FINANCIAL EXPLOITATION OF VULNERABLE ADULTS

1
FINANCIAL EXPLOITATION OF VULNERABLE ADULTS

• For Employees of Financial Institutions,
• Broker-Dealers and Investment Advisers

2
Introduction

• In 2010, 17,586 reports of neglect or abuse of
  vulnerable adults were received by the state of
  Washingtons Department of Social and Health
  Services, Adult Protective Services (APS). Of
  those complaints, 26 were about financial
  exploitation of vulnerable adults. The
  complaints that APS receives about financial
  exploitation have increased in every year except
  for one since 2001, for an overall increase of
  74.

3
Introduction
4
Introduction

• This means that in 2010, at least 4,566
  vulnerable citizens of Washington may have had
  their income or wealth stolen or improperly taken
  from them. And, because experts believe that the
  actual number of these incidents is much greater
  than that which is actually reported, many more
  seniors and disabled persons have likely been
  financially exploited each year. And the problem
  is only growing.

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Why Should You Care?

• Vulnerable adults typically have fixed incomes.
  They may have accumulated a nest egg, but may
  have little or no ability to re-build that nest
  egg if it is taken from them. They may be
  physically frail or disabled and may have a
  memory problem or a cognitive disability, making
  it impossible for them to pay for their food,
  housing, health care, and other living expenses
  if their income or assets are taken from them.

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Why Should You Care?

• If a vulnerable adults income and assets are
  improperly taken, he or she may need to be
  supported by the government. This means that the
  choices that the vulnerable adult may have about
  where he or she will live, or what services he or
  she may have, may be limited. It also means that
  taxpayers will be required to fund his or her
  care and support.

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Why Should You Care?

• But most critically, many vulnerable adults who
  are financially exploited suffer as a result.
  They may have to leave their home or drastically
  alter the plans that they had made for their
  retirement years. They may feel betrayed, sad and
  embarrassed. Their quality of life and even
  their physical and mental health may suffer, both
  in the short-term and in the long-term.

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2010 Legislation Allows You to Help

• Because of concern about the growing problem of
  financial exploitation of vulnerable adults, the
  Legislature adopted a law in 2010, that expands
  the ability of financial institutions,
  broker-dealers, and investment advisers to help
  combat financial exploitation of vulnerable
  adults.
• As an employee of one of these institutions, the
  law requires you to take this training.

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Training topics

• This training will cover
• (1) Background information definitions
  applicable
• to this training
• (2) Indicators of financial exploitation of
  vulnerable
• adults
• (3) How to report suspected financial
  exploitation
• (4) Tools available to your institution to help
  combat
• financial exploitation.

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Background Information
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Definitions

• We need to address the following questions
• Who are vulnerable adults and why are they
  vulnerable?
• How does the law define financial
  exploitation?
• Who are the perpetrators of financial
  exploitation?

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Who Are Vulnerable Adults?
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Who Are Vulnerable Adults?

• The definition of a vulnerable adult is
  included in Washingtons Abuse of Vulnerable
  Adults Act, which is chapter 74.34 of the
  Revised Code of Washington (RCW)
• Throughout the rest of this training, we will
  refer to vulnerable adults as VAs

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VAs

• VAs include persons age 60 and older, who need
  assistance in one or more aspects of their life
  (whether or not they actually receive the
  assistance)
• This can include persons with physical
  disabilities, such as people who no longer can
  take care of all of their physical, day-to-day
  needs, due to frailty or a chronic illness or
  disability
• It also can include persons with a mental decline
  or disability, such as a person who has developed
  confusion, short-term memory problems or decline

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VAs

• VAs also include the following persons age 18 or
  older
• With a developmental disability, such as mental
  retardation
• Who live in a residential care facility, such as
  a nursing home, assisted living, or group home
  or
• Who receive services from a caregiver or a
  caregiving agency

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What Factors Make VAs Vulnerable?
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What Factors Make VAs Vulnerable?

• Physical disability or weakness, dependence on
  others for bill-paying, transportation, shopping,
  or for care
• Living alone and being isolated
• Having few family or friends
• Experiencing grief over the loss of a family
  member, friend, or pet
• Suffering from depression or mental illness

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What Factors Make VAs Vulnerable?

• Being naturally naïve or overly trusting
• Have a limited IQ
• Having to assume responsibility for finances or
  other aspects of life after the death of a spouse
  and lacking the knowledge or experience to manage
  these aspects for the first time after such a
  loss. The combination of lack of knowledge and
  grief may prompt the VA to quickly turn to others
  for help.

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How Does the Law Define Financial Exploitation?
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Definition of "Financial Exploitation

• Financial exploitation is defined to include the
  illegal or improper use, control over, or
  withholding of the property, income, resources,
  or trust funds of the vulnerable adult by any
  person or entity for any persons or entitys
  profit or advantage other than for the vulnerable
  adult's profit or advantage.
• RCW 74.34.020

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Financial exploitation, contd

• Financial exploitation includes
• Use of deception, intimidation, or undue
  influence
• By a person in a position of trust and confidence
  with the VA
• To obtain or use the VAs property, income,
  resources or trust funds

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Financial exploitation, contd

• Financial exploitation also includes
• The breach of a fiduciary duty, or the misuse of
  a power of attorney, trust, or guardianship
  appointment
• To obtain or use the VAs property, income,
  resources, or trust funds

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Financial exploitation, contd

• Financial exploitation also includes
• Obtaining or using a VAs property, income,
  resources, or trust funds
• Without lawful authority
• By a person or entity who knows, or should know,
  that the VA lacks the capacity to consent

24
Financial Exploitation Criminal Conduct

• So, financial exploitation includes criminal
  conduct
• This includes stealing from the VA, improperly
  using the VAs debit card, stealing the VAs
  identity, or forging checks on the VAs account

25
Financial Exploitation Improper Conduct

• Financial exploitation also includes conduct that
  is not necessarily criminal, but is improper
• For example, if a professional employed by the
  VA, or the VAs power-of-attorney, improperly
  uses his or her authority to obtain property of
  the VA, the conduct is financial exploitation,
  even if it is not criminal conduct

26
Financial Exploitation Improper Conduct

• Alternatively, improperly pressuring or
  threatening the VA to undertake a financial
  transaction that benefits the perpetrator, but
  does not benefit the VA, is financial
  exploitation.
• For example, threatening to send the VA to live
  in a nursing home or threatening to cut off
  affection or a source of transportation to the VA
  unless the VA undertakes a financial transaction
  is also financial exploitation.

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Further examples improper conduct

• A power of attorney or guardian uses or
  borrows the VAs Social Security or pension
  funds for the power of attorneys or guardians
  own purposes, not for purchases made on behalf of
  the VA
• A caregiver borrows or gets a gift of funds
  from the VA by telling the VA a sob story about
  how he or she cannot afford to buy something he
  or she needs or wants

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Further examples - improper conduct

• A caregiver for a VA who has Alzheimers
  withdraws funds from the VAs bank account to use
  for himself/herself
• A neighbor who helps the VA pay his bills writes
  a check to herself from the VAs bank account
• A guardian transfers property owned by the VA to
  himself or herself

29
Not All Poor Choices are Financial Exploitation

• But it is important to recognize that not all
  transactions that fail to benefit a VA are
  financial exploitation. Unless the VA has a legal
  guardian, the law presumes that the VA is capable
  of making his or her own financial decisions,
  even if a decision appears to be unwise. For
  example, a VA can give all of her money to her
  adult son, who just lost his job, even if that
  leaves her without the ability to pay her bills.

30
But

• However, if the VA is directed to make a poor,
  risky or substantial financial decision, and the
  VA appears to have suffered a decline in his or
  her physical or mental functioning, seems
  confused, fearful, or has developed memory
  problems, financial exploitation may be
  occurring.

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Perpetrators of Financial Exploitation
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Who Are Perpetrators?

• Sadly, perpetrators come from all walks of life.
  They may be family members, caregivers,
  professionals, contractors, salespersons, or
  people who dont know the VA. Based on
  statistics, common perpetrators include the
  following people

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Perpetrators Family Members

• Includes spouse, a new spouse or
  recently-acquired sweetheart (after the death
  of a spouse), an adult child, or more remote
  relatives.
• A family-member perpetrator may be unemployed and
  live with the VA, may be supported by the VA, or
  may act as the VAs caregiver or the person who
  pays the VAs bills.
• A family member may take action under a
  power-of-attorney signed by the VA, but the
  action only seems to benefit the family member,
  not the VA

34
Perpetrators - caregivers, friends or volunteers

• Other perpetrators include caregivers or other
  persons who work for the VA in his or her home,
  staff of a care facility at which the VA resides,
  neighbors, friends or acquaintances
• These perpetrators may suddenly become involved
  in providing advice to the VA, managing the VAs
  money, or paying the VAs bills.

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Perpetrators - Professionals

• Perpetrators may also include lawyers, guardians,
  accountants or other advisers, or clergy or a
  fellow member of a church or synagogue.
• The VA may undertake an unusual, significant or
  risky financial transaction that does not seem to
  fairly benefit the VA, on the advice of these
  types of perpetrators.

36
Perpetrators Contractors or Salespersons

• These types of perpetrators may overly-inflate
  the price of something the VA actually needs.
  For example, the VA may need to re-roof her
  house, and a perpetrator charges her twice the
  usual rate or performs a shoddy job
• Alternatively, the VA may attempt to sell the VA
  something substantial that the VA does not
  actually need, such as new windows, claiming that
  the VA will receive a substantial rebate or tax
  break

37
Perpetrators - Opportunists

• Perpetrators also include people seeking funds
  from the VA to complete a transaction that
  appears to be highly suspect
• The VA may claim he has been instructed to send
  funds to someone in order to collect a prize or
  lottery winnings
• The VA may claim an unknown person claiming to be
  her distant relative suddenly contacted her and
  desperately needs money.

38
Indicators of Financial Exploitation
39
Indicators of Financial Exploitation

• Indicators of financial exploitation include
• Unusual financial activity
• Sudden change in legal documents or agents
  employed by the VA
• Unusual behavior exhibited by the VA or the
  suspected perpetrator

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Unusual Financial Activity

• Withdrawal of or loan transaction for a very
  large sum for a questionable or risky purpose,
  such as financing a sports car the VA cannot
  drive
• Withdrawal needed to benefit someone with a too
  good to be true or sob story
• Withdrawal directed by another person
  accompanying the VA and the VA appears to be
  confused or frightened
• ATM withdrawals or transactions at unusual places
  not previously frequented by VA, such as a casino

41
Unusual Financial Activity

• Sudden, frequent use of an ATM by a VA with
  physical disabilities, or who has never
  previously used the ATM
• Increase in withdrawals, typically in round
  numbers (50, 100, 500)
• Withdrawals or transactions that result in a
  financial penalty
• Sudden change of account beneficiaries or new
  authorized signers
• Increase in checks, unusual checks (such as more
  frequent checks to caregiver, checks for items
  not used or usable by the VA)

42
Changes to Legal Documents or Agents

• Sudden involvement of a new lawyer, accountant or
  other adviser for the VA
• Sudden change in VAs will, trust,
  power-of-attorney or durable power-of-attorney
• and
• VA appears to be confused, uninformed or not to
  fully understand the changes
• Beneficiaries are changed on documents to a new
  or much younger friend, caregiver, or
  sweetheart.

43
Concerning Behavior of the VA

• The VA is suddenly reluctant to discuss matters
  that he or she once routinely discussed with you
• The VA has a sudden change of behavior
• The VA has become depressed, has lost a loved
  one, or has developed memory problems or suffered
  some other physical or mental decline
• The VA has become dependent on others
• The VA seems fearful, confused, or cannot
  understand the transaction

44
Suspicious Behavior of Perpetrator

• Accompanies and directs the VA in the transaction
• Speaks for or over the VA appears to intimidate
  or frighten the VA
• Isolates the VA in his or her home cuts off
  contact from the VAs relatives, friends
• Recently has taken over as caregiver or manager
  of VAs bills or finances

45
Suspicious Behavior of Perpetrator

• The person becomes angry or aggressive if asked
  about the proposed transaction
• The person is reluctant or unwilling to allow you
  to speak privately with the VA
• Alternatively, the person is overly smooth in
  response to your questions his or her answers to
  your questions are not plausible or are vague

46
Reporting Suspected Financial Exploitation
47
The Law Allows Reporting

• Under the law, you are allowed to report
  suspected financial exploitation to Adult
  Protective Services and to Law Enforcement.
• The law allows you to decide when financial
  exploitation should be reported, but does not
  require you to do so.
• The law protects persons making reports of
  financial exploitation in good faith from facing
  any liability for reporting.

48
How To Report

• Reporting to law enforcement can be done by
  calling 9-1-1 in cases of emergency, or calling
  local law enforcements non-emergency line, in
  less urgent situations.
• Reporting to Adult Protective Services can be
  done by calling toll-free 1-866-EndHarm
  (1-866-363-4276) anywhere in the State of
  Washington.

49
Reporting - Your Employers Policies and
Procedures

• Reporting suspected financial exploitation is a
  very serous matter. You must be familiar with
  your employers policies and procedures on
  reporting. Those policies and procedures will
  instruct you on who you report suspected
  financial exploitation to within your
  institution, and who at your institution will
  make the decision to report to APS and/or law
  enforcement.

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Responsibilities of APS
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What Does APS Do When It Receives a Report?

• APS is authorized by law to investigate
  allegations of financial exploitation.
• APS is required to report allegations that appear
  to involve criminal conduct to law enforcement.
• APS is required to report allegations that appear
  to violate licensing or ethics laws or rules to
  appropriate licensing or certifying agencies or
  entities.

52
What Else Can APS Do to Help the VA?

• APS can also take legal action to protect a VA,
  including filing a guardianship for a VA who
  needs protection and appears to lack legal
  capacity
• APS may also obtain an emergency restraining
  order to prohibit a perpetrator from taking
  further action to improperly take income or
  assets belonging to the VA.
• APS keeps a record of perpetrators, which may
  prevent those persons from being able to exploit
  VAs in the future.

53
Do Others Have Authority to Help the VA?

• APS may refer cases to others, who may take
  further action to protect VAs
• Law enforcement and the prosecuting attorney may
  take action to criminally prosecute perpetrators
• Advocacy and social services organizations may
  provide legal representation or services to VAs
• Licensing or certifying entities may take
  regulatory action against perpetrators.

54
Legal Remedies that Financial Institutions,
Broker-Dealers, or Investment Advisors Can
Pursue
55
Sharing Information

• Your employer is authorized by law to share
  specific information and records with APS, law
  enforcement and the prosecuting attorney when
  financial exploitation is suspected or is being
  investigated.

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Short-Term Transaction Freeze

• Your employer also may impose a short-term
  transaction freeze when financial exploitation is
  suspected.
• This allows your employer to refuse a transaction
  for a short time, in order to report and/or
  investigate whether financial exploitation is
  occurring, or while APS or law enforcement is
  investigating

57
Short-Term Transaction Freeze

• Your employer may, but is not required to, impose
  a short-term transaction freeze.
• Your employer will not have legal liability for
  its decision to impose a freeze, or not to impose
  a freeze, when the decision is made in good
  faith.
• All account holders are required to be informed
  of a freeze.

58
Length of a Short-Term Transaction Freeze

• For transactions involving the sale or offer to
  sell a security, the transaction freeze can last
  as long as 10 business days
• For transactions which do not involve the sale or
  offer to sell a security, the freeze can last as
  long as 5 business days
• The length of the transaction freeze can be
  lengthened or shorted by a court order.

59
How is the Decision to Impose a Transaction
Freeze Made?

• Imposing a short-term transaction freeze is a
  drastic measure and the decision must not be
  taken lightly.
• You must be familiar with your employers
  policies and procedures on who within your
  institution you must contact if you believe a
  short-term transaction freeze should be
  considered, and who has the authority to make the
  decision about whether the freeze will be imposed.

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Summary

• Financial exploitation of VAs is a growing
  problem which can substantially harm a VA.
  Financial exploitation may cause a VA victim to
  suffer, physically and mentally. It has a very
  real and negative impact on VA victims and
  society.
• Given this concern, the Legislature has given you
  and your employer greater authority to help
  combat financial exploitation.

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Summary

• VAs may be vulnerable because of physical and
  mental changes or conditions. They may be
  dependent on others or suffering from depression
  or the loss of a loved one.
• Family members, caregivers, professionals or
  strangers may try to take advantage of these
  vulnerabilities. They may try to justify their
  actions by saying that they can take more of the
  income or assets of a VA than they are entitled
  to because they are helping the VA, but that is
  not true.

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Summary

• You and your employer can report financial
  exploitation to APS and law enforcement and share
  information with them.
• Your employer also can impose a short-term
  transaction freeze in cases when financial
  exploitation is suspected.

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Summary

• It is important for you to be familiar with and
  understand your employers policies and
  procedures on reporting financial exploitation
  and short-term transaction freezes
• It is critical for you to understand who you
  report to when you believe financial exploitation
  should be reported, or when you believe a
  short-term transaction freeze should be
  considered.

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Summary

• Together, we can make a difference for our
  vulnerable adult citizens!
• Thank you for your time and attention to this
  important topic.

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Contacts
or Call
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