Crackdown on elder abuse: With number of financial exploitation cases on rise, state laws in Midwest strengthen prevention and prosecution

Stateline Midwest ~ April 2012

Iowa Rep. Lisa Heddens was recently working with a law firm specializing in elder law, and was shocked to hear the number of cases that involved the financial exploitation of senior citizens.


“When I thought about Iowa, which is an aging state with an older population, I wondered, ‘What else do we need to have in place to protect our seniors?’” says Heddens, a Democrat.


It led to what has become a common occurrence in state capitols across the Midwest: New legislation that cracks down on a crime that costs its victims an estimated $2.9 billion each year in the United States.


That figure is on the rise (by 12 percent since 2008, according to a study done by the MetLife Mature Market Institute and the National Committee for the Prevention of Elder Abuse), but Heddens and other lawmakers are hoping to stop that trend with laws that raise awareness about elder financial abuse and increase penalties for perpetrators.


Senior citizens tend to be more vulnerable to financial fraud, scams and manipulation because they are more likely to have a large net worth and to have cognitive impairments that affect their decision making — a dangerous combination.

Typical crimes include forging signatures on financial documents and cashing checks without the account holder’s permission. Some abusers convince seniors to transfer money to other accounts, sign over property or buy expensive items for someone else. In some of the worst cases, caretakers deny medicine or food to victims who don’t agree to give them money or possessions.


As the U.S. population gets older, elder-law experts warn that the problem could worsen. In the 11 Midwestern states, the percentage of people 65 and older is expected to rise from 13.6 percent in 2010 to 20.7 percent in 2030 (1 percentage point higher than the United States as a whole).


The issue received widespread national attention last year after 90-year-old actor Mickey Rooney testified before U.S. Congress about being financially abused by members of his family, who allegedly took over his e-mail account and forced him to grant access to his finances.


In about one-third of the instances of elder financial abuse, the MetLife Mature Market Institute study found, a family member, friend or neighbor is the perpetrator. It is most common for the abuser to be a stranger (in a little more than half of the cases). The most likely victim is a woman between the ages of 80 and 89.


The same study notes, too, that the $2.9 billion annual cost to victims does not capture the full impact and prevalence of the problem. Cases are often simply not reported.


After looking at the data — and seeing that other states are also addressing the issue — Heddens decided this year to introduce a bill calling on four state agencies to conduct a review of Iowa’s policies on the abuse of people over age 60. Under HF 2387, which was awaiting the governor’s signature as of late March, a report with recommendations for legislative action must be completed by the end of the year. (Update: The bill has been signed into law.)


“This is about coming up with a plan that is right for Iowa,” Heddens says. “It’s a starting point.”


The Iowa agencies are directed by the legislature to look at other states’ laws on elder financial abuse, and the group will likely look to recent actions taken in the Midwest to prevent, investigate and prosecute these cases.

Michigan bills include measures to curb cases of elder financial abuse
Like Heddens, Michigan Sen. Tonya Schuitmaker has been shocked to hear story after story of how senior citizens are being taken advantage of in her state.


She recently heard one anecdote of an elderly man who hired a contractor to fix his home. The contractor brought the man breakfast and started to gain his trust — and then started recommending more repairs. The two would go to the bank together and withdraw money for work that cost a fraction of what the contractor was charging.


The transactions were finally reported by a bank teller who became suspicious of the unusual account activity, but not until the senior had lost more than $100,000. Bank employees might have spoken up sooner if they had received more-thorough training, Schuitmaker says, or if they knew they wouldn’t be personally liable for information provided to law enforcement.


That’s one of the reasons why Schuitmaker, a Republican, has led an effort to pass a package of 18 bills related to address each of what she calls the “three legs of the stool”: the mental, physical and financial abuse of seniors.


She made the legislative package a priority after seeing similar measures languish in recent years and after hearing from local law enforcement, prosecutors and advocates for seniors that elder financial abuse is a growing problem in Michigan.


In terms of financial abuse, SB 463 would require training for employees of different financial institutions, such as banks and credit unions, to help them identify and report suspected financial exploitation of vulnerable adults. The bill provides civil immunity to people who report suspect activity to authorities.


A series of bills (SB 456, 460, 604 and 605) would require institutions to notify joint account holders that each depositor is an equal owner of the funds and that each has the ability to add and withdraw money, and that when one account holder dies, the other continues to have full access to the account.


“A lot of times people open up joint accounts and they don’t realize the joint account holder has so much access,” Schuitmaker says. “This bill would strengthen what banking institutions do in terms of notification and awareness.”


As of late March, the bills had passed the Michigan Senate and were being considered in the House. (Update: A package of elder abuse laws has been signed into law in Michigan.)

Illinois requires training of bank employees, stiffens abuse penalties

In Illinois, the state receives about 12,000 reports of elder abuse each year, the majority of which are related to financial abuse or exploitation.


According to Claudia Kemple of the Illinois Department on Aging, about 2 percent of the reporters in these cases are financial institutions — a number that her department would like to see increase.


For about a decade, the state has operated a program called B*SAFE, which trains employees at these institutions to spot and report possible financial abuse. The program has two components: The first certifies employees themselves to train their colleagues; the second brings staff from the state Department of Aging or elder-abuse agencies to the banks to conduct the training.


As of Feb. 1, the training is now mandatory for all employees as the result of legislation (SB 3267) passed in 2010.


Each institution must provide a 30-minute program for employees, who must be retrained every three years. Institutions can opt to use the state’s B*SAFE program as a training model or they can integrate the material into training already provided to workers.


Financial institutions are not required to report suspected abuse (attempts to mandate reporting have been unsuccessful in the Illinois legislature), but they are provided legal immunity if a report is made. In fact, anyone can report suspected abuse anonymously through a statewide hot line 24 hours a day, seven days a week. The Department on Aging holds the identities of these individuals in the strictest confidence unless compelled to divulge a name by court order, Kemple says.


Illinois lawmakers have also stiffened the penalties for people who exploit seniors. Under HB 1689, passed last year, cases involving $50,000 or more are now considered a Class 1 felony; previously, the threshold for a Class 1 felony was $100,000 or more in stolen property.


Legislation currently making its way through the Illinois General Assembly would further strengthen the penalties for financial abuse. HB 5653 would allow prosecutors to freeze the assets of a defendant in cases where a senior citizen or disabled person has allegedly been financially exploited.


Lee Beneze of the Illinois Department of Aging describes this ability to freeze assets as “a very powerful tool for prosecutors,” because they could better track the funds in question and keep perpetrators from spending stolen money prior to their conviction.


The bill passed the House by a vote of 99-1 and, as of late March, was under consideration in the Senate. (Update: In late June, the bill was delivered to the governor for his signature.)

Minnesota adds new type of felony, and new tools for prosecutors
Policymakers in Minnesota, too, are concerned about the growing trend of elder financial abuse and are taking steps to bring perpetrators to justice.


“Our effort was undertaken with an eye toward improving the ability of investigators to build cases that are effectively prosecuted,” says Iris Freeman, associate director of the Center for Elder Justice and Policy at William Mitchell College of Law in St. Paul, Minn.


Freeman leads the Vulnerable Adult Justice Project, which brings together law students, policy experts and key stakeholders to advocate for policies that help senior citizens and prevent elder abuse.


When it came time for Freeman and her partners to look for a legislative sponsor in Minnesota, they had to look no further than their very own school — to Democratic Rep. Debra Hilstrom, who was working on her law degree when the project launched in 2008.


“When they asked me to be chief author of the bill, it was an honor,” Hilstrom says. “The folks who have come before us have done a good job building our state and our country, and we need to do what we can to protect them.”


HF 818, which passed in 2009, created a new type of felony for the financial exploitation of a vulnerable adult involving an amount greater than $35,000. It carries a sentence of up to 20 years in prison.


The same bill also included several measures to make it easier to investigate and prosecute such cases. For example, the statute of limitations on such cases was extended from three years to five years because these crimes often occur over time, Freeman says.


In addition, county attorneys now have the ability to subpoena the banking and financial records of a vulnerable adult as part of an investigation. And while financial institutions are not required to report suspected abuse, the law encourages them to do so by clarifying their immunity from legal challenges if they make a report “in good faith.”


“We wanted to make it easier for banks to give up records and report when they think there is exploitation going on,” Hilstrom says.


There are no data yet to determine whether the number of reports of abuse has increased since implementation of the law.


However, Freeman says it is already clear that the measure has improved the working relationship between financial institutions and law enforcement.


The bill, which received wide bipartisan support, also calls for operation of a statewide hot line to report abuse.


“Previously, statute said that you had to call the area with jurisdiction,” Hilstrom explains. “You had to call where it happened. But if the vulnerable adult was in one place and the person exploiting them lived somewhere else, who do you call?”


Hilstrom is now seeing the law from a slightly different perspective — as an assistant county attorney. She has already prosecuted two cases related to the elder financial abuse legislation.


She says it is “an incredible opportunity” to see that the law she helped shape is already making a difference.


“This is the right thing to do — raising awareness and talking about the warning signs,” she says. “More folks are aware, and when more people are aware, more people are reporting. It really goes a long way to protect people.”