Question of the Day: "What is elder financial abuse, and don’t stockbrokers, insurance salespersons, and bank officials have a fiduciary responsibility to their clients, including their elderly clients?"

Answer:  Elder financial abuse is any practice or conduct that misuses, takes or conceals a vulnerable elder’s funds, property or assets. Elder financial abuse includes any type of investment fraud that uses misrepresentation, deception, trickery, false pretence, or dishonest act to the financial detriment of a senior.

A fiduciary duty is an affirmation obligation imposed on one person to act in the best interest of another person.  Whether or not a fiduciary duty is owed to an elderly client depends on the law of the state where the senior resides. In some states like Georgia, stockbrokers owe fiduciary obligations to their clients but insurance agents and bank officials normally do not. Nonetheless, this does not give an insurance agent or bank official a license to defraud a senior out of his or her money or property and the agent or official can still be sued by the senior for fraud.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "My 90 year old aunt has Alzheimer’s and was recently moved into an Assisted Living Community. While moving her and reviewing her financial records, we noticed that money was being taken out of her account to purchase stock. How can this be – since my aunt is no longer able to think clearly enough to approve these transactions? We suspect that her broker is making these decisions without her prior approval to generate more money for himself. What should we do?"

Answer:  The practice you are referring to is commonly known in the securities industry as “unauthorized trading.” It violates securities laws and securities industry rules. Unauthorized trading occurs when a broker makes trades in a customer’s account without having any authority, either in writing or orally, to do so. Unless a client gives a formal written grant of “discretion” (like a limited power of attorney) to her broker, a stockbroker is not entitled to trade in the client’s account without obtaining prior approval for the specific trade.

In your Aunt’s circumstance, if she has given you a financial power of attorney to act on her behalf, you should immediately notify the brokerage firm’s manager in writing that no new transactions should be executed in the account because of her condition.  Even in the absence of a financial power of attorney, you should notify the manager in writing that your Aunt is suffering from Alzheimer’s.  Either way, this will put the brokerage firm on notice it has potential liability and the broker’s conduct will be more closely scrutinized.

If the transactions in your Aunt’s account have not been authorized, she has a right to recover losses she has sustained on the unauthorized purchases and I would suggest you contact a securities lawyer to advise you further. If the broker’s manager wants to meet with you to discuss your Aunt’s account, keep in mind this is akin to the insurance adjuster trying to get a statement from a car accident victim before the victim can talk with a lawyer. If the broker has engaged in authorized trading someone knowledgeable should do a complete account review to be sure nothing else improper has transpired in the account.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "What exactly is a Ponzi scheme, and what are some warning signs of these financial scams?"

Answer:  A Ponzi scheme is a phony investment plan where investors are promised high rates of returns on their investment but no real legitimate business operations exist to generate profits or earnings. Instead, early investors are paid from funds put into the scheme by later investors. When the promoter of the scheme can no longer attract new investor money to pay early investors (or he has stolen investor funds to fund his own lifestyle) the scheme collapses.

Ponzi schemes derive their name from criminal financier Charles Ponzi who is credited with creating this fraud back in the 1920s.  Charles Ponzi duped thousands of investors through a postage stamp speculation scheme. Ponzi promised to pay investors a 50% return on their investments within 90 days. Ponzi had no legitimate business or investment opportunity in place to generate earnings and used incoming funds from new investors to pay off earlier investors.  

Some warning signs associated with Ponzi schemes are:

  •  Promises of unrealistically high returns with little risk.
  • Claims by the promoter that the investment opportunity is extremely complex and usually only available to large overseas institutional investors like foreign banks and insurance companies.
  • Requirement by the promoter that investors not discuss the investment with third parties and keep all aspects of the investment confidential.
  • Representations by the promoter that investor funds are never at risk and are always held in an escrow account.
  • Lack of transparency/refusal of the promoter to disclose to investors the location of investor funds or how the funds have been invested.
  • Opportunity to reinvest promised payments at increasingly higher rates of return.
  • Inability to pay investors requested withdrawals or refusal to allow investors to cash out their investments.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "What recourse do we have if my mother’s broker inappropriately invested her life savings in risky investments and the value of these investments has decreased by 50% over the last couple of years?"

Answer:  A securities brokerage firm and its brokers have a duty to only recommend investments which are suitable for a customer in light of the customer’s objectives and individual circumstances. This is known as the “suitability doctrine.” Specifically, the Financial Industry Regulatory Authority (“FINRA”) rules state:

In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.”

Where a senior’s life situation dictates a conservative investment approach and a broker recommends high risk investments not designed to preserve the senior’s financial resources, the senior can have a suitability claim against the broker and his or her employer for damages. 

It’s likely your mother signed an arbitration agreement when she opened her brokerage account  and gave up her right to file her case in court.  Therefore, your mother needs to file an arbitration claim to recover her money. Nearly all arbitrations are conducted by arbitrators appointed by FINRA. 

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "What are some telltale signs of Financial Elder Abuse or Senior Fraud that we as a family should be looking for to help us determine whether these untoward acts have been committed against our elderly mother, who lives by herself in her home?"

Answer:  Here are some telltale signs of Financial Elder Abuse:

  • Unusual or unexplained expenditures by the senior.
  • Large cash withdrawals from the senior’s bank account
  • Numerous checks being written to a person or company that you do not know
  • Wires or asset transfers out of the elder’s bank or investment accounts that the senior cannot explain or doesn’t want to talk about
  • Numerous unexplained credit card charges
  • Monthly account balances in the senior’s bank or brokerage accounts that have suddenly declined dramatically
  • The senior living without certain basic necessities even though he/she should have the money to afford them
  • The senior recently lending money to someone you don’t know
  • Large amounts of money in the senior’s investment account suddenly being invested in one product like a deferred variable annuity

From a practical perspective, there are a few simple things you can do to help your mother avoid Financial Elder Abuse:

  • Have your mother’s bank and brokerage firm send you duplicate copies of her monthly account statements.
  • Also, most banks allow their account holders to set up daily email alerts.  Ask your mother to let you set up an email alert that sends you the daily balances on her bank accounts.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "What is the process to file a lawsuit against an unscrupulous financial advisor that my elderly parents have been working with for quite some time now? The bottom line is that this advisor has successfully “wiped out” most of my parents net worth."

Answer:  It depends of the type of financial advisor handling your parents’ money. If the advisor is a stockbroker, it’s likely your parents signed an arbitration agreement when they opened their account. This means they agreed in advance to file their case against the stockbroker and his employer in an arbitration forum and gave up their right to file their case in court.  Normally, the Financial Industry Regulatory Authority (“FINRA”) is the arbitration forum where your parents’ case would have to be filed.  Arbitration has both advantages and disadvantages but is less costly than filing an action in court and will likely get faster results. The arbitrators selected to hear the case can award your parents compensatory damages, punitive damages and attorneys’ fees– just like a jury can in court. For an overview of the FINRA arbitration process, click on this link: http://www.sbpllplaw.com/2011/04/an-outline-of-the-finra-arbitration-process-for-customer-broker-disputes/

If the advisor is not a stockbroker and your parents did not sign an arbitration agreement, they can file their case against the advisor and his employer in court. Whether they file their case in federal or state court depends on a number of factors including:

a) where your parents live
b) where the advisor lives
c) where the advisor’s employer maintains its principal place of business
d) how much money your parents lost, and
e) the legal causes of action asserted in the complaint.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


Question of the Day: "A stockbroker has solicited me to open a brokerage account with him. He seems like an honest person who genuinely wants to help me. How can I find out information about him?"

Answer:  FINRA’s Central Registration Depository (CRD) system contains registration and background information on stockbrokers. Certain information from this system can be accessed through FINRA’s BrokerCheck website at: www.finra.org/Investors/ToolsCalculators/BrokerCheck/.  

The BrokerCheck report which can be obtained through the website discloses complaints other clients have made against the broker, arbitration cases and lawsuits where the broker has been found liable and shows cases that are currently pending against him. The report also reflects disciplinary actions brought by securities regulators where the broker was sanctioned. Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
Member of the national ElderCare Matters Alliance


This week’s Ask an Elder Care Expert is J. Michael Bishop, JD

J. Michael Bishop, JD
Partner in the Law Firm of Smiley Bishop & Porter, LLP
Atlanta, GA  30338
770-829-3850
www.sbpllplaw.com

Member of the national ElderCare Matters Alliance, Georgia chapter

I am an Atlanta native and partner in the law firm Smiley Bishop & Porter LLP. I received my law degree from Mercer University law school in 1984. For the last 26 years, my firm and I have dedicated our law practice to representing investors whose trust has been abused by dishonest financial advisors, stock brokers, investment advisors and financial planners. We have been fortunate during this time to have successfully represented numerous seniors who have been victimized by unscrupulous investment companies and their employees.

Our firm prides itself on being keenly aware of the unique factors associated with representing seniors. Personally, I have served on the Board of the Elder Law section of the Atlanta Bar Association, am a member of the National Academy of Elder Law Attorneys and a Charter Member of the ElderCare Matters Alliance.  I am also a member of the Public Investors Bar Association.

My law firm is based in Atlanta, Georgia but our practice is national in scope. We have represented investors in numerous venues throughout the Southeast and across the United States. We have successfully represented clients with claims against virtually every major Wall Street firm, including: Bank of America/Merrill Lynch, UBS/PaineWebber, Morgan Stanley/Dean Witter, Wells Fargo Securities/Wachovia Securities, Prudential Securities, Citigroup/Smith Barney, Shearson/Lehman Brothers, Bear Stearns, Credit Suisse, Ameriprise Financial, Morgan Keegan, and LPL Financial, as well as numerous others.


Question of the Day: “My husband is 74 years old and has mid-term Alzheimer’s; I am 60 yrs old. We have been married for 34 years. I am a "burned out" primary caregiver to him, and I work 9 hours, four days a week at an outside job cleaning houses. We are both 8½ years Permanent Residents, and when we came to America he did not show any signs whatsoever of being sick. Does he qualify for any government assistance?"

Answer:  Your husband should qualify for Medicaid given his age and disabilities. You didn’t mention his or your monthly income or your family resources. However, assuming his monthly income is less than $2,022.00, assuming his resources are less than $2,500.00, and further assuming your family resources are less than $109,560.00, then your husband should qualify for Medicaid benefits. Allow me to add that your current situation as a “burned out” primary care giver is common. It would appear essential to your continued good health that your husband transition into a long term skilled care facility in the near future. I recommend that you contact an Elder Law attorney to assist your family with the asset planning and Medicaid planning that will be required for your husband to successfully qualify for Medicaid, while at the same time protecting your family assets. Also, please visit the Center for Medicare and Medicaid Services website at www.cms.gov for further information and helpful resources. Thank you for your inquiry, and best of luck!

To locate experts in your state who can help you with these elder care matters, go to: www.ElderCareMatters.com – America’s online source for elder care experts plus information & answers about a wide range of elder care matters.

Dennis Duncan, Attorney at Law
The Law Offices of Dennis L. Duncan, P.C.
Macon, Georgia  31210
478-254-4232
Member of the national ElderCare Matters Alliance, Georgia chapter


Question of the Day: “What are the steps necessary to obtain Guardianship / Conservatorship for my mother who is elderly and suffering from Alzheimer's disease? She is a resident of the state of Illinois."

Answer:  You will need to file a Petition for Guardianship and Conservatorship with the Probate Court in the county of residence for your mother in Illinois. I practice Probate Law in Georgia, and every state may handle the petition process a little differently. Please check with the website www.ProbateIllinois.com. There you can enter the county of residence for your mother and proceed directly to that county’s Probate Court website for more specific information regarding the petition process. You will need to contact a Probate Law attorney in Illinois, who is familiar with the court of jurisdiction. If the process in Illinois is like the process in Georgia, then procedurally this is what you can anticipate: A lengthy Petition for Guardianship and Conservatorship must be completed, which will include among other things, your mother’s financial records, medical examination reports/physician affidavit, and contact information for all living relatives. The relatives are notified by copy of the petition, and they are given time to object by filing a caveat if they so choose. If a caveat is filed, a period of discovery is allowed by the court before setting a court date. Mediation may be mandated by the court or the parties may elect to resolve any differences thereby. If no resolution can be reached, a bench trial takes place, and the Probate judge decides the outcome. If there is no opposition to the petition, a less formal in chambers hearing is held by the Probate judge, and the Guardianship and Conservatorship is granted by the court to the petitioner. I hope this information proves helpful, and I wish you the best of luck!

To locate experts in your state who can help you with these elder care matters, go to: www.ElderCareMatters.com/statechapters.htm

Dennis Duncan, Attorney at Law
The Law Offices of Dennis L. Duncan, P.C.
Macon, Georgia  31210
478-254-4232
Member of the national ElderCare Matters Alliance, Georgia chapter


Recent Posts

Stay in Touch with Elder Care Matters

 Facebook  Twitter  Google Plus  Linked  Blogger

eNewsletter Sign Up

ElderCare Answers

If you need answers to your elder care questions, send your questions to us at:

Answers@ElderCareMatters.com

Answers are provided by our ElderCare Matters Partners, some of America's TOP Elder Care Professionals who have years of experience in helping families plan for and deal with a wide range of Elder Care / Senior Care Services.

All Q&A's are posted on the homepage of ElderCareMatters.com

ElderCare Matters Articles

ElderCare Matters Articles are useful and up-to-date Elder Care / Senior Care articles that are provided by our ElderCare Matters Partners to help you plan for and deal with your family's elder care matters.

If you help familes plan for or deal with elder care matters, then you owe it to yourself and to families across America to become a professional member of the National ElderCare Matters Alliance and to be listed on the many Elder Care / Senior Care Directories that are sponsored by this National Alliance of Elder Care Professionals.

ElderCareDirectories.com

For additional information about professional membership in the National ElderCare Matters Alliance, (including the many benefits of becoming one of our ElderCare Matters Partners) and to download an Application for your Basic, Premium or Partner Membership in the National ElderCare Matters Alliance, visit: ElderCare Matters Alliance.