“Scams: A Sucker Retires Every Minute“
More retirees are being targeted by financial fraudsters. Often, these scammers are themselves elderly.
Life insurance pools.
The options being offered to senior citizens hoping to ensure a comfortable retirement are dizzying. And in a growing number of cases, that may be the intention as more scammers–often elderly themselves–try to con retirees. Though hard numbers are difficult to come by, many lawyers and advocates for the elderly say more seniors than ever are being lured into investment schemes that are unsuitable for people of their age or are outright swindles. “Seniors who suffer from isolation and diminished capacity make ideal targets,” says Steve Riess, a San Francisco attorney who represents elderly victims of con artists peddling bogus investments.
One out of five Americans over the age of 65 has been the victim of a financial scam, according to the Washington-based Investor Protection Trust, a nonprofit that promotes shareholder education.
Many of today’s scammers have a particularly good understanding of their victims–because the fraudsters themselves are of retirement age, if not exactly retired.
- William Kirshner, 84, a financial adviser in Corpus Christi, Tex., was sentenced to five years in prison for stealing more than $100,000 from senior citizens and other clients who invested in promissory notes issued by his company.
- Ronald Keith Owens, 74, was sentenced to 60 years in prison in January 2009 for persuading investors, including retirees, to put more than $2.6 million into nonexistent bank-related investments.
- William Walter Spencer, 68, a Franklin (Tenn.) financial adviser, sold elderly members of his church promissory notes that turned out to be bogus. He pleaded guilty to fraud in May and is expected to be sentenced in August.
Veterans are a big target. Several groups offer to help former soldiers sign up for a $2,000-a-month benefit from the Veterans Affairs Dept. in Washington. While the program is real, some groups are telling seniors they can only qualify if they liquidate their assets and purchase an annuity, which usually comes with a hefty sales commission.
Reverse mortgages, which let people aged 62 and older get cash out of their homes and are repaid when the borrower dies or moves, are a big part of many scams.
One popular ruse is urging the elderly to finance annuity purchases with a reverse mortgage, despite a ban on cross-selling them with other financial products.
Other unsuitable investments being pushed on seniors are pools of life insurance policies, similar to the bundles of home mortgages that helped fuel the financial crisis. Some of these have turned out to include policies that don’t exist, and it’s unclear whether they’re supposed to be overseen by state insurance regulators or the Securities & Exchange Commission.
Principal-protected notes are another investment being pushed on the elderly, says John Gannon of the Financial Industry Regulatory Authority in Washington. He says seniors fall for these because the name makes it sound as if they’re risk-free; in fact the principal isn’t always protected, as holders of notes backed by Lehman Brothers learned when the firm collapsed.
“Financial professionals, both legitimate and illegitimate, know there are assets seniors have that they can get their hands on,” Gannon says. “They’ve figured out ways to get to all of them.”
The bottom line: More retirees than ever are being targeted by financial swindlers, many of whom are themselves elderly.
If you have been victimized by fraud, or have doubts as to whether you are or were defrauded, please email a Florida attorney.