States Must Do More To Protect Our Vulnerable, Elderly Citizens

The cruelties of elder abuse can take many forms.  Even if no bruises appear, the consequences can be enormous.  All too often, rogue financial advisers prey upon feeble senior citizens who possess diminished mental capacities and are thus unable to fend for themselves.  Even more worrisome are the unlicensed fly-by-night promoters who brazenly hop from deal to deal, knowing little about the actual features of the financial products they so enthusiastically tout.  Recognizing that they stand to pocket handsome commissions by convincing investors to bite on the investments they are pitching, they energetically make one presentation after another.  In doing so, they target those in their “golden years.”  Why?  It’s simple; that’s where the money is.

Senior citizens control a disproportionate share of the wealth in this country.  Plus, people falling within that age group frequently lack the background — and the intellectual capacity — necessary to assess the merits of the supposed wealth-building opportunities that are presented.  Not only it is well known that a decline of mental functions generally accompanies the aging process, it is now understood that even a mild cognitive impairment can make seniors more vulnerable to crooked investment schemes.

Combined, these conditions provide for a tragedy on an epic scale.  Annual losses stemming from financial fraud directed at senior citizens are estimated to be about $3 billion.  If more effective protective measures are not put in place, even darker days will appear on the horizon.  As more baby boomers steadily grow older — and become less capable of protecting themselves, we can expect to see more victims of these offenses.

As the future unfolds, regulators will continue to play a role in addressing financial abuse of the elderly.  But, in many respects, their impact will be modest.  Stretched thin by lean budgets and frequent turnover, they will be forced to move numerous cases through the system by routinely imposing relatively minimal sanctions.  While federal prosecutors carry a lot of clout, they can only do so much.  Due to their limited numbers, they generally restrict their focus to the largest and most extraordinary schemes.  As for state prosecutors, they have historically steered clear of this area, tending instead to focus their efforts on violent crimes.  Plus, they can rarely call upon sophisticated financial fraud investigators for assistance.

Perhaps the biggest impediment to the systematic, efficient, and successful pursuit of these cases is the cognitive fragility of the victims — the very condition that made them so attractive to scam artists in the first place.  The intellectual deficiencies that leave so many of our seniors unable to discern the true features of a given investment routinely undermine their ability to provide convincing testimony.

What steps should be taken?  First, state regulators and prosecutors should make periodic disclosures outlining the cases they have initiated against defendants accused of defrauding the elderly.

Second, courts should expedite cases involving civil and criminal allegations of fraud upon the elderly.  Cases cannot be allowed to linger on congested dockets as the health of elderly, infirm investors spirals downward.

Finally, statutes of limitations should be lengthened.  By way of illustration, a five-year statute of limitations that begins to run when a transaction occurs will generally be of little benefit if the terms of the underlying investment state that profits will not be realized for six years.  In sum, such a five-year statute of limitations will frequently expire before it becomes apparent that the investment vehicle in question has “blown up.”

To be sure, this commentary should not be construed as criticism of judicial or prosecutorial authorities.  Day after day, judges and prosecutors go to great lengths to keep society “on track.”  We owe them a debt of gratitude.  Nonetheless, the time has come to place a greater emphasis on protecting vulnerable elders.


Chris Bebel

Former Federal Prosecutor

Former SEC Attorney

Advocate, Defrauded Investors

Bradley Ellison

Securities Fraud Paralegal