Law Tips: The Problem of Financial Exploitation of the Elderly and Disabled

Financial exploitation of the elderly and disabled has been called “the hidden epidemic.” Attorneys who represent the aged and disabled frequently encounter acts of financial exploitation. And attorneys must do what they can to protect their clients from the risk of being financially exploited.

This statement from James Voelz, ICLEF’s Elder Law Institute faculty member, is a reflection of his ongoing concerns about the elderly and disabled clients he serves. I am grateful that Jim agreed to share his expertise on protecting clients in the expanding elder law arena with Law Tips readers. This week he provides background on the “problem” and the applicable law. Then, as we go down this road, we’ll hear Mr. Voelz’s further advice on steps elder law attorneys may want to take to prevent exploitation of clients.

Jim Voelz’s thoughts on the financial exploitation problem:

The Indiana Adult Protective Services (“APS”) program received 41,334 reports, of which 10,506 reports were investigated during 2012. The reports were classified as follows: Abuse- 2,689, Neglect- 3,176, Self Neglect- 3,198, and Financial Exploitation- 1,443. How many cases of financial exploitation are reported? The estimates range from 1 in 5 to 1 in 44.

I recently met with an APS investigator who has almost 25 years of experience. He said that reports of financial exploitation are increasing, and voiced extreme frustration that he has never seen criminal charges filed against a person who financially exploited an elderly or a disabled person! He said that we have the tools to protect people in Indiana, but these tools are not being used effectively. He said the exploiters are getting away with financial exploitation when they are not being prosecuted. He said prosecutors do not file charges, because victims suffer from dementia or other health issues making it difficult to prove that a crime has been committed.

I also contacted Patrick D. Calkins, who is the Program Director for Adult Protective Services. Mr. Calkins told me that APS does not keep statistics about the number of financial exploitation reports that result in criminal charges being filed against the alleged perpetrator. He did verify that the most common excuse for failure to prosecute is “that the victims make bad witnesses.” But he said that his take on this is that homicide victims make bad witnesses also, but prosecutors still file charges for murder.

Mr. Calkins also told me that the victim’s attorney is often the victim’s last line of defense. Consequently, it is important that we do what we can to help our clients not become victims of financial exploitations, and if our client does become a victim, then to help stop the continuation of financial exploitation and to help our client seek appropriate remedies.

Adult Protective Services

Indiana has had an adult protective services (APS) law since 1985. See Indiana Code 12-10-3-1 through 12-10-3-31. Indiana is the only State in which the APS program is a criminal justice function.

The Division of Aging of the Indiana Family and Social Services Administration oversees the APS program. There are 16 APS unit geographic boundaries. APS has 42 field investigators who are employed by “hub prosecutors” who have a contract for services with the Division of Aging, and they are paid from State funds.

A person who believes or who has reason to believe that another person is an “endangered adult” shall make a report to the adult protective services unit, a law enforcement agency, or the Division of Aging on its statewide toll free telephone number (1-800-992-6978), as required by Indiana Code 12-10-3-9.

So what should an attorney, who knows that his client has been financially exploited, do?

Is the attorney required by law to report this? Yes, Indiana Code 35-46-1~3(a) does require a report to be made to the Division of Aging, APS, or a law enforcement agency.

But, what duties does the attorney have pursuant to the Indiana Rules of Professional Conduct?

Rule 1.14(b) and (c) outlines these responsibilities. (Law Tips note: Here is a link to specific language of Rule 1.14: Indiana Rules of Professional Conduct. Consult the Rules for guidance on when a lawyer is permitted or required to take protective measures. One comment to the Rule concludes as follows: “The lawyer’s position in such cases is an unavoidably difficult one.”)

Suspicious Activity Reports

The Financial Crimes Enforcement Network of the United States Department of the Treasury issued an Advisory to financial institutions regarding the filing of suspicious activity reports regarding elder financial exploitations on February 22, 2011. Please refer to http://www.fincen.gov/statutes_regs/guidance/html/fin-2011-a003.html. The Advisory lists potential indicators of elder financial exploitation.

If the financial institution has a reasonable explanation for the transaction based upon the available facts, including the background and possible purpose of the transaction, it is relieved of the obligation to file a Suspicious Activity Report.

Attorneys who are representing clients or other agents who are involved in an activity with a financial institution that could result in the institution filing a Suspicious Activity Report should provide the financial institution with a reasonable explanation for the transaction. This may prevent a visit from Federal or State law enforcement.

Senior Consumer Protection Act

Indiana has a new law called the Senior Consumer Protection Act that became effective July 1, 2013. The Act provides civil remedies involving financial exploitation of a person who is at least 60 years of age. The Act can be found at Indiana Code 24-4.6~6-1 through 24-4.6-6-6.

We’re breaking here in Jim Voelz’s discussion of financial exploitation of the elderly and disabled. But he continues to share his expertise next week in areas such as the right timing for a person to gift their assets and the amount of power given to the attorney-in-fact.

For a comprehensive update in elder law from an outstanding panel, check out the 2014 Elder Law Institute on October 9-10, 2014.

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About our Law Tips faculty participant:
James K. Voelz, Voelz Law, LLC, Columbus, Indiana. Mr. Voelz ‘s law practice primarily involves estate and disability planning, estate and trust settlement, elder law, and Medicaid qualification services. Jim is a member of Hoosier Hills Estate Planning Council, National Academy of Elder Law Attorneys and its Indiana Chapter, and the Indiana State Bar Association’s Elder Law and Probate, Trust and Real Property Sections. Mr. Voelz serves on the Committee on Character and Fitness of the Indiana Supreme Court.  And he is also the author of “Senior Moments” newsletter.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

One Response to “Law Tips: The Problem of Financial Exploitation of the Elderly and Disabled”

  1. I very much appreciate this article. As President of NASGA (National Association to STOP Guardian Abuse), I can attest that an on-going theme from our members who are involved in guardianship disputes involving family member guardians, a majority of those cases involve family theft which goes unpunished. In these cases, the police often refuse to take reports and refer to the theft as a “civil matter.” This is especially true in Power of Attorney abuse.

    Another growing problem concerns APS which is often called in on these cases. APS rushes to put a guardianship in place to “protect” the vulnerable elder before even investigating the allegations/charges. Later, if the investigation is completed and the results are “unfounded,” it’s too late. The guardianship is in place and there’s no way out.

    Unlawful and abusive guardianships and conservatorships by third-party “professional” guardians and lawyers is a growing problem nationally which will only increase because Boomers are entering the age of vulnerability and they are the last generation of great wealth. With the courts basically not monitoring guardians, vulnerable people are losing their life savings, their homes, and even their freedom. And their voices are not even heard when studies are conducted about elder financial exploitation.

    Among the many problems with guardianship as practiced today is there is no place to go for help. Agencies who should help refer wards and their families back to the very court that is allowing the “legal” financial exploitation or abuse (such as isolation) to occur.

    For more information, visit NASGA’s website: http://www.StopGuardianAbuse.org.


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