by Tim Ralph
As we meet with folks across America, we occasionally come across some unfortunate cases, where overly trusting people have been taken advantage of and their savings have been swindled.
In this true story “Trusting Cindy,” we use fake names merely to provide a lesson to the reader.
We recently visited with Cindy, age 72, who personally loaned her two real estate agent “friends”, Steve and Susan to purchase, renovate (flip) and rent, California real estate. The promise was for the borrower to pay Cindy, 8% per year on the loan. A very attractive deal to most.
Despite her financial advisors’ advice, over the last 6 years she has issued personal loans in the sum of $1.2million. In those 6 years, zero interest payment has been made and current “interest owed” is over $200,000.
When Steve and Susan were asked about the properties, each time a separate bad luck story was presented and accepted by trusting Cindy. To compound this issue, trusting Cindy had borrowed this $1.2million that she gave to Steve and Susan. As her cost of borrowing increased over the 6 years, she is now very close to default on her loan with no re-payment in sight.
Just recently, Steve came to Cindy again, and asked for another investment of $100,000. Trusting Cindy was not so trusting any more.
She reached out to her financial advisor, and admittedly, told him he was right. Her advisor had been against this from day one. Unfortunately, Elder Financial Abuse affects some 5 million Americans a year’s*1. The abuser can be someone they know or even a stranger.
Some behavioral red-flags
1. Noticeable change in appearance or grooming
2. Disorientation or confusion
3. Change in mood
4. Change in eye contact
5. Cringing or withdrawing
6. Hesitancy to enter conversations
7. Nervousness or fear of the person with them
8. Not being allowed to speak or make decisions on their own.
Red-Flag financial activities:
1. Unusual and numerous withdrawals from accounts
2. Accompanied by someone who is not a relative
3. Signature looks forged, unusual or suspicious
4. Someone else is overly interest in their finances
5. Client is concerned or confused about transactions
6. Unusual changes to beneficiaries
7. Abrupt changes in a will, trust or power of attorney.
If you identify any of these red flag behaviors, activities or actions during your discussions with a senior contact your Financial Advisor or the Local Special Investigations Unit to report your concerns.
Remember, it’s your responsibility to do the right thing, at the right time, for the right person.
*1 How the Senior Safe Act Could Curb Elder Financial Abuse”, Published on www.forbes.com (May 8, 2018)