Elder Financial Fraud

Elder financial abuse can take many forms, and unfortunately, is also common. An estimated 1 in 10 Americans over 65 have experienced some form of elder abuse. The Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), Consumer Finance Protection Bureau (CFPB) and Commodity Futures Trading Commission (CFTC) have all issued special alerts and other warnings about how elder investors can avoid being victims of investment fraud.

Financial abuse, where someone takes or misuses another person’s money or property for the benefit of someone other than that person, is a common form of elder abuse. While elder abusers are often family members or spouses, FINRA has Rules 3240 and 3241 in place to protect senior investors from predators including some brokers.

FINRA’s Rule 3240 regulates borrowing from or lending to customers. The rule lays out the permissible lending arrangements, notification and approval procedures, and the definition of “immediate family” to govern such activity. Generally, a financial advisor should not be borrowing money from an investor whether for a private investment or a loan.

Rule 3241 came into effect last year. Under the rule, a registered person must decline being named a beneficiary of, or receiving a bequest from, any customer’s estate and must decline being named as an executor, trustee, power of attorney, or similar position for or on behalf of a customer unless the customer is immediate family, or the representative provides written notice to his or her firm and receives written approval prior to the designation or appointment.

If you believe a financial advisor was improperly named as a beneficiary or executor of an estate or otherwise helped someone else take money from a senior or an estate that didn’t belong to them, you may be able to recover the lost money through a securities arbitration claim against the financial advisor, broker-dealer or investment advisory firm.

State of Florida Statute 825.103 is designed to punish perpetrators of “elder financial fraud” and protect the exploitation of elderly persons. A financial advisor or other person engages in elder financial fraud if he/she:

• Knowingly, by deception or intimidation, deprive the victim of use or benefit of personal funds;
• By an individual who know or reasonably should know that elderly person lacks capacity to consent; and
• Breach of fiduciary duty to an elderly person which results in an unauthorized appropriation.

Trusts and trust funds are often part of an elderly person’s estate planning, and the related fraud is a growing type of elderly abuse. The trustee who oversees the funds in a trust has an obligation to put the interests of the beneficiary above their own. However, trustees also have power over the trust and more knowledge than the beneficiary, and therefore the opportunity for fraud and misconduct.

There is widespread gross misconduct by trustees who are taking advantage of the elderly and abusing their trusts and trust funds.

Our trust fund fraud attorneys have experience representing the interests of trusts in arbitration claims.

Our attorneys routinely represent investors in claims against stockbrokers, investment advisors, and others for elder financial abuse when a trusted advisor takes or borrows money from a client under false pretenses. In other cases, our attorneys have successfully recovered money for the sale of unsuitable investments.

Elder financial abuse is on the rise including claims against financial advisors who offer “free” lunch seminars, use misleading professional designations, and peddle purposefully complex products which many seniors (and others) cannot understand. Regulators highlight that scammers count on the victims’ silence to keep their activities ongoing.

Among other matters, our lawyers’ represented several dozen elderly investors to recover several million dollars they had lost in investment scams. The SEC ultimately charged the broker in that scam with fraud for preying on elderly members of his own community. Managing Partner, Scott L. Silver of the Silver Law Group was honored with the Daily Business Review’s “Securities Litigator of the Year Award” for his work on the case.

Elderly investors are frequently targeted for investment/securities fraud, including Ponzi schemes. Many financial advisors give the appearance of legitimacy by the promoter of an investment/security through various methods to unwary or unsophisticated investors. Targeted investors include members of a group or organization (affinity fraud) or individual with little investment experience. Common red flags of an investment or securities fraud include:

• Financial Advisor Recommending Early Retirement Plans
• Guarantees of Principal and Interest;
• Unregistered Investments;
• Fictitious Custodian of Funds;
• Difficult to Understand Investments;
• Senior Advisor Designations Without Any Credentials or Licenses;
• Advisor Insists “His Family Members” Invested;
• Contact by Phone or Email By Stranger; and
• Sense of Urgency From Advisor.

Silver Law Group has pursued claims in FINRA arbitrations, class actions, and in court for violations of laws against elder abuse. We are also frequently sought by trust estate lawyers and in probate matters to investigate and potentially pursue claims for investment fraud cases. Our lawyers won more than $1 million for an elderly client scammed by a stockbroker in a FINRA arbitration claim award believed to be one of the first successful cases under Florida Elder Abuse Statutes.

Silver Law Group’s attorneys are frequent lecturers at retirement communities, town meetings, pension groups, and other places and discuss with those audiences proactive measures to avoid being victims of investment fraud. We would be happy to speak to your group, free of charge, about what the members of the group can do to protect themselves from investment fraud. We never charge for a consultation and are happy to talk privately with someone about their personal financial situation.