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Elder Abuse Spotlight: Record DOJ elder fraud sweep nabs 250, new SEC, Finra rules to protect elders

Friday, February 23, 2018   (0 Comments)
Posted by: Brian Monroe
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By Brian Monroe
bmonroe@acfcs.org
February 23, 2018

In this Elder Abuse Spotlight, ACFCS is highlighting some key recent actions to counter the rising financial exploitation of the country’s most vulnerable population. This includes a historic, coordinated sweep by federal authorities arresting hundreds of individuals who allegedly defrauded victims of an estimated half a billion dollars, new securities rules to protect seniors from predatory scammers, and a government watchdog noting a rise in phishing attempts targeting elders.


DOJ sweep brings charges against hundreds accused of defrauding elderly victims

In the global sweep involving nearly a dozen countries, the U.S. Department of Justice (DOJ) and other authorities levied charges against more than 250 defendants alleged to have victimized more than a million Americans, mostly elderly, to the tune of more than $500 million.

The actions charged a variety of fraud schemes, including mass mailing, telemarketing and investment frauds to individual incidences of identity theft and theft by guardians. To read the full release, click here.

As the elderly population of the country grows, countering financial abuse has become a growing focal point of federal and state investigators and bank anti-money laundering (AML) compliance departments. In some cases, banks have created specialized training for alert analysts and frontline staff to better recognize the red flags of elder abuse.

In the sweep, one critical area was tracing the financial trails to the larger, often foreign, criminal networks victimizing hundreds at a time. As one example, a single criminal enterprise identified in the sweep garnered tens of millions of dollars in illicit funds.

 “A number of cases involved transnational criminal organizations that defrauded hundreds of thousands of elderly victims,” according to authorities, while others involved smaller scale cases of abuse involving those in a position of authority or trust, such as a single relative or fiduciary who took advantage of an individual victim.

“The Justice Department and its partners are taking unprecedented, coordinated action to protect elderly Americans from financial threats, both foreign and domestic,” Attorney General Jeff Sessions said in a statement. 

“Today’s actions send a clear message: We will hold perpetrators of elder fraud schemes accountable wherever they are,” he said. “When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the Department’s disposal – criminal prosecutions to punish offenders, civil injunctions to shut the schemes down, and asset forfeiture to take back ill-gotten gains. Today is only the beginning.” 

The sweep also involved the International Mass-Marketing Fraud Working Group (IMMFWG), a network of civil and criminal law enforcement agencies from Australia, Belgium, Canada, Europol, the Netherlands, Nigeria, Norway, Spain, the United Kingdom and the United States. 

As part of the initiative, the Department’s Consumer Protection Branch, working with the U.S. Attorney’s Office for the Eastern District of New York and others, also brought numerous cases this past week in a coordinated strike against more than 43 mass-mailing fraud operators, including criminal charges against six individuals. 

In addition, law enforcement agents issued more than a dozen search warrants from Las Vegas to south Florida and coordinated with the Vancouver Police in Canada, who executed over 20 warrants – all regions known to be epicenters for fraud against the elderly.

For example, federal investigators stated that just one of the schemes prosecuted criminally by the operated from 14 foreign countries to cost American victims more than $30 million.

Some examples of the elder financial exploitation prosecuted by the Department include:

·         “Lottery phone scams,” in which callers convince seniors that a large fee or taxes must be paid before one can receive lottery winnings;

·         “Grandparent scams,” which convince seniors that their grandchildren have been arrested and need bail money;

·         “Romance scams,” which lull victims to believe that their online paramour needs funds for a U.S. visit or some other purpose;

·         “IRS imposter schemes,” which defraud victims by posing as IRS agents and claiming that victims owe back taxes;

·         “Guardianship schemes,” which siphon seniors’ financial resources into the bank accounts of deceitful relatives or guardians.

Perfect storm leads to more crimes targeting elderly

An aging population, desperate relatives still downtrodden by the economic downturn and fraudsters more readily realizing the vulnerability of older folks is leading to a surge in financial crimes against the elderly.

According to the Census Bureau's “middle series” projections, the elderly population will more than double between now and the year 2050, to 80 million. By that year, as many as 1 in 5 Americans could be elderly.

This puts more pressure on bank compliance teams to look for the signs of elder abuse, including: 

  • Has an elder customer with a stable account balance suddenly started incurring non-sufficient funds (NSF) charges or low account balance?
  • Has an elder customer account shown a large increase in withdrawals or checks to unfamiliar recipients?
  • Do accounts of an elder customer show large transfers into the account from investment accounts, only to be quickly withdrawn?
  • Is an elder customer with no or infrequent ATM withdrawals now showing an increased pattern of ATM withdrawals?
  • Is an elder customer with consistent spending patterns now showing a sharp increase in spending?

To read the full ACFCS story and for more red flags, please click here.


In industry first, new Finra rules come online to better protect seniors from fraudsters, scammers

The Financial Industry Regulatory Authority (Finra), the nation’s chief self-regulatory body overseeing the securities sector, has warned companies and criminals alike that as of this month, there are two new rules to better protect seniors.

The new rules, approved a year ago, put in place the first uniform, national standards to protect senior investors, according to Finra.

Firms are now required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account when there is a reasonable belief of financial exploitation.

The rule also permits Finra member firms to place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold. 

Firms can also reach out to law enforcement and adult protect services.

It is a critical measure because of the difficulty investors face in trying to recover funds that they have inadvertently sent to fraudsters and scam artists. To read more, click here.

As well, last year the Securities Exchange Commission (SEC), the country’s chief trading regulator, worked with Finra to tackle the issue head on, creating a new rule aimed at protecting elder investors. 

The commission approved the rule in March 2017, with an effective date of February 5, 2018.

The new rule involves “two key steps to protect investors. First, firms will be required to make reasonable efforts to obtain the name and contact information for a trusted contact person for a customer’s account. Second, firms will be permitted to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation.”

For more information on the SEC and Finra rules, please click here.


FTC notes rise in phishing schemes targeting seniors

The U.S. Federal Trade Commission (FTC), which offers a bevy of resources to help seniors better protect themselves, issued a new alert Friday related to scammers attempting to gain access to victims’ computers by sending a fake invoice and diseased link that could install ransomware if someone clicks on it.

“In this version, scammers, posing as a well-known tech company, email a phony invoice showing that you’ve recently bought music or apps from them,” according to the FTC report. “The email tells you to click on a link if you did not authorize the purchase. Stop – do not click on the link. That’s the new twist on an old scam.”

The email is a clear phishing attempt, where the scammers would then use that information to commit fraud or identity theft, according to the FTC.

Scammers also use phishing emails to “get access to your computer or network – then they install programs like ransomware that can lock you out of important files on your computer,” according to the commission.

The FTC offers these tips to prevent from being victimized:

·         Be suspicious if a business, government agency, or organization asks you to click on a link that then asks for your username or password or other personal data. Instead, type in the web address for the organization or call them. The link in the email may look right, but if you click it you may go to a copycat website run by a scammer.

·         Be cautious about opening attachments. A scammer could even pretend to be a friend or family member, sending messages with malware from a spoofed account.

·         Set your security software to update automatically, and back up your files to an external hard drive or cloud storage. Back up your files regularly and use security software you trust to protect your data.


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