Elder financial abuse is all too common in Sacramento County and elsewhere. The abuser, often a family member or caregiver, drains away the resources of an elder or dependent adult who cannot work to replenish them. By the time the theft is discovered, the money may be long gone and the victim may be saddled with debt. What can the victim do?
In a recent post, I commented on how often elder financial abuse cases often go unprosecuted in California, to the chagrin of victims and their families. A week after that post, the California Department of Insurance announced the conviction in Placer County Superior Court of Christine Ann Cooper, who was arrested in Sacramento County and ultimately sentenced to 18 months in jail after embezzling approximately $129,000 from her mother’s trust accounts. According to the Department, Cooper wrote checks to herself from the accounts over a nine-year period and falsified records to conceal her thefts.
Contact with local law enforcement eventually may result in prosecution, but victims and their advocates should take a multi-faceted approach.
My perspective on elder financial abuse comes from four years of consumer protection work at the Federal Trade Commission, where I investigated and sued businesses engaged in deceptive practices, followed by many more years in the private practice of law in the Sacramento region, where financial elder abuse situations often come across my desk.
So, what are the options for victims, their family members, and others who advocate for them when it’s evident that an elder or dependent adult has been the subject of financial exploitation?
- Stop further financial loss. In the short term, ensure that the financial abuser no longer has physical access to the victim’s residence, checkbook and financial records, and that any electronic access to accounts is terminated. This may require closing accounts or at least changing passwords.
- Promptly contest unauthorized charges. There is a short fuse to contest fraudulent charges on debit cards and credit cards. When the abuse goes back many months, there likely will be no way to simply reverse the charges.
- Review the elder’s estate plan and consider protective adjustments. To halt and prevent the recurrence of abuse, review the elder’s estate plan, including any will, trust instrument and powers of attorney. Any financial power of attorney in favor of an abuser should be revoked, and the revocation may be recorded. An elder who already has created a trust, or who has sufficient mental capacity to create a new trust, can select a reliable third party to serve as trustee who can better resist fraud and undue influence. Private professional fiduciaries (licensed by the California Department of Consumer Affairs) and bank trust departments can play this role.
- Pursue a conservatorship. A judge of the Superior Court may appoint a conservator over the estate of a person who is substantially unable to manage his or her own assets or to resist fraud or undue influence. If the abuse is ongoing and the abuser is in a position of authority (e.g., agent under financial power of attorney), a conservatorship may be the only way to stop the losses. A judge can suspend or terminate financial powers of attorney, and suspend or remove misbehaving trustees. A temporary conservatorship might be obtained within a week of filing papers with the court, but the petitioner must present evidence showing an immediate risk of harm. Hire an attorney who is familiar with the conservatorship process to guide you.
- File a civil lawsuit for financial elder abuse. Under the Elder Abuse and Dependent Adult Civil Protection Act (California Welfare and Institutions Code sections 15600 to 15675), the elder can prosecute the case in his or her own name, a conservator (if appointed) can bring the case, or the court can appoint a guardian ad litem to act on behalf of the elder. The statute of limitations for claims is a relatively long four years, and the powerful remedies available to a prevailing plaintiff include compensatory damages, punitive damages, and legal fees. Yet it may be hard to find a lawyer to take such a case on a contingency basis, and even a plaintiff with a compelling case involving a large loss may end up with less collected than dollars spent on the litigation. Plaintiffs can ask the court to issue a pre-judgment writ of attachment to freeze assets so as to preserve them for future collection. Consider also whether claims may run against associates, perhaps with deeper pockets, who assisted the abuser with some aspect of the theft.
- Make a complaint to local law enforcement agencies or to a state regulatory agency. In situations of alleged abuse by family members, as a member of the Yolo County District Attorney’s Office observed in a recent podcast on financial elder abuse, prosecutors may be reluctant to take action because of the gray area between a voluntary gift and an act of theft, and the need to prove the latter beyond a reasonable doubt. The Sacramento County District Attorney’s Office does not issue statistics on elder financial abuse cases, and the last press release announcing a conviction came nearly two years ago. It seems that only a small fraction of cases get prosecuted. On the other hand, prosecutors are more likely to act when the perpetrator had a license, such as the insurance agent license that Ms. Cooper held, or owed fiduciary duties to the victim, as a trustee owes to a beneficiary (also present in the Cooper case). A complaint to a state licensing authority may get the ball rolling on criminal prosecution. Keep in mind that, while criminal prosecution may provide a measure of justice, prosecutors do not necessarily focus on recovering money for victims.
- Report the abuser to the tax authorities. Elder abusers, of course, do not report what they have stolen as income. But the tax authorities may take another view. Consider the recent case of Angelina Alhadi. She provided caretaking services to Arthur Marsh, a 91-year-old resident of Santa Clara County who suffered from dementia and other illnesses. She passed him a note offering her services when he was being discharged from the hospital. Over the next two years, she fleeced him for over a million dollars, which she claimed were nontaxable loans or gifts. In a well-written opinion issued in April 2016 following a trial in San Francisco, a United States Tax Court judge concluded that the supposed gifts were in fact the fruit of undue influence within the meaning of California law, such that all the money she received was taxable to her, and also merited a penalty for fraud. The opinion provides a detailed case study on how caregivers can worm their way into the pocketbooks of vulnerable elders. While the exploitation in the Alhadi case may have been too subtle to prosecute criminally, at least the “tax man” caught up with the abuser.
In elder financial abuse cases, victims and their advocates should consider the above options and come up with an approach that best fits the situation of the elder.