As a forensic accountant who specializes in financial fraud investigations, I have seen numerous examples of caregivers exploiting elderly clients and manipulating them for personal gain. I call it “legacy larceny” — fraud by caregivers who target elders and misappropriate their funds, steal possessions, and coerce them into changing wills or signing over assets.
To be clear, a reliable caregiver can be a godsend for families struggling to care for an elder. But fraud involving caregivers is depressingly common. Last year alone, the AARP reported that more than $20 billion was stolen from elders by caregivers, friends, and family.
A dishonest caregiver can manipulate a vulnerable elder and sow discord and doubt within families and ensnare them in a web of deceit. To combat caregiver fraud, awareness, and vigilance are paramount. Families must remain attentive to signs of financial irregularities, maintain open communication with their elderly loved ones, and seek professional guidance when suspicions arise.
Allow me to illustrate through the hypothetical scenario of the Smiths, a family who epitomize success and generational wealth and whose matriarch has been targeted by an unscrupulous caregiver.
When a Family’s Suspects a Caregiver
Mrs. Eleanor Smith, a widow in her late 80s, lives in an elegant home, where time has left its mark on every piece of furniture and cherished memories linger. In recent years, Mrs. Smith has been attended by, Emily, an amiable young woman who has provided much-needed, round-the-clock care and companionship.
Initially, the Smith family was relieved to have found such a capable and devoted caregiver ensuring Mrs. Smith’s comfort and safety. Then odd things began to happen. Heirlooms went missing. Bank accounts showed unexplained withdrawals. And Emily began to insist on accompanying Mrs. Smith to legal appointments.
James, Mrs. Smith’s grandson, spoke up first. He felt Emily was engaged in a subtle campaign to isolate Mrs. Smith from her family. After consulting with his family, James decided it was time to investigate. This was no small decision. The emotional toll of legacy larceny on concerned family members cannot be overstated, and investigating potential financial abuse in a larger trust or estate can be challenging because of the array of assets, accounts and transactions that may be involved.
Calling in the Professionals
As he began to dig into his grandmother’s estate, James quickly realized he needed professional help. He contacted financial advisors and legal counsel, who, in turn, brought aboard a forensic accounting firm to help prove fraud had occurred, determine how much had been stolen, and trace where the money had gone. An experienced forensic accountant also extracts evidence in a way that will stand up to scrutiny by law enforcement and the courts.
The financial forensic investigation yielded evidence that Emily had been engaging in a wide-ranging scheme that included siphoning funds to her own bank account, opening credit cards in Mrs. Smith’s name, and selling off artwork and jewelry and pocketing the proceeds. She was in the process of getting Mrs. Smith to change her will to make her the primary beneficiary of the estate when James began his investigation.
In the end, Emily’s was prosecuted, and Mrs. Smith’s assets were recovered. And while scars linger, the family has emerged stronger and resolved to never again fall victim to such deceit.
Preventing Caregiver Fraud
To avoid falling victim to caregiver fraud, consider the following:
1. Thoroughly Screen Caregivers: Conduct background checks, verify references, and ensure caregivers are licensed and trained.
2. Monitor Financial Activity: Regularly review bank statements, credit card transactions, and other financial records for unusual or unauthorized activity.
3. Limit Access to Personal Information: Restrict access to sensitive documents, passwords, and financial accounts to trusted family members or professionals.
4. Communicate Openly: Maintain open lines of communication with the elderly loved one and encourage them to report any suspicions or concerns.
5. Seek Professional Assistance: Consult financial advisors or elder law attorneys for guidance on setting up safeguards and managing finances.
Extra Care for Those with Dementia
For those with dementia, additional safeguards are crucial, including:
1. A Comprehensive Care Plan: Develop a plan addressing medical, financial, legal, and emotional needs. Involve all relevant family members and professionals in the process.
2. Limiting Access to Financial Information and Cash: Restrict access to financial accounts, set up automatic payments and direct deposit, and minimize the amount of cash accessible to the individual with dementia to reduce theft or misuse.
3. Legal Guardianship or Conservatorship: Consider appointing a trusted individual or professional to manage financial affairs in cases where an individual is severely impaired.
4. Regular Legal and Financial Reviews: Schedule regular reviews of documents with an attorney or financial advisor.
5. Specialized Financial Products: Explore products like trust accounts or annuities offering additional safeguards for individuals with dementia.
6. Fraud Alerts and Credit Freezes: Place fraud alerts and credit freezes on the individual’s credit reports to prevent unauthorized access to credit and other financial accounts.
Caregiver fraud does not discriminate based on financial status. Whether you have $10 or $10 million, everyone is vulnerable. Let the Smiths’ story serve as a cautionary tale. By taking preventative steps, paying close attention to the care your family members are receiving, and speaking out and investigating when you feel something is not right, you can shield your loved ones from harm and ensure their legacies are untarnished by greed and deceit.
The FSS team has deep experience assisting individuals, families, and their counsel, in financial fraud investigations. Contact us for a consultation or visit our Forensic Investigations practice page for additional information about our approach.