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Once
revered as a Wall Street genius, Bernie Madoff became a
synonym for a crook three years ago after he was exposed
for running the biggest Ponzi scheme in history.
His
“penthouse arrest” provided a fascinating glimpse
into the lives of the rich and famous.
But fraud
doesn’t stop on Park Avenue. Sadly, plenty of little
Madoffs live all around us, and they often target
seniors because, as one investigator put it, seniors are
home and they answer the phone.
“People
just don’t think it can happen to them,” said Linda
Cena, securities manager for the Michigan Office of
Financial and Insurance Regulation. “We’ve had many,
many Ponzi schemes in Michigan. Money is stolen every
day.”
Many
seniors have a steady Social Security check, possibly a
pension or a 401(k) plan and just enough fear about
their finances to make them think that they must do
something to make their money grow. Con artists chase
that cash.
Cena, who
spoke last week at what was dubbed Fraud Fighter College
at Marygrove College in Detroit, told the story of a
woman who had a $400,000 settlement from her husband’s
death. She took the money to the same credit union where
she had done business for years.
“Any
one of you could walk into that situation and feel
trusting,” she warned the seniors at Marygrove.
A teller
steered the woman to a registered securities
representative — who told her to invest in the TGBG
fund, or To God Be Glory. That fund had no connection to
the credit union but was a fraud scheme run out of Ann
Arbor, Mich., according to state regulators. The
woman’s money was gone and she had to work out a
recovery plan with the credit union.
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“A
one-minute phone call could have saved her all that
money,” Cena said, recommending that people call the
state at 877-999-6442 to talk to a real person about
brokers and investments.
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Michigan
AARP says, based on a recent survey, that 79 percent of
its members are concerned about fraud.
“They’re
coming after everybody — young and old — and they
have no sympathy,” said Diane Crawford, 60, a Detroit
Public Schools retiree who attended the Fraud Fighter
College. “These people are out to get us for real.”
Seniors
vulnerable to all types of scams
Seniors
are losing $2.9 billion a year nationwide to financial
abuse, a situation that will only get worse as the older
population grows—unless public awareness of the
problem grows faster.
“The
way that a social problem gets dealt with is not by one
person or one group,” said Oakland County (Mich.)
Circuit Judge Edward Sosnick, who is chairing a program
called SAVE — Serving Adults who are Vulnerable and/or
Elderly. Sosnick compares the issue to early efforts to
combat drunken driving and domestic violence by
publicizing them and encouraging victims to come
forward.
“It’s
not some family problem,” Sosnick said of elder abuse,
“but it’s a really, really serious problem.”
At a
meeting I attended last month on the issue, Sosnick said
raising awareness will require a coordinated effort by a
broad scope of people. In the case of financial abuse,
that includes police, prosecutors, banks, families,
adult protective services, social agencies and others.
Seniors
are at risk of all sorts of financial exploitation —
from con artists promising a shopping spree in return
for a small processing charge on a debit card to crooked
financial advisers talking someone into shifting
retirement money from a 401(k) plan into a self-directed
IRA, and then putting that money into some fraudulent
movie scheme.
And, yes,
a grandson or granddaughter on drugs can become a
predator, too.
Many
times victims are too ashamed to take legal action
against a broker — or a family member — who has
stolen from them. FBI agents who spoke at a Fraud
Fighter College at Marygrove College in Detroit last
week noted that sometimes victims will lie to loved ones
for years because they don’t want to admit falling for
a con.
Anyone
from janitors to judges can be scammed. People who work
40 years and save every dollar have to be told that
their $4-million retirement fund has been wiped out by
financial fraud.
The FBI
warned about Forex scams promising quick money from
trading foreign currency; sweepstakes scams involving
wiring some money upfront to Western Union, and
foreclosure scams where people claim to buy your house
to cover your mortgage debt and ask you to pay rent. The
rent is collected but the mortgage isn’t paid and the
property is foreclosed.
Con
artists even use automated calls that “warn”
consumers about fraud — and then instruct them to call
a toll-free number to “confirm information” by
giving away bank account or Social Security numbers.
Crooks
also use fake caller ID to make bogus calls look like
they’re coming from a legitimate agency.
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The
Michigan AARP and the Michigan Office of Financial and
Insurance Regulation teamed up this year to offer five
of the Fraud Fighter College seminars. Funded by money
obtained in penalties from financial-fraud crackdowns,
the seminars addressed health care fraud, ID theft and
investment fraud. The Marygrove event was sponsored by
the Investor Protection Trust, Michigan OFIR and the
AARP Foundation.
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Susan
Peters, a citizen education speaker from the Michigan
Attorney General’s Senior Brigade, said seniors need
to be especially careful about letting medical and other
personal paperwork pile up on the dining room table or
other accessible places. As people get older, she said,
more service workers, health care aides and others will
visit, and the unscrupulous among them can steal numbers
or other valuable information from such documents.
Peters
warned of another scam where someone calls to say you
are facing arrest for missing jury duty. The caller asks
to “verify” a Social Security number. Don’t give
it, she said, adding that the No. 1 thing a person can
do to fight identity theft is to not give away
information.
We
don’t need to be a client of Bernie Madoff to lose
money or get scammed. A fraud can hit anywhere—even
among people trying to make ends meet in affordable
cooperative housing.
Donald
Cole, 57, who lives in Detroit, said he lost $700 to a
man recommended by a friend to install his carpeting.
The man
measured the house, brought carpet samples and asked for
a $700 down payment on the $1,200 job, Cole said. Cole
called and called for months afterward but “he never
did come back.”
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