Sunday, June 16, 2024

Swindling seniors

by Edward Martin

As the winter nights grew longer, pain replaced the laugh lines that once crinkled his face. They’d been married 53 years, he and Faye, with three grown children and a plain little brick house that doubled as Pierce’s Plumbing Co. on a treeless Roanoke Rapids street. More than two decades before, Faye had left a nursing job to become the helpmate, keeping house, answering phones and hand-addressing bills. Figures flustered her, so her husband handled the money.

When cancer claimed him in January 2010, Jordan Oliver Pierce Jr., 75,was laid to rest behind the stone gateway of Cedarwood Cemetery. Junior, as he was known, grew up here and had been a plumber since 1977, so scores came to mourn. One was in his 40s with dark hair and a warm smile. His attentiveness touched Faye, then 73.

It was nothing romantic. After Junior’s death, Tony Martin, who had a wife and three kids and aspired to open a furniture store, would sometimes drop by with flowers. “Mama would say, ‘Look what Tony brought!’” says daughter Wanda Cooke. “Mama never thought she could take care of herself without my daddy.” In fact, the Pierces had always been frugal, and Faye was left well off. Two months after burying her husband, she bought a modest, 26-year-old house on Steeplechase Run to be across the street from her daughter.

Cooke cringed when Martin, who billed himself as a designer, charged Faye $80,000 in interior-decorating fees for the 1,482-square-foot, six-room, vinyl-siding house for which she’d paid $135,000. Martin had suggested furniture, colors, curtains and other items. “I said, ‘Mama, that’s way too much,’ but she trusted him,” Cooke says. “I tried not to meddle in her personal stuff. I didn’t know that she didn’t know the difference between $1,000 and $10,000.” Then, in March 2012, came the burglary at Pierce’s Plumbing.

In papers police found strewn on the floor were uncashed checks to Faye, beginning about a year after Pierce’s death. Cooke helped mind the company’s finances after her father died, but had never seen the checks. It’s all right, Faye told her daughter. Tony, she said, had written them as his way of assuring her he’d repay the tens of thousands of dollars she’d lent him. Don’t cash them until I tell you to, he told her. Cooke was floored. “He’d drained one account completely dry and started on the others.”

In March 2013, Tony Linwood Martin Jr., was convicted of a crime little known outside the ranks of bankers, credit-union managers, domestic attorneys and families of victims. Found guilty of elder exploitation and obtaining property under false pretenses, he’d taken more than $160,000 from the plumber’s widow in the roughly 18 months after Pierce’s death. N.C. Department of Corrections records show he served 16 months in prison.

Faye Pierce’s family credits Amy Broughton, an assistant district attorney in Halifax County, for her aggressive prosecution of Martin under elder exploitation laws. “If you stick up a 7-Eleven, at least you don’t know the other person,” says Broughton, now a private attorney in Raleigh. “It’s so much sadder when you look into somebody’s eyes and know they’re suffering and grieving, and then use that against them.”

Nobody knows how many senior citizens get ripped off in North Carolina. Based on a 2010 report by the U.S. Government Accountability Office that estimated annual national losses at $2.9 billion, the yearly Tar Heel toll is probably $100 million a year or more. This summer, the federal Consumer Financial Protection Bureau urged financial bodies to do more to stop it. Cloaked in the frailty of age, embarrassment, family secrets, Internet scams and even ignorance that they’ve been victimized, it may be society’s most unreported crime.

Elder abuse is “verging on epidemic proportions,” State Employees’ Credit Union CEO Jim Blaine says.

The number of substantiated cases reported to the N.C. Department of Health and Human Services’ aging and adult services division reached 3,600 in the year ended in June, up from about 2,900 in the 2011 fiscal year, says spokeswoman Alex Lefebvre. But there are hopeful signs: The number of cases reported to the elder fraud division of the N.C. Attorney General’s office has declined since a new state law, which took effect on Jan. 1, 2014, empowered banks, credit unions and other financial institutions to more swiftly intervene, says David Kirkman, who heads the agency’s elder-abuse division. Still, through June, 190 cases had been reported, averaging $10,400 each in losses.

“It’s verging on epidemic proportions,” says Jim Blaine, chief executive officer of Raleigh-based State Employees’ Credit Union, with more than 2 million members. SECU battles elder exploitation by drilling employees on detection and forming partnerships with local senior and social-services groups. “We see signs of it in our organization every day, and it’s growing dramatically,” Blaine says. Elder financial exploitation is “the crime of the 21st century,” says Peter Gwaltney, president of the North Carolina Bankers Association. He came to North Carolina in 2014 after leading the national Senior Housing Crime Prevention Foundation, based in Memphis, Tenn.

“The population age 65 and up is growing rapidly,” he says. “Between 2012 and 2040, the age-85 population will more than triple. That means some large numbers. More people have more wealth because they have more time to accumulate it. That’s partly why we’re seeing such an escalation of elderly financial abuse.”

The financial impact of elder exploitation extends beyond victims and their families. From law-enforcement agencies, bankers and others emerges the picture of a race pitting the sophisticated technology of financial institutions and government sleuths against audacious Internet and telephone exploiters. Banks and credit unions are pouring thousands of dollars into training and technology to halt the fraud, costs passed along to customers and shareholders. In other cases, taxpayers get stuck. The General Accounting Office examined about 80 Utah cases and concluded the state paid nearly $1 million for Medicaid care for elderly victims left penniless. Human costs are incalculable.

“Mama felt a sense of betrayal,” says Cooke. “She trusted the guy so much she even went against what her family told her. Mainly, I let the police and the district attorney handle it, and she never really had much to say. But she had the strangest reaction: She just cried.”

The stereotypical target: Everyone’s mother, the aging widow scammed by home-repair crooks. That is hardly the rule. The elderly fraud victim is likely affluent, often a retired business executive or owner. “That’s where the money is,” Kirkman says.

Details are usually hidden in banking privacy laws, though examples surface. In December 2013, the attorney general’s office received a call from a Charlotte bank. “They said, ‘Hey, we’ve got a man here at our service desk who has sent $3.5 million to places all over the world, thinking one of his distant relatives died in Nigeria, and he has to pay all these fees to get the estate transferred,’” Kirkman says.

The man, in his 80s, “was a savvy businessperson and investor who’d made a fortune over his lifetime,” he adds. “It’s not just your naïve person on food stamps or some elderly woman on Social Security.” Two retired Research Triangle IBM executives fell prey to similar scams, along with retired husband-and-wife North Carolina State University professors who lost $800,000. The state’s first million-dollar victim was a retiree in a Piedmont town of 25,000.

Fred Cobb, a senior vice president at State Employees’ Credit Union in Cary, describes a member in her 90s who obtained cashier’s checks for $10,000 and $73,000 to help two acquaintances with purported college expenses. A trust officer intervened, calling police and the woman’s retirement home. The intended recipients were or had been employees at the senior center. One, who had been fired for taking money from the woman, was waiting in the branch while she obtained the $10,000 check for him. Retirement-home officials convinced the elderly woman to redeposit the large check, but not the other.

The SECU example underscores a paradox of financial fraud among the elderly: Those astute or frugal enough to amass healthy retirement accounts or trusts are often the most vulnerable. “That’s one of the techniques of the scammers,” Kirkman says. “They try to make people feel they’re young again, and still in the pilot’s seat. They desire to be decision-makers again. In business and finance, they were usually wheeler-dealers.”

Physiological factors also come into play.  The elderly often “lose a healthy sense of skepticism,” Gwaltney says. He cites a University of California at Los Angeles study that showed profile photos altered to make faces look untrustworthy. A group of 119 older adults, with a mean age of 68, was more trusting than a test group with a mean age of 23. A corresponding study measured brain activity during the exercise. Older adults had substantially less. “This doesn’t mean we lose our intellectual capacity,” Gwaltney says. “We’re just more accepting.”

Violations of well-placed trust are common. “We see things like a caregiver coming in to help with cleaning, taking the victim to the grocery store, things of that nature,” says Larry Brown, senior vice president for risk management of Raleigh-based First Citizens Bank.

Four years ago, Susanne Marie Crotty, wife of Buncombe County District Court Judge Edwin Clontz and a law-firm legal assistant, was sentenced to jail for embezzlement, financial card fraud and other charges for stealing more than $100,000 from an elderly client. Crotty said she “always had her interest at heart.”

In a small eastern North Carolina town, a 93-year-old widow in June 2010 answered the telephone to hear an authoritative voice congratulating her on winning a multimillion-dollar lottery, a common sweepstakes scam. The caller told the woman to send wire transfers of money to cover taxes and other costs. She complied and then was told if she sent more, she could win $3.5 million. Kirkman, who runs the attorney general’s program to break the cycle of such frauds, says scammers took more than $10.1 million from Tar Heel victims reported to the program in 2014, though about $2.4 million was halted or reclaimed.

The widow ultimately lost $250,000. “They played on her emotions, and told her that if she won this sweepstakes, her sons would never have to work again,” says one of her sons. When she stopped sending money, the scam took a threatening turn. “When I went home, I found my mother had covered up the house numbers. I asked her why and she said she didn’t want people to know where she lived.” The reaction traces a cycle in which confidence is also lost, along with money. “My mother was very independent throughout life, very smart,” says her son. “My wife and I told her it was a scam, but she refused to believe it. All her life she would work her you-know-what off to make something happen. It was like if she wanted something, she could will it.”

Osteoporosis had left the sweepstakes victim so stooped she fumbled with frail hands to reach kitchen cabinet doors. She dragged a crippled leg, but she could still make it to banks in the small town, where her late husband, a retailer, had laid up money for their old age. “My father was a World War II hero, a medic with Patton who participated in the Battle of the Bulge and liberation of three concentration camps,” says the woman’s son. “He’d done business in that town since 1953, and had funds in every bank in town. People, and I include the banks in that, basically stole from him.”

Five years later, the son says he has invested thousands of dollars in attorney’s fees and other costs and hundreds of hours pursuing the case, after hitting deadends with banks, state regulators, law enforcement and others. Because his efforts are pending, he asked that the name of his parents and the town not be disclosed. Amid the wrenching realities of elder exploitation is the tightrope walked by financial institutions between banking privacy, fiduciary duty to customers and often uncooperative victims. It occurs at the volatile juncture of human emotions and business law.

The son says his mother abruptly began wiring $10,000 transfers to a Florida bank. He asked banks to halt the transfers while he obtained power of attorney over her affairs, which took more than six weeks. One institution handled eight additional wire transfers in that period. “They cited the privacy act, but if you read it, there’s a caveat that all bets are off if fraud is thought to be occurring. They made $18.50 per wire transfer. You can’t tell me sending her home wouldn’t have been the right thing to do, foregoing the $18.50 fee.”

The family obtained a measure of justice last November when Jack Mayer, 43, a Pennsylvania resident who claims French citizenship, was sentenced to up to 30 years in prison in connection with the scam that targeted victims in North Carolina and four other states. The victim’s son has recouped about $70,000. His mother died in 2013, at age 96.

Such cases are often complex. If the victim is lucid, as in the case of the Cary credit-union target, or merely exercises poor judgment — a 90-year-old customer giving large sums to his new 30-year-old “fiancée” — laws might not be broken. The son of the sweepstakes victim in eastern North Carolina concedes that his mother, who lived independently until 2011, “told the banks she’d take her business elsewhere,” if they didn’t comply.

When Cary credit-union executive Cobb tried to dissuade the nursing-home resident from giving $10,000 to a stranger, “she pointed her finger in my face and told me and the police we should be ashamed of depriving that young man of an opportunity to better himself,” he says. “She said this was her money and she was going to spend it any way that she wanted.”

North Carolina lawmakers in 2013 passed a law that obligates financial institutions to report suspected fraud against adults over 65, while also providing protection from privacy-invasion lawsuits. The law clarifies a point argued in the Pierce case in Roanoke Rapids. Martin’s attorney argued that Faye Pierce, though older than 70, was nevertheless competent. Her daughter, a plumbing company employee and others were forced to testify she was not. Previous law left the question unclear, though in April, the N.C. Supreme Court upheld the  guilty verdict. Under state law, age 65 is a threshold and competency is not considered.

Stepped-up detection by banks and credit unions is helping cut down on exploitation cases, Kirkman says, while noting that only a fraction are ever reported. Reported cases totaled less than $4 million during the first half of this year, down from $11.8 million in all of 2013, according to the Attorney General’s office. But catching and prosecuting criminals remains too hard, Brown says. “You’ll call the agency you’re supposed to refer to and they’ll refer you to law enforcement. You call them and they refer you back to the agency.”

Bank and credit-union insiders describe increasing use of data-mining software that can flag even miniscule changes in banking habits, such as the size or geographic location of withdrawals or suddenly declining balances. Tar Heel banks now require managers and tellers to train for tipoffs of elder fraud, such as customers making withdrawals while accompanied by strangers. “We’ll ask, ‘How’re you feeling this morning? Who brought you here?’” Brown says. “Is that a relative from out of town, or someone who just put a roof on your house and wants to be paid three times what it’s worth?”

Exploiters aren’t standing still, especially given the Internet’s incredible reach. Automated software targeting 500,000 email addresses can be bought for less than $70. Cisco Systems Inc., a San Jose, Calif.-based tech giant, concluded that eight people out of a million fall for so-called Nigerian prince scams — victims are told they’ve inherited overseas estates — sweepstakes, sweetheart and similar ruses. Billions of scam emails are sent annually.

On a quiet street in Roanoke Rapids, Faye Pierce lives with the memories of Junior, her husband of more than five decades. Now, her daughter is nearby.

“It has shortened her life,” says Wanda Cooke. “It has had that effect. She’ll never be the same.”

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