminology in order to appear lawful.

Part II of our blog features more scams and schemes targeting the elderly, plus how to avoid these crimes and what to do if you or loved one becomes a victim.

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