Rise in Elder Investment Abuse Motivates MEMBERS Trust to Ramp Up Training

TAMPA, Fla. -- With the number of older people living longer and accounting for a growing amount of wealth, investment fraud toward senior citizens is on an alarming rise.

A July 2006 survey from the North American Securities Administrators Association found that while individuals aged 60 or older make up 15% of the United States' population, they account for 30% of fraud victims. The survey of state securities regulators also indicated that an estimated 44% of all investor complaints are made by seniors. Unregistered securities, variable annuities, and equity-indexed annuities are the most pervasive financial products involved in senior investment fraud, regulators found.

For its part, MEMBERS Trust Co. said it has taken a proactive and ongoing approach to helping credit unions spot suspicious activity. The nationally chartered trust firm has provided additional training for its trust officers that include emphasis on a living trust, said Tom Walker, president/CEO of MEMBERS Trust. The document is created so that the living owner has the ability to name a person as trustee. The grantor can serve as the trustee and control the assets even though they belong to the trust.

"Through things like staff seminars, we're looking to continue to train trust officers to spot potential elder abuse," Walker said. "Unless a [financial] institution becomes more sensitized, nothing will happen [to protect senior citizens].

MEMBERS Trust also provides its credit union clients with detailed agency contact information to report abuse. At its annual users' conference in February, the company put together a presentation for trust officers to bring them up to speed on identifying red flags, said Tim Kenczewicz, president of MEMBERS Trust, Western Division. A training program is prepping for roll out that will include brochures, posters and Power Point presentations.

"Some credit unions already have some sort of program in place on reporting. If a plan or program doesn't exist, the trust officer will encourage them to establish one," Kenczewicz, said. "We don't necessarily want trust officers reporting the [abuse]."

There's a wealth of resources to tap for information on elder abuse, Kenczewicz said. The company is in the midst of sorting through them to find the "best of the breed," he added. The package is expected to be complete over the summer.

Kenczewicz applauded California for its reporting requirements. The state's Financial Abuse Reporting Act, which went into effect on Jan. 1, 2007, requires credit union and bank employees, like health care professionals, social workers, and clergy, to report suspected financial elder abuse to law enforcement and adult protective authorities.

Indeed, for some victims who know they have been scammed, reporting on their own can be embarrassing, according to a May 2006 NASD Investor Education Foundation Investor Fraud study. Of the 165 investment and lottery fraud senior citizen victims interviewed, each had lost at least $1,000 and some lost more than $1 million.

"The numbers are really staggering, the dollar amounts are staggering," Kenczewicz said. "Most of the time, the situation involves a caregiver or a relative. They're put in a position where they are handling [the senior's] finances. Sometimes, that's their justification--they think they're taking care of them."

The buffer that MEMBERS Trust aims to create between its older members and their assets will be a living and breathing role.

"In addition to serving as a barrier between the thief and the client, we're waving that banner. Through a course of key questioning, credit unions can help identify cases that may look suspicious," said Neil Archibald, corporate counsel and chief compliance officer at MEMBERS Trust.

--msamaad@cutimes.com