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Business of Home: How to Prevent Elder Financial Exploitation

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According to a recent Metlife study, financial exploitation of the elderly is up 12 percent, with more than $2.6 billion taken annually. In more than half the cases, the offenders are trusted friends and even family.

A Chicago-area financial planner is facing several years in prison for his role in a $9 million Ponzi scheme.

Most of 67-year-old Algird Norkus' victims were elderly clients who’ve seen their life savings wiped out.

"I beat myself up every day, why did I do it?” said one victim, 71-year-old Bob Govenat, who lost $350,000 for trusting the wrong man. "I am ashamed, I am hurt."

Govenat said Norkus offered him more than 13 percent return on his money if he would invest in a new company of his.

Govenat saw his money siphoned out of legitimate investments and had checks written to Norkus directly. Soon, the interest payments stopped and Norkus wouldn’t return his calls. Eventually Govenat went to authorities.

Along with criminal charges, Govenat and dozens of other victims have filed a lawsuit against Norkus and Madison Avenue Securities, the brokerage firm with which Norkus worked. Neither would comment for our story, but Govenat’s lawyer said the money is still missing.

"I tell people trust, but verify," explained Andrew Stoltmann, a leading attorney for financial fraud.

According to a recent Metlife study, financial exploitation of the elderly is up 12 percent, with more than $2.6 billion taken annually. In more than half the cases, the offenders are trusted friends and even family.

"People should be aware there are a lot more Mr. Norkus’ out there in the bushes just waiting to take your money,” said Govenat. "I don’t know who you trust today, I really don't!"

Stoltmann said seniors must take steps to protect their money. Here are his seven tips for more peace of mind:

  • Put Assets in a Trust and Hire a Bank Trust Department to Manage: The best advice for those over the age of 65 is to put assets in a trust and hire a large bank trust department to manage the funds. While bank trust departments tend to have high fees, they are usually very conservative in how they manage client funds. If the assets are in a trust, only certain people, like the trustee, can parcel out money. It is imperative to have two sets of eyes looking over every financial transaction.
     
  • Duplicate Bank Statements: Consider allowing the bank to send a duplicate copy of your bank statement to a trusted family member. Usually, most financial elder exploitation cases are only reported or discovered six to 12 months after the initial losses have occurred. Of course, elders with failing sight are at a greater risk because they may rely upon the very person who is stealing from them to ensure that the financial transactions are in order. An independent pair of eyes that is able to review bank statements every 30 days will be able to catch suspicious activities in the early stages and cut it off.
     
  • Inventory Jewelry & Valuables: Jewelry is the number one item that is stolen from homes occupied by elders. Not only should your jewelry be kept in a locked drawer, you should have photographs of valuable items in a separate location in order to document what was taken.
     
  • Get Caller ID: Financial scammers love the telephone. It is now their weapon of choice. The minimal cost of caller ID is well worth it. If the incoming call is classified as “private” or “unknown,” or even from out of state, your level of suspicion should go up.
     
  • Identity Protection: Identity theft is extremely common. Take steps to prevent it by running a credit check once a year to learn whether someone has applied for or obtained a credit card in your name. The three major credit agencies are Experian (1-888-397-3742), Equifax (800-685-1111) or Trans Union (800-916-8800).
     
  • Protect Your Mail: If possible, do not allow your mail to sit in an unsecured mailbox where the public has access. Consider purchasing a locked mailbox, renting a post office box, or installing a mail slot in your front door.
     
  • Shred Important Documents: Every piece of mail containing your name, address and any other identifying information should be shredded before being discarded. A shredder is one of the best investments seniors can make.

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