The old saying about prevention being the best medicine holds true when it comes to financial scams. Particularly in situations involving elderly investors, victims rarely recoup even a portion of the assets they lost, experts say.

Successfully prosecuting cases of elder financial abuse is challenging for a number of reasons, not the least of which being that victims are commonly unwilling or unable to come forward as compelling witnesses, according to Tom Hebrank, CFP, president of Advanced Planning Solutions, which provides senior healthcare planning services for fee-only planners.

"When something has happened, usually it's extremely difficult to undo," Hebrank says. "That's how most situations are because the elderly person will not voluntarily go to court.”

So what explains the reluctance to come forward? In many cases, the victim is ashamed or embarrassed to have been duped, experts say.

But, all too frequently, the perpetrator is a close relative of the victim or someone else in a position of trust, such as a close friend, neighbor or caretaker, according to Page Ulrey, senior deputy prosecuting attorney in King County, Washington.

"Very often the perpetrator is someone they trust and love, which makes testifying against them very difficult," Ulrey says.

"The money is hardly ever repaid," Ulrey says. "Most of these victims never, ever get their assets back.”


Ulrey has served as a dedicated elder abuse prosecutor since 2001, and says the number of cases referred to her office has been "growing exponentially." Still, she says that sometimes by the time a case reaches her, the victim's dementia has grown severe enough to disqualify them as a witness.

And for an incident of elder abuse even to make it to a prosecutor, it has to pass through law enforcement, and in a great many jurisdictions the police forces operate under limited resources and don't have the capacity to hire outside experts, such as a forensic accountant, to solidify what are often very complicated cases.

"There just isn't the money, there just aren't the people to be able to chase all these things down," says Thomas West, an elder abuse expert and a senior associate at Signature Estate & Investment Advisors in Tysons Corner, Va.,

Likewise, police forces often don't have close ties with adult protective services organizations, which might be best positioned to refer them to qualified specialists to perform functions like capacity evaluations, according to Ulrey.

But in many jurisdictions around the country, APS agencies are underfunded as well, and often are overwhelmed by their volume of caseloads.

West remembers calling APS to report the suspicion that a caretaker was stealing from an elderly client. As it turned out, the caretaker was not stealing, but the answer from APS was hardly encouraging.

"Their response was 'We're so understaffed that unless you have an older adult on the sidewalk bleeding then you need to assume it's going to be at least three to six weeks before we're going to be able to call you back,'" West recalls.


Small wonder then that compliance experts like Daniel Bernstein, chief regulatory counsel at MarketCounsel, stress the importance of catching abuse early on, and encourage advisors to put in place the policies, procedures and training at all levels of the firm to provide for a mechanism for reporting and escalating suspicious activity.

"I think the key is that the firm has the proper communications in place to allow for the issue spotting at any level to be escalated," Bernstein says.

Kenneth Corbin is a Financial Planning contributing writer in Washington and Boston.

This story is part of a 30-day series on better serving seniors.

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