Broken trust – Prosecution difficult when scams target county’s seniors
Patty and Clifford Smith were happily retired. They had socked away $235,000, owned their cozy Cedar Ridge home outright, and were looking forward to spoiling their grandchildren.
Then they decided to invest their money with a local broker who was recommended to them by a friend. Today, their life savings are gone. Clifford, a Pearl Harbor veteran, has died. And Patty must scrape by on $1,000 from Social Security each month.
Instead of the laughter of grandchildren, Patty Smith often awakens to the clamoring of bill collectors trying to collect on debts she says were run up and left unpaid by the loan officer, who was convicted of credit card fraud and charged – unsuccessfully – with elder abuse.
Though unable to convict the broker on all charges, county authorities say the Smiths were nonetheless victims of financial elder abuse, one of the country’s fastest growing crimes. It is an offense that often targets those too ill, too enfeebled or, like the Smiths, too trusting.
“There are so many insidious scams that take assets away from the elderly. Sometimes they get reported in the newspaper, but we see them all the time,” said Rob Shotwell of Adult Protective Services.
Authorities say crimes against the elderly are rising in Nevada County, where nearly 17 percent of the population is retired. Last year, there was a 21-percent increase in reported cases of financial fraud against the elderly in the county, Shotwell said.
But senior advocates also say that only a fraction of the crimes against older residents are discovered. Even when cases are reported, investigated and prosecuted, the victims are not guaranteed success in court.
“These cases are a mess and a nightmare,” said Jim Phillips, Nevada County deputy district attorney said.
“Because you are dealing with so many factors including multiple bank accounts and having to prove beyond a reasonable doubt that the perpetrator exercised undue influence over the victim, these are often the hardest cases to prosecute.”
Phillips, who argues most elder abuse cases for the District Attorney’s Office, said that virtually all cases end without the victim getting any money back.
In the Smiths’ case, for example, the broker faced elder abuse charges for allegedly defrauding the Smiths and others out of approximately $350,000, according to court records. Ultimately, the woman was only convicted of credit card forgery and was ruled to be responsible for about $50,000 of their losses. She was sentenced to two years in prison and served fewer than 180 days.
“This case is typical in that the jury could grasp that (the broker) forged Smith’s name to get credit cards and went shopping,” Phillips said. “But proving she scammed (Clifford Smith) out of his security interests is murkier.”
‘Fertile ground’ for scams
State law defines financial elder abuse as theft, embezzlement, forgery or fraud against any person 65 years and older. In order to get an elder abuse conviction, the prosecutor must prove the suspect knew and took advantage of the fact that the victim was a senior.
Shotwell believes that in addition to weak laws and lack of resources for investigators, financial abuse of the elderly has been made more common by the Internet and the prevalence of telemarketing.
“The people who perpetrate bogus sales schemes have realized (elder abuse) is fertile ground,” Shotwell said.
“Seventy percent of all the private wealth in this county is owned by people over 50, and the laws protecting this demographic group are extremely weak.”
Many Nevada County victims continue to fall for the “Nigerian bank” swindle, foreign lottery scams and telemarketing abuses. All are extremely common in Nevada County, Shotwell said.
In the Nigerian scheme, victims will get e-mail messages, phone calls or letters from purported high-ranking Nigerian officials promising to transfer large sums of money into the victims’ bank accounts for safe keeping if they will help the “official.”
Victims unwittingly give the perpetrators access to their bank accounts or send cashier checks or money orders, losing an average of $6,500, Shotwell said.
“Senior folks are intelligent, but the sell job on these scams is so convincing, they buy into them in an emotional way,” he said. “It’s very disconcerting.”
Seniors fall victim to financial fraud more often than younger age groups because they are generally more trusting.
“Elder abuse victims come from Tom Brokaw’s Greatest Generation,” said Jonelle JerramParker, senior victim advocate for Nevada County. “These are people who grew up in the World War II era, when a man’s word was as good as a bond.”
Dark side of trust
At 70, Patty Smith and her identical twin sister, Nancy Speraw, can attest to those values.
According to court documents, in 1995, Clifford Smith first trusted the broker, Joan, and her firm to invest $195,000 at the 15-percent interest rate she promised in return. To secure that investment, he obtained a lien on a property she owned.
Because the broker was acquitted of elder abuse, The Union has chosen not to use her real name in this article.
In 1998, Clifford Smith again trusted her to open a temporary credit card account in his name for her own personal use.
In 1999, he agreed to release his security interest in Joan’s property after she made what Patty Smith called an emotional appeal to him.
“(Joan) begged my husband to release her property because her marriage depended on it,” Smith said. “She was a con artist.”
Ironically, that same year, Joan wrote a letter to The Union that warned residents of the rise in financial elder abuse scandals and even suggested “the residents of Nevada County be on financial elder abuse alert.”
Court documents state that Joan defaulted on the Smiths’ loan in August 2000, and the principal was never returned.
“Even after she stopped paying us interest, my husband kept telling me that he trusted her and that she would get us our money back,” Smith said.
Joan denied that she opened credit cards in Smith’s name without his knowledge, and she told The Union that she never intended to victimize the Smiths.
Successful financial elder abuse convictions are often reached when the prosecution is able to show that there was a substantial decrease in the victim’s assets over a short period of time after meeting the alleged perpetrator, Phillips said.
In 2001, Phillips successfully argued a financial elder abuse case involving a woman with Alzheimer’s disease, Ruth Westmore, and her gardener, Danny Griego, by showing that Westmore’s net worth declined by $79,337 over the two a half years Griego worked for her.
A jury convicted Griego of grand theft from an elder, and he was sentenced to five years’ probation. In addition, he was ordered to pay some restitution to Westmore.
The process, however, was anything but easy.
“The finances involved in even slam-dunk elder abuse cases are still a mess,” Phillips said. “The court had to order its own personal accountant to figure how much restitution Griego should pay.”
In the Smiths’ case, Phillips said, Joan made it appear that she earned interest on Clifford Smith’s loan by running what he called a “Ponzi scheme.” In such a scam, the person entrusted with money fakes investment success by paying off old customers with money from new ones.
“It looked like Joan paid interest to the Smiths using new investors’ money,” he said. “But in the end, she defaulted on their loan and declared bankruptcy.”
Patty Smith recalled a variety of tactics Joan used to keep her husband’s trust, including hiring Speraw to work at the loan office Joan owned.
According to Smith, Joan would flatter her husband and act interested in his friends and his church.
“She kept asking us for more money, even though she stopped making our monthly interest payments and her checks kept bouncing,” Smith said.
Smith and her husband finally went to the police after a family friend convinced them they were victims of financial fraud.
Nevada County has received $90,000 from the state for the past four years to finance an Elder Abuse Advocacy and Outreach Program in order to increase awareness and prevention of the crime.
Still, most elder abuse experts agree that there are not enough resources to effectively prosecute and bring these cases to justice.
“We can’t file charges on every case we see involving criminal activity,” Shotwell said. “Even when we know in our hearts the victim was wronged, if we don’t have the right evidence to convince the jury, we have to let it go.”
Smith lives every day knowing she and her husband were wronged because of their age.
“I blew up the other day and told (the bill collectors) my husband is dead and that he had nothing to do with these debts,” Smith said in an interview at her home in Cedar Ridge.
The collection callers don’t always ask to speak to her late husband, Clifford Smith. Often, they ask for Joan, too.
“I had planned to do so many things when I retired, and now I don’t even have enough money to visit my grandchildren,” Smith said. “It’s all gone, our whole retirement.”
For more information about elder abuse outreach and education programs, contact the Nevada County Senior Victims Advocates at 470-2485.
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