Protecting Seniors from Financial Fraud
Shirley Krohn has devoted a major part of her volunteerism career being a Senior Assembly Member with the California Senior Legislature. In this capacity, she has written legislation around elder financial abuse issue and has successfully had five signed into law. She discusses this important subject of helping to protect seniors from financial abuse.
A stranger suddenly wants to be your mom’s BFF. An elderly client at the bank where you work comes in one day to withdraw an inordinately large sum of money. A financial advisory firm invites your elderly parents to a free lunch. All of these are red flag moments – events that call for further investigation to protect seniors from financial fraud.
“I would say, don’t go to any free lunches, and if you do don’t talk to anybody. Get your lunch and leave,” said Shirley Krohn, a senior assembly member with the California Senior Legislature and tireless worker devoted to fighting senior exploitation. Shirley and I spoke about senior financial abuse, and how we can protect against it, during a recent episode of The Aging Boomers podcast. Following is an edited transcription of our conversation.
Frank: We have with us Shirley Krohn, who is a full-time volunteer, having retired in 1997 from a 40-year career with the same company. Since that time, she has devoted tremendous amount of time and energy to educating seniors on what they can do to protect themselves from financial fraud. In this capacity, she served as the board chair of the Elder Financial Protection Network, and as program manager of Communities Against Senior Exploitation.
Since 2006, Shirley has devoted a major part of her volunteerism being a senior assembly member with the California Senior Legislature. In this capacity, she has written legislation around elder financial abuse issues, and has successfully had five signed into law by the governor. Shirley, it's just an honor to have you on the show. Thank you for all your hard work and thank you for joining us on The Aging Boomers.
Shirley: This is a real pleasure, Frank. Thank you so much.
Frank: I know it's a big issue, but how big of an issue is it regarding seniors being taken advantage of through financial fraud and financial abuse?
Shirley: It's a huge issue and it's getting bigger every day. In fact, I would call it an epidemic all the way from the financial scams, to the lottery scams, to the family members and caregivers taking advantage of seniors. It really is a nasty situation not just in California. It's all over the nation and I've even heard about situations arising in other parts of the world. Even in our sovereign nations, the tribal community, they are experiencing this as well. There is no sacred ground anymore or safe place for anybody. It makes it just that much more important for people to be aware of what they can do to protect themselves.
Frank: I know you've been spending many years trying to educate people, educate seniors. I think that's the main issue, to stop it. We'd all like for this to stop, but probably it's a matter of educating people, educating seniors, their families, et cetera. Tell us more about the California Senior Legislature, or CSL as it's known. Is this a new organization? I know it's in California, but for those listening outside of California, are there groups like this in other states as well?
Shirley: Yeah, let me give you a snapshot of the CSL and then tell you what I know about what's happening in other states. The California Senior Legislature isn't new. We're actually celebrating our 35th year this year. It is an independent, non-partisan volunteer state agency dedicated to providing model legislation impacting our aging population, as well as being advocates for the many needs of this population.
The CSL has 120 volunteers across the state, 80 senior assembly members, and 40 senior senators. While we are a state agency, we do not receive any funding from the state to conduct our business. I'll get into that a little bit later. Insofar as comparable organizations in other states, yes there are about 20 other states that have organizations similar to what we do, only they call themselves, "A Silver Haired Legislature."
They vary in how they're funded, how they're organized, what their activities are. Do they advocate? Do they introduce legislation? Do they have a relationship with their state legislature? It varies from one state to the next. The common pattern is they all have that relationship like we do here in California.
Frank: If somebody from another state goes online and types in, "Silver Hair Legislature," they might be able to get some information on their area, right?
Shirley: Absolutely. That's exactly how I did it and it's pretty comprehensive. You can definitely check it out. The other thing I would suggest is find out if you can volunteer with your organization and how you might be able to advocate for some of the issues the working on, if it's an interest to you that would be a good thing.
Frank: Being in the industry, I’ve heard some horrendous stories that just make you sick about seniors being taken advantage of. It's my understanding that most of the financial fraud is actually coming from within someone's own family. Is that correct?
Shirley: The biggest perpetrators of this crime are indeed family members and/or caregivers, which is a huge issue, because family members can do things to isolate a senior so that they don't have any outside communication. Caregivers can do this as well. With family members it starts out on a congenial level, and then over time they get access to the checking account or to a credit card or some such thing.
There are also instances when a family member or a caregiver could place a senior in isolation so that they have no contact, whatsoever with people outside of their immediate surroundings. I've even heard stories where people are locked into a bedroom and that's where they stay until they're given something to eat if indeed they're even fed. It's a pretty horrific crime.
I've heard numbers as high as four billion dollars in losses to financial exploitation in the United States, and it grows every single day. Of course with the population expanding, it's not going to get any better. Education and awareness are two primary ways we can [combat] the crime. I don't know that we're going to stop the crime, but at least we can get some awareness out there.
Frank: This isn’t just a lower-class issue; it’s happening across the board, with the middle class and upper class, right?
Shirley: You're absolutely right;there is no economic cutoff as to when people can be victimized. The big picture if you look at it is that the aging older generation holds almost all the major equity, most of them on their own homes, maybe even out right. They've got equity built up, and that becomes a very big target for a family member or a caregiver.
Frank: Now we're going to talk about some of the legislation that you pass. Is the legislation more about punishing those that commit this type of crime or is there a legislation that could even help stop it? Talk to me a little about that.
Shirley: It's like plugging the dam with a piece of chewing gum, especially when you try to do something legislatively. I have a bill right now that is being authored by a senator from Southern California having to do with creating an elder abuse offender registry. Meaning that any citizen who wants to hire somebody to be a caregiver could go online and find out if that person has been convicted or has received a judgment of any kind against them for doing any kind of elder abuse. I'm hoping that that will become law. It's like Megan's law for child abusers.
The other thing is that you have to follow the money. The money goes to the financial institution and that's why they [banks and financial institutions] are mandated to report any suspicious activities. Seniors have patterns. Every Thursday or every Friday they go to the Brick and Mortar Bank or Credit Union to conduct business of some kind, either pull out cash or do something, but there are habit forming scenarios.
When that pattern changes for some reason -- they go in now and ask for $25,000 cash or whatever --that raises a red flag to the financial institution. They are required to fill out a form called the Suspicious Activity Report,which then moves onto their radar screen for further investigation to find out if this person is being financially harassed in some way or exploited.
Banks have mandated reporters to do this. At one point, I was very actively involved in initiating that particular legislation, but at the request of financial institutions, they had a sunset date on it, meaning that it would have expired at a certain date. I submitted further legislation to get that sunset date removed so that they are mandated to report suspicious activity forever. They are required by law in California. It's interesting, because not every state has financial institutions mandated.
Frank: Is it just suspicious activity or is there a certain amount [of money] they must report? Is it a subjective thing, like the teller going, "Something doesn't seem right," or is it specific what they have to do?
Shirley: It can look many different ways. For example, if a family member now accompanies the senior to the financial institution and appears to be harassing them into making decisions or releasing funds or whatever, that would be a suspicious activity where the bank would probably, more of than not, call the senior into a private office with the branch manager to find out, "Are you okay? Is there something going on here that's unusual for you? Have you given full permission for this money to be withdrawn or are you being harassed into doing it?"
Sometimes the senior is just so relieved that somebody has paid attention, and they will be willing to say, "Yes, I'm being harassed." Then the bank can make a report to adult protective services and law enforcement. Then there are subtle ways in which things can happen over time, where the perpetrator is smart enough to know that if they do it a little bit at a time, it's not going to raise that much attention. It can happen over period of time and not be reported at all.
Bank employees have to be completely trained to understand the signs to look for and what to do when they notice something that's out of the ordinary. That was part of a bill, the original legislation is for that training and policies to be put into place. Every piece of abuse, every instance can look different than the last time. Somebody's got to be really on their toes.
Frank: I have a question for you on power of attorney. I know that we talk about powers of attorney on this show all the time, and we highly suggest to families that when somebody turns 18, they should have a power of attorney. It's not just the seniors, it's for everybody. We also bring up the fact that it's not so difficult. It's actually a lousy name. People think, "Oh, I got to go get an attorney. This is going to cost a lot of money," and they just never do it.
Also, I'm thinking about the other side of it. The fact that it is so easy to put together a power of attorney and maybe get a parent to sign something that maybe they don't understand. Is that an issue with powers of attorney?
Shirley: Yes it is. Quick deed claims are also an issue, where a perpetrator can get the seniors just sign over the ownership of a property to them, and without having their best interest at the forefront. The power of attorney is definitely something where you say, "Get a trusted family member." You might think the family member is trusted, but it turns out that they could be the biggest perpetrators of all.
I think if you have a trusted attorney or a trusted financial planner or a trusted friend who ... Trust is such a huge word. I almost hate to use it because it can be something that's violated just as quickly as it can be established. You’ve got to have some place to start. Going to websites of financial planners or CPAs or whatever might be able to give you somebody that you can trust or somebody like yourself Frank, who might have access to resources in your county that might be worth somebody working with to set up this POA.
Frank: What are some of the challenges or road blocks you're running into out there and what could our listeners help with?
Shirley: I have one huge challenge as it relates to the California Senior Legislature. We do a lot of work obviously on aging issues, and I tend to gravitate more towards issues having to do with financial abuse. We cover a lot of different topics that are on the radar screen for many seniors, housing, and health, and you name it. The one thing that's loud and clear for us is that we may not be in business after 2017.
The reason for that, as I mentioned earlier, is we are state agency, but we do not receive any funding from the state. In fact, we are one of those charities listed on the state tax form under contributions. You may not even know about the contributions page, many don't, that's the problem. We are listed on there as the California Senior Legislature Fund, where people can make a tax deductible contribution.
The problem is that this year, we're running maybe 60% behind where we should be, and it's already August. We are required by law to collect $250,000 a year, which covers the majority of our expenses, and we are at risk of losing out altogether. If we don't make that minimum, we can be taken off of the list all together and with little hope of getting back on, which means that we go out of business.
What that means to seniors in the state of California, specifically, is that then they lose the one advocacy organization that is actually looking at ways to protect seniors from all the different kinds of situations that are likely to impact them over time. I would say that if anybody wants to learn more about the CSL, they can go to our website (www.4csl.org) and get not only our history but the proposals and bills that have been signed into law by the governor. I would encourage people to do that.
If somebody wants to make a direct contribution, we've got PayPal which also takes credit cards. We can't let this organization go away. I and my 119 colleagues would be heartbroken if that were to happen, because we know how important it is to continue to take care of this aging population legislatively.
Frank: Let's repeat it again, it's www.4csl.org. Check it out. Contribute of you can. Everything helps.
If having you on the show helps a little bit out there, then great. Unfortunately, we're running out of time, but I don't mind going over a little bit on this because I think it's such an important subject. Do you have any final words of advice for our listeners?
Shirley: One of the big things is about hiring a caregiver. Many seniors want to hire a family member to be their caregiver and go through the county agencies to be able to pay that person, but they don't want to have that person go through a background check. It could be that the family member they are considering has indeed been prosecuted or convicted of a either a misdemeanor or a felony in their past history.
I would be very hesitant to hire somebody that I knew had that kind of background. Because it's family, seniors sometimes insist on it, and it may not happen, but it very well could happen that they would be subjected to some abuse.
The other thing that I would warn seniors about is the invitations to go to a free lunch, which could be another way to get them involved in buying a differed annuity, which is not a good financial product for a senior at all, but there’re free lunches all over the place and they're run by people that say they're financial advisors but they're not. They are con artists. I would say don't go to any free lunches, and if you do, don't talk to anybody. Get your lunch and leave.
The other one is to be aware of strangers who want to become your best friend. There are groups of people that move into communities, become that person's best friend, and then over time take advantage of them. Beware of and have families beware of somebody who's ingratiated themselves with that senior.
Reverse mortgages, oh boy. That's another slippery slope that people fall for because they think they can get money out of their property. That's probably the worst financial investment anybody can make. We could do a whole show on that.
And of course the myriad of computer scams, the internet scams, and that sort of thing. We have many more seniors today with access to the internet, so that's another one to be cautious about.
Frank: Shirley, thank you so much for joining us. Shirley Krohn. Go to the website, www.4csl.org. Check it out, donate. It's a wonderful organization that's going to be needed for many years to come, that's for sure. Shirley, we'll have you back in the future. Thank you so much for joining us on The Aging Boomers.