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Elder Investment Fraud

Financial abuse against the elderly is one of the fastest-growing crimes in the United States, with millions of Americans becoming unsuspecting victims every year.

Today in the United States, 40-plus million people are 65 and older. This number is expected to more than double to nearly 90 million by 2050. In the face of the economic downturn, many seniors find themselves with smaller retirement nest eggs than they anticipated, leaving them vulnerable to financial abuse, fraud and high-pressure sales tactics from unscrupulous people or firms.

Elder financial abuse occurs when someone illegally or improperly uses a senior's money, investments or some form of property. The exact number of victims is hard to pinpoint, because the crime often goes unreported. A 2011 study by MetLife estimates that financial losses by victims of elder financial abuse were nearly $3 billion in 2010, a 12% increase from the $2.6 billion estimate in 2008.

In almost all instances, perpetrators of elder financial fraud achieve their goals through deceit, threats, and emotional manipulation, says the MetLife study. Some of these men and women behind these crimes are strangers. Many times, however, the orchestrators of the crime are trusted helpers, caretakers, friends and family members.

Elder financial abuse takes many forms – from wrongfully using an elderly person's funds, to forging his or signature on a checking or brokerage account, signing a contract, or deceiving an elder into handing over various property or assets. One of the most common ways of committing fraud against the elderly is through "free-lunch seminars."

According to the Securities and Exchange Commission (SEC), these gatherings often take place at hotels, restaurants, retirement communities and golf courses. The firms and individuals conducting the seminars, typically provide a free meal, door prizes, free books, and vacation deals to encourage attendance. The real purpose of the meetings, however, is to get attendees' to open new accounts with the sponsoring firm or buy into a certain investment product.

The most common investments discussed at these types of sales seminars include private placements, variable annuities, real estate investment trusts, equity indexed annuities, mutual funds, and reverse mortgages, according to the SEC.

During the holiday season, incidences of elder financial abuse often increase, say experts. The MetLife study found that in reviewing 1,128 articles on elder abuse in general from November 2010 through January 2011, 354 (31%) concerned elder financial abuse.

In a regulatory notice issued last month, the Financial Industry Regulatory Authority (FINRA) reminded brokers and investment firms of their supervisory obligations to elderly clients and, specifically, about using certifications or designations that imply expertise, training or specialty in advising senior investors. The notice also outlines findings from a survey that FINRA conducted with broker/dealers and their use of senior designations.

Remember, anyone can become a victim of elder financial fraud. If you, a loved one or an elderly neighbor or friend suspect financial abuse, contact the authorities immediately. Financial scammers count on the silence of their victims to keep their crime going.


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