Financial elder abuse is nothing new. But when it occurs at the hands of a financial professional, it can be particularly disturbing.
In a recent case, a Chico broker, formerly affiliated with Wells Fargo Advisors, was accused of stealing nearly $89,000 from his client, an older woman.
The broker, Jeffrey C. McClure, was permanently barred from selling securities, based on accusations of writing 36 checks on the woman’s account – without her knowledge or consent – between December 2012 and August 2014.
According to the Financial Industry Regulatory Authority, which issued its enforcement action on Dec. 22, McClure had access to the client’s checkbook to help pay her bills. Instead, he’s accused of depositing the checks to his own accounts and using the money on personal expenses.
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“Armed with a checkbook, he was able to write checks to his benefit,” which allegedly totaled $88,500, said Susan Axelrod, FINRA executive vice president for regulatory operations, based in Washington, D.C. “That’s the type of person we want to get out of the business.”
McClure was permanently barred from selling securities. In consenting to the sanction, he neither admitted nor denied the charges, according to FINRA. Calls to the office of McClure’s attorney in Chico were not returned.
Financial abuse of seniors takes a huge financial toll. The annual loss to victims is estimated to be at least $2.9 billion, according to The MetLife Study of Elder Financial Abuse in 2011.
Efforts to curb such abuse are widespread. Last year, Sacramento County’s Adult Protective Services office re-opened a financial fraud unit, staffed with five investigators, following increased reports of elder financial fraud.
In November, an analysis by the Wall Street Journal found that the country’s biggest “hot spots” for broker malfeasance were in California and Florida, primarily in areas populated with seniors with higher-than-average incomes. Of the country’s top 16, the greater Sacramento area ranked No. 10, ahead of San Diego, Orange County and the San Fernando Valley.
“There’s a concentration in those areas of some amount of wealth and retirees, which may lead more investment professionals to those areas – and thus may have a higher percentage of violative conduct as a result,” Axelrod said in an email. She said FINRA has offices in Los Angeles and Boca Raton, Florida, that are focused on looking at higher-risk individuals in both states.
FINRA, which has been accused by critics of not being tough enough, has been cracking down on problem brokers nationwide. In 2013, it set up a program to root out “high-risk” brokers based on tips, irregular transactions and other red-flag behavior. Last year, based on examinations at branch offices nationwide, it ousted 100 of those high-risk brokers, some in as few as eight days. As of November, FINRA had barred a total of 447 brokers in 2014.
Over the last five years, FINRA said, it has kicked out of the industry an average of 357 brokers annually.
“There’s a very small percentage of high-risk brokers,” said Axelrod. “They’re a small group, but the allegations are so serious, they need to be moved out of business completely,” said Axelrod. “We have to move quickly and swiftly to ban them (from the industry).”
With more than 629,500 individuals registered to sell securities, the bad actors are truly a minority, FINRA says.
“There are a lot of investment professionals who are focused on doing a good job for their customers and who act with integrity and honesty,” Axelrod noted.
Nevertheless, experts say the problem of elder financial abuse is likely vastly under-reported.
Many seniors may be reluctant to report financial fraud, said Eleanor Blayney, consumer advocate for the Certified Financial Planner Board, which oversees the nation’s CFP industry. Many seniors are embarrassed at being duped, may not want to admit they are not on top of financial matters or find it incomprehensible or frightening that a family member or someone they are close to would defraud them, she said in an email.
“The best single piece of advice I would give seniors: Identify a friend, family member or professional to be their advocate and ‘eyes and ears’ whenever they are engaging in a major financial transaction or decision,” said Blayney, who wrote the CFP Board’s Financial Self-Defense Guide for Seniors. “Do not try to make these decisions by yourself, even if you are certain you are competent to do so.”
Blayney said it’s the same approach as when you’re facing a major medical procedure and take someone with you to a doctor’s appointment to discuss options. “That person can listen objectively and hear things that you may miss or not completely understand, given your personal and emotional involvement in what is being discussed,” she said. “Everyone, particularly seniors, needs a financial advocate just as much as a medical advocate.”
Call The Bee’s Claudia Buck at (916) 321-1968 or read her Personal Finance columns at sacbee.com/claudiabuck.
Elder financial fraud: How to avoid it
What it is: Taking financial advantage of seniors, such as through sales of inappropriate investments and annuities, telemarketing consumer scams, forging signatures on financial accounts, etc. It can occur at the hands of caregivers, family members, scam artists or even seemingly trusted financial professionals.
Warning signs: Unfamiliar signatures on checks; unusual withdrawals from checking/savings accounts; confused or befuddled behavior by a senior and/or the appearance of a new “friend” who gains access to the senior’s finances; bills going unpaid; unexpected expenditures on trips, gifts or other purchases, etc.
Where to get help:
FINRA: An independent watchdog of the securities industry, the Financial Industry Regulatory Authority investigates and disciplines brokers accused of wrongful behavior. To search for a broker’s disciplinary history, use FINRA’s BrokerCheck tool at: brokercheck.finra.org You can type in an individual or a company name. Or call (800) 289-9999.
StopFraud.gov: The federal government’s go-to site for information on elder fraud and financial exploitation, it lists more than 12 agencies designed to protect seniors.
Financial Self-Defense Guide for Seniors: A how-to booklet by the Certified Financial Planner Board has warning signs for how to avoid financial scams and abuse. Go to letsmakeaplan.org or call (800) 487-1497.
Attorney General’s Office: In California, the state attorney general’s office has a “Citizen’s Guide to Preventing & Reporting Elder Abuse,” available online at oag.ca.gov .
CANHR: Based in San Francisco, California Advocates for Nursing Home Reform is a nonprofit involved with senior issues, including financial abuse. It also has an attorney referral service for those seeking advice on elder law issues. It’s at canhr.org or (800) 474-1116.
Source: Bee research