Abuse against the elderly is usually hidden in plain sight, a “wolf in sheep’s clothing” if you will. Some terrible individuals, who are in positions of authority and trust, are taking advantage of their most vulnerable elderly clients. In this episode Victor shares a few stories, which happened pretty recently and unfortunately, fairly often. These stories are of trusted authority figures who abused their power and took advantage of their elderly clients. They stole money and disguised it as necessary fees for their services. The lesson from today’s episode: always have a system of checks and balances in place.
Make It Last with Victor Medina is hosted by Victor J. Medina, an estate planning and Certified Elder Law Attorney (CELA®) and Certified Financial Planner™ professional (CFP). Through his law firm and independent registered investment advisory company, Victor provides 360º Wealth Protection Strategies for individuals in or nearing retirement.
Victor Medina: Hey, everybody, welcome back to Make It Last. I am your host, Victor Medina. I’m so glad you could join us here this Saturday morning. For those of you that are joining us on Facebook Live, welcome back as well.
Hey, listen, if you’re interested in watching this show, of course, you can always catch that on Facebook Live, where we simulcast the show as well as on YouTube. We’ve got all of the prior episodes. I shouldn’t say all of them.
We’ve got a bunch of the prior episodes going all the way back where we’ve done to recording. Sometimes, a little bit more fun to watch the show if you’re looking on your phone or your screen and listen to it.
Either way, we’ve got a bunch of different ways for you to engage with Make It Last. This is the show that helps you keep your legal ducks in a row and your financial nest eggs secure. We’re talking all things retirement. Just last week, I spent the first segment talking about bad actions that were going on with Wells Fargo fiduciary relationship.
I can’t even go a week, one week. Didn’t get there one week before we have a next article with more bad actors. It really got me thinking. In this same time, August 21st or so, I was featured on another radio station, NJ 101.5, that was doing a segment on elder care.
They did a five‑day whole special on elder care. They finished up on that last day with me, some interviews with me. The interview really only lasts about 45 seconds on the air. There’s a little bit more online. If you go to NJ101.5.com, you will be able to look up my quotes and what I was talking to the reporter about, dealing about asset protection and how do you make sure you don’t go broke.
One of the things that I found missing in the stuff that they were talking about, was how to protect elders against abuse and exploitation. It gets me to the topic that I want to be talking about today, which is that I want to help you understand, first of all, how elder abuse might occur, and also, how to avoid it.
I have three different news reports that have all come out within the last month or so, two of them in the last week, talking about situations where people in trusted positions, specifically professionals like lawyers and financial advisers, ended up doing something wrong with the money.
Really, they’re after money, in the case of the lawyer, in their position of power and trust. Let’s go through each one of these. I’m accused, I think, of being too harsh on financial advisers. Let me now put up one of the elder law attorneys and absolutely put them on the cross, leave him in the stockades.
This is not going to be a great story but we had another elder law attorney in New Jersey, in fact, just to make my skin crawl, another individual who hosted a radio show twice a month called Inside the Law. His name is Robert Novy. He was out of Brick. He plead guilty earlier in the year. I think this was on July 27.
He ended up pleading guilty to first‑degree money laundering before a court in Ocean County. Under the plea agreement, the state’s going to recommend that the lawyer be sentenced to 10 years in state prison, including three years and four months of parole ineligibility. That means he’s going to serve a minimum of three months…Excuse me, three years and four months.
He admitted to stealing millions of dollars from law clients. The state investigation revealed, essentially, that he stole nearly three million dollars from at least two dozen victims. This is not one or two people they had access to. He systematically and, sociopathology in there, sociopathically, he put himself into these people’s lives and stole from them.
Now, he is going to have to pay up restitution to his victims out of two funds totaling four million dollars that are being created used assets previously seized from him. We got four million dollars from him and he’s going to spend those four million dollars in restitution.
There’s at least one fund of three million dollars to provide restitution to client victims, their heirs, estates, and trusts already identified, and a second fund of a million dollars to provide restitution for others not previously identified, but who have come forward with proof that they were the victim of theft.
Essentially, what we have is three million dollars that was part of the original investigation. Since the case broke, I suppose, there is another million dollars that they’ve discovered that was stolen at that point in time as well. He has got to surrender his law license, thank god, and he is going to have to pay $500,000 to the state.
He was arrested in October of 2016. They seized billing records, other evidence. They obtained court orders, freezing four million dollars in assets, as we talked about. He essentially stole from elderly clients, stealing their life savings.
What he did was he would find people that did not have a close relative to them or claim to their estate, to challenge what was going on. He would insert himself through either using wills, powers of attorney, trust documents, either making himself the sole financial decision‑maker, as well as the beneficiary.
Whatever happened, he put himself as the recipient of that, like if they had a big annuity or if they are a life insurance policy, he would do direct the insurance companies to redeem the policies and send the money directly to him.
Then he would steal the money. If anybody ever challenged him, he would say that there were administrative varies and he would pay them the funds. He was really looking for people that would not raise issues. This is an important part of what we wanted to cover today.
One of the most important things that you can do is make sure that you’re keeping an eye on what’s going on. I’m going to go into a little bit more of that as we get through the next couple of segments because this is a big topic.
We want to make sure that we are covering this correctly, in giving you all of the tools that you need in order to keep yourself protected, but, this guy, Bob Novy ended up transferring funds from the clients’ personal accounts directly into his own account. He took personal accounts and put them into his trust account.
He had powers of attorney signed by the victims. They legally required these people to put the money with this guy. Basically, they just put it within his control. Then he would, essentially, also put money in and then bill the clients for power of attorney fees without any invoices, just to steal the money out.
What we see is the sort of systematic effort by him, to insert himself into a position of power where he could, for lack of better term, just control everything that was going on in there and do so without much oversight.
He was looking for, specifically, the kind of people that would not be aware of what was going on. We see this as a common theme where looking for potential victims in essentially anyone who is in a situation where there’s somebody who is not caring for him, or looking out over what’s going on. Those are right for somebody to steal money from.
I’m going to transition a little bit. When we come back from the break to the financial adviser side and talk to you about two cases that are going on there that have gone on there.
I think you would find that some of that really, really alarming, but at the end of it, we’re going to give you some tools that you can use in your own life to make sure that you don’t fall victim. These people ‑‑ and this is the thing that just drives me nuts about it ‑‑ who were doing the stealing, were in positions of trust.
They were in positions of having some autonomy over what was going on. Because there is no oversight and because they were trusted individuals, they exploited that trust and they hurt the people that they’re supposed to be caring for.
We want to make sure that we help you avoid that because it doesn’t help my case much to say, “Look at…just find better people to trust,” because at the end of this it’s very difficult to determine who is trustworthy. Wolf in sheep’s clothing comes to mind.
Victor: We just want to make sure that even though we’ve got a situation where we have somebody who is giving over trust, we have the checks and balances to make sure that they’re going to continue to do the right things.
Stick with us. When we come back, on Make It L we’re going to talk about the financial adviser side, couple more cases just in the last week. Then, we will give you more information about how to protect yourself. We’ll be right back here on Make It Last.
Victor: Welcome back to Make It Last. I’m talking today about incidents of elder abuse. As I mentioned at the top of the show I had been featured on another radio station that was doing a five‑day special on elder care.
While I was interviewed to talk about asset protection, which we covered a little bit last week, and how to protect the home and how to protect the IRA ‑‑ these are the kind of topics that I was covering in my segment ‑‑ that five‑day special really didn’t delve into elder abuse.
I’m sort of exercised about this in large part because there’ve been number of news accounts that have come out in the last few weeks. Just a couple on the last week since I last talked about the Wells Fargo advisers that were supposed to be a fiduciary. There’s been more cases that have come out about this.
Those cases essentially continue to highlight where elders are susceptible to being abused, and in fact have been abused on a financial matter. We’re not talking about nursing home abuse. We’re not talking about physical abuse, because that is a separate issue. I want to focus a little on bit about the abuse of professionals who were inserted in people’s lives.
It’s hard enough to manage, making sure you’ve got the right kids that are named. If you were putting over trust in somebody like an attorney or financial adviser, and they’re exploiting that trust and they’re doing wrong by you, that can be almost as bad and it’s devastating to your life.
In just last week, I was leafing through the “New York Times.” Actually, I have to give credit where credit is due. [laughs] I was at a soccer tournament, and I was there two days. I don’t know if you know anything about soccer tourns, but they’re normally two days. You sit there two games on each day. You sit there in between the games and you hang out with the other parents.
The kids hang out together. There’s lot of fun. When I came home from the first day, my wife had left open a New York Times. I still get a hard copy paper. She left out the New York Times and essentially it was an article that was entitled “Caring for Aging Parents with an Eye on Broker Handling Their Savings.”
It talked about a woman named Tracy Devoe. She had to essentially move her 84‑year‑old mother from a Manhattan apartment to an assisted living in Brooklyn. The mother was suffering from Alzheimer’s. She didn’t want to go, but she got into a situation where she was wandering on the Upper East Side several times. It was very, very difficult.
What happened was, in order to make sure that they understood what was going on or she understood was going on, Tracy had to get a handle on the finances for her mom. It turns out that, what they were relying on was this account through J.P. Morgan Securities that the father opened at least eight years ago.
The account was already explaining expenses for the father because he had two strokes and was living in a residence that the wife was moving to, and for a younger sister who was in a community with adults with developmental disabilities.
The point is that we were already spending money out of there. What happened was, when the daughter finally noticed what was going on, she noticed some unusual activity in the account. She had been overseeing this for four or five years by the way. She really delved in and it looked like it had gone down about a $100,000 in one month. Her own accounts were up.
This is the largest economic expansion in history now. It looked like the account should have gone up if things are smartly invested. She started to investigate what was going on. It turns out that…Hiring a lawyer and hiring friends are consulted.
It turns out that the account had been charged about $120,000 in commissions that year or about 10 percent of value, there’s about $1.3 million in there. Of course, it’s about 10 times more than what advisers would normally charge to manage account of that size figures to one, one and a quarter percent.
What was happening was that the broker was selling about two‑thirds of the portfolio and then reinvesting the proceeds back into other securities yielding a commission, what we call churning. When they investigated that, he sold…I don’t know, maybe in eight different times in a day Exxon shares. It generated commissions on each one of the sales. This is frantic trading.
She highlighted this and settled with J.P. Morgan for the sum that she’s prohibited from discussing. J.P. Morgan did their corporate speak. “The client agreed to an appropriate resolution of this matter in June. We are very disappointed with that they’re feeling their expectations have not been met.” Crap. We know it’s crap. We know that they did wrong.
More importantly, the broker [laughs] still works at J.P. Morgan. This is somebody who definitely wants to be avoided. What it highlights is that this adviser essentially saw the opportunity to be making more money in the account using this churning, because the parents are dealing with Alzheimer’s. There was a lot of money that need to be generated with paying out claims.
Essentially, what you had there was a scenario where people could overlook what was going in terms of activity because it looks like it was OK, and they’d given their trust over. There was another article that it come out a while ago, about somebody selling an index to nearly two somebody with dementia about four years before it all happened.
You pocket a very tidy commission but the point was that there was an inappropriate product for this scenario. It’s essentially highlighted. Again, another scenario with somebody with dementia and what would have happened or what did happen to them because somebody was trying to make money in a position of trust.
What we’re seeing here is that this is not limited just to the financial space or just to the attorney space. We see this abuse of trust in any professional setting. It gives us some pause and caution because what we want to do is we want to make sure that we are essentially protecting ourselves, to trust but verify.
We want to cut the cards on this scenario because we do want to make sure that people are not blindly giving over faith. When we come back from the next break, what I will do is I will talk to you a little bit about what you can do to help protect yourself, because it’s essential that you take these steps. I think it’s nearly impossible.
I think that I’m probably one of more trustworthy people out there. I know that I do things the right way. I am fond of saying in the office, “Until doing the right thing stops being an advantage in the marketplace I’m just going to keep capitalizing on doing the right thing.” I really have to innovate beyond that.
From a perspective of the way that we work here I know I’m very comfortable that we do the right thing. I don’t use that as the method of explaining to my clients that they should just go ahead with my recommendations.
I want to make sure that they’re aware that what we’re recommending in any of these contexts are scenarios where that’s in their best interest and where they are not at risk for exploitation. In any scenario, whether or not they are potential victims, whether they are risky in the sense that they are diminished in some fashion or whether or not they full have their faculties and they’re totally fine.
I want to explain and give them all of the information that they know that they can rely on as well as having other ways of crosschecking what we’re doing to make sure that no one’s going to be in a position to exploit them or take advantage of them.
Victor: When we come back in a break, I’m going to tell you what we do in our office and give you some steps so that you can help protect yourself whether or not you work with us or somebody else.
You want to use these steps to help protect yourself especially if you are at the beginning stages or having some condition where you might potentially be with Alzheimer’s, with dementia or something like that. We’re just getting on and your concerns that you may not have control of this going forward.
We do want to talk about that and help you with all of that, so stick with us. When we come back on Make It Last, I’m going to give you those special tips. We’ll be right back when we break.
Victor: Welcome back to Make It Last. Today, I’ve been talking a lot about elder abuse. We’ve been setting up the stage for different scenarios in which it can happen. Brokers doing excess turning and trading inside of the accounts.
Attorneys putting themselves in a position to receive all of the proceeds of what has been going on or steal money or anything like that and people in a position of trust. When I left you on the break, what I did is I explained that the way that we work in our office is that we try to paint the picture is the wrong word.
What we try to do is we try to give the clients all of the information that they need to ensure that we won’t be in a position to abuse the trust that they’ve given us. We know that we’re very worthy of the trust, but I go overboard and explain that. Let me give you some tips on that.
Here are a few things that we don’t do in our office. We do not accept being trustees or executors or power of attorney agents for any client. There are people from time to time who are without a lot of family or they trust us and they want to name us in the position of a fiduciary.
When I say that we don’t do it, I should probably be completely transparent to you. It’s probably happened maybe three or four times in my career over thousands and thousands of cases. We talked a lot with those clients before they made those decisions.
For everyone else, what I want them to have faith in is that we remain on their side of the table throughout their journey in life. If we were a trustee or if we were a power of attorney agent or if we were an executor, we would essentially be in a position to control that and we would be paid for our services, but we would have a lot of control over their lives.
I don’t want them to fear that scenario where they have to be looking over their shoulder making sure that I’m doing the right thing. I am their counselor. I’m their advocate. I’m their protector as an attorney. I cannot serve that role effectively if I’m also somebody that’s being named as a fiduciary. So, we don’t do it.
If you’re visiting with an attorney that says, “Well, just name me the executor because it will make it easier and yes, I’ll get paid,” that’s a red flag. I don’t want you doing that. I would much rather that you find a friend that will hire this person as the attorney if they want to work with them or find a family member that you trust.
To have somebody who’s a fiduciary, as we saw in the case of Robert Novy, it gives you the opportunity to have that person steal millions and millions of dollars over the course of that. Yes, he lost his license. I guess some of those people are getting their money back, but it’s their estate that’s getting the money back. They never got it during their lifetime.
We don’t want to put and insert people in those positions. By the way, that goes the same whether we’re talking attorney or financial adviser. When we had a financial adviser hat, I’m also not accepting roles of a fiduciary relationship for being a…it’s going to confuse everybody.
This is different than being a fiduciary looking out for the best interest, but I don’t want to be their agent. I don’t want to be their power of attorney agent. I don’t want to be their executor. I don’t want to be their trustee.
Whether I’m being their financial adviser or their lawyer, I don’t want that role, nor should you insert anybody who’s in that role as a professional in that situation.
By the way, read the documents. Even though you may not have made that request, sometimes unscrupulous people will insert themselves in there. They will insert themselves to be some form of an adviser that’s required by the documents. You die and your kids use the documents. They say, “Oh my God! I’ve got to hire this person to have them make more money.”
Our name is not on the documents as a role in there to get paid any time in the future. I say to people, “This is not a mafia scenario.” It’s not like you’ve got to hire us unless something bad will be happening to your plan. We really do give people autonomy in their choice.
If their kids want to go with another lawyer after they pass away, that’s fine. If you want to go with another adviser, another attorney somewhere down the road, that’s fine as well. It’s important that you don’t put people in a position where they could abuse it.
The second thing that I want to talk about is looking through and verifying. Let me talk a little bit about the financial role. Many times, independent advisers will rely on statements that they generate to say this is what’s been going on with your account. What I tell people is don’t trust just that.
Although I’m going to be giving you all that information, you’re going to have an account. In this case, our monies are held at Schwab. They never write me a check. The monies are held at Schwab. Given they don’t have Schwab there, you can call Schwab at any time. Ask them what’s going on with the account. You’re going to see all the statements.
You will never hear me say, “Send a check to my office and then I’ll forward it to you.” Anything that money’s being distributed out will only go to the address of record. I have no authority nor do I want any authority to send third party checks to somewhere else. I can’t send wire transfers.
While it seems like it’s a matter of convenience that you’re creating the scenarios that will make life more convenient by putting these things in place, what you’re doing is putting better controls in place. That’s what’s important. We want to make sure that whatever’s going on with your money really only has one direction when it comes out and that’s to go to you.
It’s the same case when you pass away, for instance, and you have a life insurance claim. Your kids should never agree to have those proceeds just be sent over to the attorney’s office, the financial adviser’s office or anything like that. All of the proceeds should go directly to the beneficiaries or to the account of record wherever that address of record is.
This gives us the opportunity to make sure that we are keeping track of everything that’s going on in there. We’re not creating opportunities for people to take that money because they’re rerouting it or because they have access to it. That’s super important because that’s where the abuse happens.
The abuse happens within the cracks where they find a victim who doesn’t have a lot of family watching over it or who’s unsophisticated. It turns out they have access, they have opportunity to do that. The last thing that’s related to this is most of these steps seem like they are inconvenient. Some of them may even be more expensive than they normally should be.
If you have to go and hire a bookkeeper, somebody to watch over stuff or if you have to have a check issued and it has to be a certified check. That’s $3.50. A lot of these inconveniences and additional expenses are necessary in order for you to protect yourself. I’m not afraid of a few dollars and I don’t think that you should be either.
We don’t want to be penny wise and pound foolish in creating the scenarios where things are protected. Having additional log ons. I’ll give you another example. It may be a few dollars more to have paper records mailed to the house rather than relying on electronic snapshots. If you were there saying, “Well, no. Just send me a snapshot. Just send me a PDF.”
All that electronics can be manipulated. If instead, what you have is a paper statement that’s being mailed to you directly from the custodian, you can crosscheck that for the activity that’s going on. Again, that’s another one of those things. A couple more dollars, a little bit more inconvenient scenarios and then the idea, of course, is that you will be able to help protect yourself.
In spending those dollars, in creating the scenarios where you can crosscheck what’s going on, you will be able to pick up on it. Now, you may find nothing. That’s all we really want, right? We want to make sure you find nothing.
More importantly, by doing all of these things and essentially presenting yourself as somebody very vocal and involved or the family is vocal and involved, the other thing you do is you take yourself off the victim list.
If you’re there looking over what’s going on and you make sure you’re like a squeaky wheel, you say I know what’s going on. I read these documents. Here’s what’s going on. If you present that way, anybody that might be someone that could abuse the situation is going to go running for the hills. They’re going to find somebody else to abuse.
You want to present as somebody that’s less susceptible to being abused in that scenario. That will help take you off the target list. That is just as important as actually catching somebody or anything else on there. It’s like when you’re walking around the city.
Don’t look like a victim walking around. Don’t be holding up the map as you’re looking around and go, “Where am I?” with dollars hanging out of your wallet or your purse. That’s the same thing here. We want to make sure that you look like you’re vigilant and diligent on what’s going on. That will help you avoid those situations, too.
Keep an eye out for this stuff. It happens and I really don’t want it to happen to you. You’ve now heard this show. In fact, if you know of somebody that is in a similar scenario, they could have some situation or they’re somebody who’s a potential victim or they’re by themselves, share with them this episode of the show, either direct them over to iTunes or Spotify.
You can go to makeitlastradio.com. go right to Episode 70 and go ahead, pull that off and share it with them. Next week, we’ve got two special guests because it is National Assisted Living Week.
We’ve got two guests from CareOne, Liza Kelly and Michelle Gidosh. They’re going to join us talking about some of the new things that their assisted living facilities are doing to help people with dementia and other cognitive impairments. Don’t miss next week. It’s going to be really, really a great show.
Other than that, we will catch you next Saturday on Make It Last. We hope you keep your legal ducks in a row and your financial nest egg secure. I think that’s the first time I haven’t stumbled over my own tag line in weeks. Catch you next Saturday. Bye‑bye.