FINANCIAL EXPLOITATION OF THE ELDERLY THROUGH UNDUE INFLUENCE
Elder abuse is a serious problem in our society. While our health care system allows people to live well into their 80’s and even 90’s, this same longevity can cause them to become reliant on others for help in managing their physical needs as well as their banking, investments, and other financial matters. With this dependency comes the risk that the care-givers will exploit the older person to their own advantage.
Unlike mental incapacity caused by a stroke or dementia, which is more readily observable, undue influence as a form of elder abuse can easily be hidden behind the mask of a “caring” relative or friend who has been entrusted with the property and/or physical care of a dependent older person who may still be competent but is too afraid or ashamed to complain of the abuse taking place.
This article will address the financial exploitation of the elderly, as opposed to physical abuse or neglect.
The first topic discussed below profiles the type of older person who is likely to become the victim of financial exploitation through undue influence. The common characteristics of perpetrators of such abuse will be analyzed in the second topic. The next topic describes the stages in the development of undue influence, along with the common signs indicating its presence. The final topic lists the remedies that are available to elderly persons or their representatives or heirs who seek redress for the harm resulting from financial exploitation through undue influence.
Researchers have found that the older persons who are most likely to be financially exploited by care-givers through undue influence share one or more characteristics. These include:
✔ Being physically disabled or weakened, and thus dependent on the assistance of others in performing the activities of daily life, such as bill-paying, transportation, house-cleaning, meal preparation, and shopping.
✔ Living alone, and being isolated from community activities and health care services.
✔ Having few family or friends who are able and willing to visit and engage in social interaction.
✔ Experiencing grief over the loss of a loved one (a spouse or sibling, for example) whom they lived with or to whom they were emotionally attached.
✔ Suffering from depression caused at least in part by their isolation or loss.
✔ Being naturally naive, overly trusting, and open with strangers.
✔ Lacking knowledge about their own finances and/or the confidence in their ability to handle them, e.g., their recently deceased spouse always took care of the bills and finances, so that the older person does not trust himself or herself to handle such responsibilities.
Research has also found that even when the older person is aware that the perpetrator is misappropriating their funds, they still will not report the theft to the authorities or other people. This silence can be based on fear of abandonment, being overwhelmed at the prospect of involving law enforcement and the court system in their personal affairs, and/or a fear of being forced to go into a nursing home if they would report the abuse.
Elderly victims of financial exploitation may also experience feelings of guilt or shame, particularly if the offender was a family member or someone else whom they trusted. As a result of these feelings, they may lose confidence in their own judgment and become severely depressed, even to the point of suicidal ideation.
Reference: Michael J. Tueth, M.D., Exposing Financial Exploitation of Impaired Elderly Persons, American Journal of Geriatric Psychiatry, 8:104-111, May 2000.
Individuals who financially exploit a dependent older person through undue influence can range from the older person’s spouse, child, or other close relative, to more remote family members, neighbors, at-home caregivers, and attendants in a nursing facility. Perpetrators tend to fall into one of two groups: opportunists or predators.
Opportunists begin their relationship with the older person in an appropriate and trusting manner. Over time, however, whether due to resentment, repressed anger, or simple greed, opportunists come to believe they are entitled to take the older person’s assets. Unrelated opportunists can include housekeepers, neighbors, a care-giver at a private residence, assisted living facility or nursing home, fellow members of a church or synagogue, clergy, attorneys, accountants, bankers, and investment advisers.
Opportunists most often are family members. In many cases they have been entrusted with the victim’s assets as an agent under a durable power of attorney, as trustee of a lifetime trust, or as a co-owner of bank accounts, and end up using that access to transfer the assets to themselves.
Predators are those who intentionally seek out older persons of apparent wealth to victimize. Predators tend to find their victims by frequenting places that are known to cater to older people, such as senior centers, nursing homes, and even support groups for the bereaved. Predators may purposely obtain jobs in private homes, hospitals, or pharmacies to seek out potential victims. Predators are even known to review obituary columns for names of bereaved surviving relatives.
A mark of perpetrators, both opportunists and predators, is that even when confronted with overwhelming evidence of their abuse and undue influence, they do not apologize or express remorse for their actions. Their responses more often are aggression and anger toward the accuser.
Assuming that there is a family member, neighbor, or other person meeting the profile of a potential abuser who encounters an older person who is dependent on others for their care, how does the abusive relationship actually develop? Based on the above-cited study of Michael J. Tueth, M.D., financial exploitation generally develops in certain stages:
✔ The perpetrator (whether an “opportunist” or “predator”) first recognizes that the elderly person is vulnerable. This observation may be based on the older person’s physical and/or mental deficiencies in vision, memory, speech, hearing, or mobility
✔ The perpetrator next secures the victim’s trust and confidence by being friendly, considerate, and helpful. (If there has been a long-standing relationship between the parties, this trust may already be present.)
✔ As the victim grows to place their trust and confidence increasingly in the perpetrator, the perpetrator begins to isolate the victim from contact with other people (friends, relatives, attorney, clergy, etc.) who may have been helpers in the past, or whose influence might interfere with that of the perpetrator.
✔ In the more obvious cases, phone calls are screened, mail is checked, and attempts by others to visit the victim are discouraged or conducted only in the presence of the perpetrator.
Purposeful Isolation. Isolation of the victim by the perpetrator is a strong indicator of undue influence. Oftentimes the victim is already living alone and generally removed from contact with outsiders, due either to physical limitations or a psychological fear of leaving the confines of home, and the perpetrator further reinforces their isolation.
The perpetrator can create a warped sense of reality in which the victim learns to regard all others with fear and mistrust. For example, the perpetrator will convince the victim that everyone else is interested only in selling their home, taking their money, and then dumping them in a nursing home.
Gradually the victim transfers all of their affection to the perpetrator. The victim will even lie about their condition to keep away family, friends, the police, or an investigator sent by the Area Agency on Aging’s Protective Service Program.
At this stage perpetrators will begin to manipulate the victim through acts of intimidation and threats, e.g., withholding food or medicine, or ceasing any further contact, unless the victim agrees to give them cash, deed over their home, or execute a new will that benefits the perpetrator.
The victim’s long-time attorney and other advisers may be replaced at this point by unscrupulous or naive professionals who are chosen by the perpetrator to change the victim’s estate plan to benefit the perpetrator.
The culmination of these steps is that the victim winds up giving the perpetrator access to or control over their bank accounts, investments, and other assets, and making substantial “gifts” to the perpetrator and/or members of the perpetrator’s family.
Reference: Bennett Blum, M.D. , Testimony to the Senate Committee on Commerce. Science and Transportation, Hearing on Targeting America‘s Senior, July 28, 1999.
Bank Account Activity. Unusual activity in the victim’s bank accounts is usually the best evidence that financial exploitation is occurring. Such activity can include:
✔ Placing the perpetrator’s name on bank accounts as co-owner with right of survivorship, agent, “POD,” “TOD,” or trustee.
✔ Transfer of funds to new accounts at banks with which the victim has had no prior connection, and frequent transfers of funds among several accounts.
✔ Checks in large amounts or on frequent occasions being paid to persons who have had no prior connection to the victim, especially if they are related to or associated with the perpetrator.
✔ Frequent withdrawals being made through ATMs, especially if victim is physically frail and has not previously used an ATM.
✔ Suspicious signatures appearing on checks or credit card applications.
✔ Bank statements and canceled checks no longer being sent to the victim’s home address.
Explaining the Victim’s Behavior
In trying to explain a victim’s seemingly irrational behavior — “Why didn’t she just refuse to go along with the perpetrator’s demands?” or “Why didn’t he take advantage of that opportunity to inform a third party of the abuse?” — some experts refer to a condition called Hostage Identification Syndrome, better known as Stockholm syndrome. Stockholm syndrome is based on a 1973 incident in Sweden involving hostages taken in a bank robbery who fought off police efforts to rescue them after six days in captivity. From that incident, the theory has been posited that in relationships where a dominant person has succeeded in isolating and controlling a weaker person’s environment, the weaker person will tend to form a strong bond with the dominant party, even to the point of defending that party if his or her control is challenged by an outsider who is attempting to rescue the weaker person.
While it does shed some light on the victim’s actions, Stockholm syndrome has not been recognized as a mental disorder in the DSM. As applied to an elder abuse situation, there may be no clear correlation between how hostages act in a life-and-death crisis situation like an armed bank robbery and how an elderly person might respond when caught in an abusive relationship with someone who may be a long-time friend or family member.
And is it necessary to employ the term “syndrome” to adequately explain the elderly victim’s behavior? Victims of abuse object to such a label being put on their actions, since in effect it turns them into victims a second time by suggesting that they are suffering from a type of mental disorder. The basic human elements of intimidation and fear are sufficient by themselves, they say, to explain their actions.
Regardless of the underlying causes, the practical effect of the victim’s behavior in an undue influence case will often be that they will side with the perpetrator if confronted with evidence of financial exploitation, and refuse to take legal action against them.
What can you do if you are a relative, friend, professional adviser, or someone else interested in the welfare of an older person whom you suspect has been financially exploited through undue influence?
Reality Check. Before taking any formal action, your first step should be to make sure that you are accurately reading the situation. Is your only evidence of exploitation an isolated incident of apparent excessive control and submissiveness? Does your evidence consist merely of second-hand, hearsay allegations made by another party?
By the same token, it would be wrong to accept at face value an older person’s denial that any abuse has occurred when there is some credible evidence to the contrary. As mentioned above, the older person who is denying abuse may well be acting out of fear and intimidation, where such denials are not inconsistent with undue influence being present.
Unlike physical abuse, where the tell-tale signs can be observed by physical exam, the presence of undue influence can be much more difficult to detect.
Thus, if possible the older person should be personally examined by a gerontologist, neurologist, or other medical professional trained in elder abuse issues, so that they can objectively assess both the older person’s vulnerability to exploitation through undue influence as well as their specific relationship with the suspected perpetrator.
The next step would be to consult with an attorney who specializes in estate and elder law matters to discuss your concerns, and then to devise with your attorney a specific plan for proceeding. While every case is unique, one or more of the remedies discussed below are usually applicable to a case of financial abuse involving undue influence.
Intervention by Outsiders
If possible an attempt should be made to simply break the influence of the perpetrator over the victim. If you are not prepared to become directly involved yourself, you could at least convey your concerns to a relative or close friend of the victim who is known to be trustworthy, or to the victim’s doctor, attorney, rabbi, or minister, with the hope that they will intervene. For example,
✔ The victim could be physically removed from the isolating conditions that have bred the undue influence.
✔ Powers of attorney and other legal documents that had given authority to the perpetrator could be revoked by the older person.
✔ Trusted family members or other interested parties could be appointed as replacement fiduciaries in order to protect and recover the victim’s assets.
The problem with this approach, however, is that in a given case there may be no one who is willing and able to perform this role effectively. In addition, these actions may simply invite retaliatory maneuvers by the perpetrator, who will go back and persuade the older person to revoke any new power of attorney and return control to the perpetrator.
Report Abuse to State Protective Service Program
The Pennsylvania Department of Aging operates a Protective Service Program in each of its Area Agency on Aging offices throughout the Commonwealth. The purpose of this Program is to protect older adults (defined as those 60 years of age and older) from neglect and physical, mental, and financial abuse.Anyone can report suspected elder abuse or neglect to the Protective Service Program of their local Area Agency on Aging office for investigation. The law shields the reporting party from any type of retaliation; the reporting party may even choose to remain anonymous. To find the Area Agency on Aging that serves your county, see the AAA state/county map. (The phone number for the Allegheny County office is 412-350-6905; the statewide elder abuse hotline is 1-800-490-8505.)
Once a report of financial abuse is filed, an investigation will be made by a trained investigator. However, while the Protective Service Program can investigate alleged abuse, it has no authority to bring legal action on behalf of the victim to stop the abuse or to recover assets. The most that the Protective Service Program can do is refer its findings to the local District Attorney’s office for possible prosecution, if it determines that the abuse rises to the level of criminal conduct.
From the reporting party’s perspective, filing an allegation of suspected abuse will likely end in a sense of frustration, because the Protective Service Program, even if requested by the reporting party, will not inform him or her of the status of its investigation, or when its investigation has been completed, or whether it ultimately found evidence of abuse.
There have been relatively few criminal prosecutions of financial exploitation cases involving elderly victims in Pennsylvania. There are several factors that may explain this. Many District Attorneys do not have the manpower to vigorously enforce criminal charges against perpetrators of elder abuse, especially in a non-consumer situation involving a single victim and a perpetrator who are related to each other. A difficulty in winning convictions in cases involving older victims of financial abuse is that the victims may be too confused to testify as to the details of how their money and assets were taken, or to effectively disprove a possible defense raised by the perpetrator that the victim actually wanted the perpetrator to have the assets, so that the transfers were lawful gifts.
Prosecutors often end up telling the victims or their advocates in such cases to engage their own attorney and pursue non-criminal remedies.
Legal Action Against Perpetrators
In many cases the most effective remedy available to the older person who has been victimized by financial exploitation is to engage an attorney to bring a civil action against the perpetrator in court on the grounds of undue influence, and possibly misrepresentation and fraud. The action could be brought by the victim directly, by his or her agent acting under a Power of Attorney that authorizes the agent to commence litigation, or by a Guardian of the Estate appointed by a court for the victim (discussed below).
After the victim’s death, the case could be brought by the personal representative of the victim’s estate.
Regarding potential defendants, such parties would obviously include the perpetrator(s) individually. In addition, the perpetrator’s employer might be held liable to the victim if the facts would show either that:
✔ The exploitation occurred during the course and within the scope of the perpetrator’s employment, or
✔ The employer acted negligently or recklessly in supervising and regulating the activities of its perpetrator-employee.
Types of Relief
The remedies that could be sought in a case of financial exploitation resulting from undue influence would typically include one or more of the following:
✔ Request for an accounting
✔ Demand for return of assets and setting aside of conveyances
✔ Request for an injunction “freezing” the bank accounts in which the victim’s money has been placed, pending the outcome of the litigation,
✔ Imposition of a constructive trust, and
✔ Demand for money damages, attorney’s fees, and costs.
Consult with an attorney as to the specific remedies that should be sought in a specific case.
Guardianship of the Estate
As discussed above, as a preliminary step to bringing legal action against the perpetrator, a Guardian of the Estate may have to be appointed to represent the victim’s interests. Any person who is interested in the welfare of the victim has standing to file a petition with the Orphans’ Court in the county where the victim is domiciled to request the Court to declare the victim to be an “incapacitated person” as defined by law and to appoint the petitioner or another party to act as Guardian of the Estate.
Once appointed by the Court, the Guardian of the Estate could commence legal action against the perpetrator and possibly others on behalf of the victim.
Will Contest and Other Legal Action by Heirs and Executors
If the financial abuse is not discovered until after the victim’s death, the victim’s heirs can contest a will that was allegedly obtained by undue influence or possibly seek to recover assets that were wrongfully conveyed during the victim’s lifetime.
As discussed above, the personal representative of the victim’s estate will also have the right to seek recovery of such assets.