Boomers beware: Scams, frauds and other financial exploitation schemes targeting older Americans are a growing multibillion-dollar industry enriching the schemers, anguishing the victims and vexing law enforcement officials who find these crimes among the hardest to investigate and prosecute.
"The true con artists, who are in the business of making money off older folks through devious means, are very good at what they do," said Sally Hurme, a consumer fraud specialist with AARP. "They cover their tracks, they use persuasive psychological means to spin their tales."
Elder financial abuse encompasses a wide range of tactics, some perpetrated by relatives or trusted advisers, some by strangers via telemarketing and Internet-based scams.
Researchers say only a fraction of the abuse gets reported to the authorities, often because victims are too befuddled or embarrassed to speak up. Even with the reported cases, data is elusive because most federal crime statistics don't include breakdowns of victims' ages.
Nonetheless, there's ample research to convey the scope of this scourge.
A federally funded study conducted for the National Institute of Justice in 2009 concluded that 5 percent of Americans 60 and older had been the victim of recent financial exploitation by a family member, while 6.5 percent were the target of a nonfamily member. The study, led by psychologist Ron Acierno of the Medical University of South Carolina, was based on input from 5,777 older adults.
A report last year by insurer MetLife Inc. estimated the annual loss by victims of elder financial abuse at $2.9 billion, compared with $2.6 billion in 2008.
"Elder financial abuse is an intolerable crime resulting in losses of human rights and dignity," MetLife said. "Yet it remains underreported, underrecognized and underprosecuted."
Older Americans are by no means the only target of schemers and scammers, but experts say they have distinctive characteristics that often make them a tempting prey.
Some have disabilities that leave them dependent on others for help; others are unsophisticated about certain financial matters or potential pitfalls on the Internet. Many are relatively isolated and susceptible to overtures from seemingly friendly strangers.
"That's why telemarketing scams are so successful," said Karen Turner, head of a newly formed elder fraud unit in the Brooklyn District Attorney's Office in New York City. "They're delighted to have someone to talk with — they almost welcome the calls."
Coupled with these factors, most older Americans, even in these troubled economic times, have tangible assets in the form of homeownership, pensions and Social Security income that scammers seek to exploit.
Another factor is the older generation's patriotism and respect for authority, according to Sid Kirchheimer, who writes a weekly "Scam Alert" column for the AARP Bulletin.
"A lot of the scammers pretend to be with the government — they say they're calling from the Social Security Administration or the IRS," Kirchheimer said. "People 65 and over, they often fall for that."
There's a multitude of scam scenarios, some of them new twists on old ploys.
Variations on a theme
Among the current variations:
—The Grandparent Scam: Impostors, often calling from abroad, pose as a grandchild in need of cash to cope with some sort of emergency, perhaps an arrest or an accident. The grandparent is asked to send money and urged not to tell anyone else about the transfer.
Police in Bangor, Maine, said a man in his 70s was bilked out of $7,000 in January by a con artist pretending to be his grandson who called to say he needed money to get out of jail in Spain.
In another version, scammers pose as soldiers who've been serving in Afghanistan, and call grandparents claiming to need money as part of their homecoming.
—The Lottery Scam: Scammers inform their target that they have won a lottery or sweepstakes and need to make a payment to obtain the supposed prize. The targets may be sent a fake prize-money check they can deposit in their bank account. Before that check bounces, the criminals will collect money for supposed fees or taxes on the prize.
Police in Holden, Mass., say an 80-year-old woman recently was bilked out of $400,000 over the course of a year in her efforts to claim bogus prize money. In Los Angeles, authorities said last year that an 87-year-old widower fell for a lottery scam masterminded in Quebec, and mailed $160,000 in checks that he'd been told was for taxes on his purported $3.3 million in winnings.
Many recent lottery scam calls have come from Jamaica, to the point where its area code (876) is now cited as by anti-scam experts as a warning sign. Other Caribbean area codes also have been implicated.
—The Toilet Paper Scam: Fraudsters often try to convince gullible targets into paying exorbitant sums for unneeded products and services, as exemplified by a scam uncovered in South Florida last year.
According to U.S. investigators, salespeople claiming their company was affiliated with federal agencies told their elderly victims that they needed special toilet paper to comply with new regulations and avoid ruining their septic tanks. In all, prosecutors said the company scammed about $1 million from victims from across the country, including some who purchased more than 70 years' worth of toilet paper.
Perpetrators from abroad
Three suspects in that case, all from Florida's Palm Beach County, pleaded guilty to wire fraud. But officials say arrests are the exception, not the rule, especially in telemarketing and Internet scams where there's no paper trail, no face-to-face interaction and the perpetrators are often operating from abroad.
"It's very hard for us to investigate overseas — the likelihood of us finding them and extraditing them is slim," said Turner, the Brooklyn prosecutor.
Paul Greenwood, a deputy district attorney in San Diego who runs an elder abuse prosecution unit, says he's been trying cajole local banks and credit unions to be more aggressive in protecting their elderly customers. One way is for those institutions to contact authorities if they detect suspicious withdrawal patterns.
Greenwood says he's often spoken by phone with overseas scammers, initially pretending to be a potential victim, then revealing who he is.
"They're not in the least affected. They just move on to the next call," he said. "If they're outside the U.S., they're home free."
Nonetheless, Greenwood hopes his fellow prosecutors nationwide will become more aggressive in pursuing charges when they can catch a suspected scammer.
"The cliche is that these are victims with poor memories or who are reluctant to testify," Greenwood said. "We've found we can overcome that. Once you get them into court, the victims have such strong jury appeal that most of time the defense just pleads out."
Cases of financial elder abuse surface at all levels of U.S. society.
For example, Anthony Marshall, the son of multimillionaire philanthropist Brooke Astor, was found guilty in 2009 of exploiting his mother's dementia to help himself to millions of dollars. He's free pending appeal.
Mickey Rooney, the 91-year-old actor, is suing his stepson and others on allegations that they tricked him into thinking he was on the brink of poverty while defrauding him out of millions and bullying him into continuing to work. The case is pending in Los Angeles Superior Court.
"I felt trapped, scared, used and frustrated," Rooney told a special Senate committee considering abuse-prevention legislation last year. "But above all, when a man feels helpless, it's terrible."
For elderly scam victims of modest means, the results can be catastrophic.
"The abuse can leave a person devastated," Turner said. "They're not young to enough to grow a nest egg again — the nest egg is gone."
Even small-scale scams can have long-lasting impact.
Now in her mid-80s, Eunice Langa of New York's Duchess County still remembers a phone call some 20 years ago telling her she'd won a free cruise.
Delighted at the chance to give her brother and his wife the cruise as a gift, Langa agreed to mail off more than $100 in fees to claim the prize, only to learn later she was victim of a scam.
"I just took them at their word," she said. "There was no such thing and no way of tracking it."
Since then, Langa, who has a master's degree and work experience in broadcasting, teaching and public relations, has updated herself on potential exploitation and how to avoid it. Among other programs, she participated in two workshops developed by the National Council on Aging to help older adults learn how to budget their money, find benefits and avoid scams.
Her advice to others: "Don't get excited with an offer and jump into anything without thoroughly investigating first."
For prosecutors and other anti-scam experts, the most wrenching cases often involve financial abuse by an older person's adult children or other family members who'd been put in positions of trust.
"These people think they're entitled to something — they say, 'I just wanted an advance on my inheritance,'" said Arlene Markarian, an assistant district attorney in Brooklyn who specializes in elder abuse prevention.
She says this type of financial exploitation is often accompanied by physical abuse, and yet many elderly victims balk at reporting it.
"There's the embarrassment factor — no one wants to see relatives prosecuted," Markarian said. "And there's fear of losing your independence — being put in a nursing home. A lot of the times, it's the offender making that threat."
Markarian added another note of caution.
"We're seeing not just older victims but older perpetrators," she said. "Not all old people are sweet."
A case in point: The estranged father of actress Jodie Foster — 89-year-old Lucius Foster — was sentenced to a five-year jail term in December for bilking more than $100,000 from poor and elderly people in a home-building scheme.
Family members and advisers
Financial abuse by family members and trusted advisers will be among the targets of the federal Office of Older Americans, part of the new Consumer Financial Protection Bureau. Plans are in the works to provide guidelines for relatives and others on ethical standards for helping handle an older person's finances.
The Office of Older Americans is headed by Hubert H. Humphrey III, a former attorney general of Minnesota who says awareness of elder abuse is growing among law enforcement agencies and among citizens he's been meeting with in recent months.
"You ask if there's someone in audience who had something like this happen, someone will stand up and have the courage to tell their story, and you'll see others nodding their heads in recognition," Humphrey said. "It's out there — and people are beginning to have a greater confidence to speak out about it."
One of the policy advisers working with Humphrey is Naomi Karp, who formerly handled elder-abuse issues for AARP.
She said most states have developed appropriate laws for dealing with elder abuse, and the key question is whether there are enough investigators and other resources to carry them out effectively.
She likened the challenge to a whack-a-mole game.
"As soon as law enforcement or regulatory agencies go after one scam, it's so easy for the con artist to morph with the next best one," she said.
One needed step, according to abuse-prevention advocates, is getting money for the federal Elder Justice Act. It was passed by Congress two years ago with the aim of helping states combat various forms of elder abuse, but thus far no dollars have been appropriated to put it in practice.
The FBI is actively fighting elder financial abuse, issuing anti-scam top sheets and tracking the online portion of problem through its Internet Crime Complaint Center.
Hesitancy to report
Special Agent Nick Savage said the center received more than 300,000 complaints last year, reflecting close to a half-billion dollars in losses, with 45 percent of the toll borne by people over 50.
Among older victims, Savage said, there's often a hesitancy to report the crimes.
"A lot of people are ashamed of the victimization and don't want to come forward for fear that they'll be seen silly, that they should have known better," he said.
Savage acknowledged that local law enforcement agencies are sometimes reluctant to pursue scam investigations if the perpetrators are abroad. He said the FBI, with help from its foreign counterparts, can make headway in some instances, especially if it can establish a pattern that bundles a number of individual cases into one.
Looking ahead, there are mixed views on whether the baby boomers, now mostly in their 50s and early 60s, will be less prone to scams and exploitation than their elders.
The AARP's Hurme thinks that's possible.
"They're more assertive, questioning — certainly they've grown up on computers and are more savvy with them, so there is hope," Hurme said. "But I don't think the bad guys are going to go away — they're going to adjust their pitches as the demographics change."
Naomi Karp noted that many victims of securities fraud are well-educated men, not yet of retirement age, who overestimate their acumen, perhaps foretelling further problems as they age. She also noted that many boomers, no less so than their elders, will eventually experience cognitive declines that will increase their vulnerability.
"They may be boomers," she said. "But financial capacity is the often first kind to decline."