Why Elders Are the Most Targeted Group with Scams and Fraud Housing and Investment Fraud

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by: Tehila Mörtl

 

Those most likely to own their homes out right, have secured life savings and established credit are the elders within our society resulting in this being the biggest target group for scams and fraud.  Further compounding the issue is that seniors are also less likely to report such crimes.  The biggest reason elders are hesitant to report being a victim of a scam or fraud is two-fold, not only does one feel shame but are also concerned that family will believe they no longer have the mental capacity to handle finances.  In this light, please join us in this series as we further explore the current scams and frauds being perpetrated against elders.  Plus, review how to protect your elder in maintaining their life savings and investments. 

Reverse Mortgage Scams

According to the FBI, reverse mortgages, also known as home equity conversion mortgages (HECM), increased 1,300% between 1999 and 2008 from which real estate, financial service and other related business scams have been perpetrated.  Those intent on taking advantage of seniors have been known to offer free homes, assistance with foreclosures, refinancing and other investment prospective opportunities through investment seminars, direct mail, billboards, e-mail and other forms of advertisement. 

When hiring a reverse mortgage counselor

  • Do your homework opting for a well-established, qualified advisor who comes with recommendations.
  • Never respond to unsolicited advertisements whether they be received through direct mail or e-mail.
  • Be aware that anyone offering payment for a home you do not own is running a scam.
  • Remember that legitimate HECM loans are insured by the Federal Housing Authority (FHA).

To report reverse mortgage frauds, contact Housing and Urban Development (HUD) at (800) 347-3735 or visit their website at: www.hud.gov/complaints/fraud_waste.cfm

House stealing

One of the newest scams that combines two popular rackets, identity theft and mortgage fraud, results in house stealing.  First, the con artist selects a home they want to steal.  To do so, they assume the identity of the home owner by obtaining their name and other personal information through the internet, discarded mail which has not been shredded, etc. and create false identification, credit cards, social security card, etc.  Once these types of identification and accounts are established and signature is forged, the perpetrator then files a deed and suddenly the home their victim has loved and spent years paying off is no longer theirs.  This home could be a primary residence or one that stands vacant as a vacation home or rental property.  In the instance of a vacant home, fraudsters often put the house on the market and make off with the profits from the sale.  Meanwhile, the actual home owner continues paying their mortgage none the wiser.  I recently read of one real estate business owner out of Southeast Los Angeles who defrauded more than 100 homeowners and lenders out of approximately $12,0000,000 so, as you can see, this is no small problem within the states.  Though not necessarily easy there are steps one can take to ensure the safety of their home.

Prevent your home from being stolen

  • Check payment book and other information to ensure it reflects the name of your mortgage company and load number.
  • Should there come a time that you receive payment book from a company other than the one you have your loan with, immediately contact your mortgage company, local law enforcement, the FBI and the company in question.
  • Regularly check your county deed office to ensure correct information is on file.
  • Remain vigilante

Investment Fraud

Far too many have fallen victim to fraudulent schemes either while planning or managing retirement funds.  In order to protect your savings, be aware of what frauds are currently being committed.

 Protect your savings by being aware of current financial schemes

  • Advance fee
  • Pyramid schemes
  • Prime bank investment/Prime bank notes frauds
  • Nigerian letter or 419 fraud 

Advance Fee Schemes

Though not limited to the internet, anyone who has used e-mail in the past decade or so has likely received a solicitation for an Advance Fee Scheme. Specifically the intended victim is requested to submit monies for a finder’s fee for goods or services, to obtain a loan, participate in an investment, facilitate a contract or obtain some type of monetary gift such as lottery winnings and receives little if anything in return.  In some cases the victim is even asked to sign a contact guaranteeing payment.  Unfortunately, the contract does not ensure that anyone other than the individual behind the scheme receives compensation.  As part of the contract or in addition to, many perpetrators will include nondisclosure or non-circumvention agreements to be signed.  These documents are in turn used to prevent the victim from reporting the fraud to authorities under the threat of a civil suit.  Further, Making a payment to or investing funds with any company or individual one does not have access to or know is no more wise than purchasing property in another state sight unseen.

  • Be cautious of any individual or company that does not maintain a physical street address or a direct phone line.
  • Investigate the company by contacting the Better Business Bureau
  • Contact local law enforcement and the Federal Bureau of Investigation (FBI) to establish legitimacy.
  • Consult your banking institution or an attorney.
  • Understand what you’re signing!  Be honest with yourself about whether you can fully decipher any type of contract and consult a qualified lawyer.

To learn more, please visit:  http://investor.gov

Pyramid Schemes

Perpetrators of such schemes go to great lengths to make these programs appear to be legitimate, high yield, multi-level market investments.  Given a constant influx of new participants is required to continue paying investors, eventually the pyramid collapses.  

For additional information, please visit:  http://www.sec.gov/answers/pyramid.htm 

Prime Bank Investment Fraud

Prime Bank Investment Fraud is another scheme which has gained international attention as individuals and organizations have lost billions of dollars throughout the world.  Such Prime Bank Investment Fraud is a general term also referred to as:

  • Discounted U.S. Treasury Securities
  • Standby Letters of Credit (SLC)
  • Guaranteed Bank Notes
  • International Monetary Fund Backed Securities
  • Prime Bank Debentures
  • Prime Bank Guarantees
  • High-Yield Trading or Roll Programs
  • International Chamber of Commerce (ICC) 3039 or 3034 Letters of Credit

Individuals perpetrating such frauds, profess to have access to secret trading program(s) sanctioned by the U.S. Treasury Department, Federal Reserve Bank, International Chamber of Commerce, World Bank or International Monetary Fund.

Prime bank or comparable trading platforms claiming to offer above average market returns or below market risk are fraudulent as are secret markets which trade securities.  Further, offering such programs or claims of the ability to introduce investors to such violates numerous federal and criminal laws.  Please note, it is illegal to offer or sale securities that have not been registered with the U.S. Securities and Exchange Commission.  Blocked Funds Letters stating that funds are available are often used to perpetrate such frauds and simply do not exist in legitimate banking. 

What to look out for

  • Extreme secrecy
  • Name dropping
  • Axioms
  • Over-reliance on substantiation
  • Disproportionate disclaimers
  • Weak documentation
  • Excessive yields
  • Lack of transactional basis
  • A secondary market

Additional information can be found at:  https://www.treasury.gov 

Nigerian letter fraud

These fraud schemes combine the threat of impersonation fraud with another form of advance fee frauds violating section 419 of the Nigerian criminal code with the schemer posing as a Nigerian government official.  The victim first loses by being convinced to send increasing amounts of funds for various reasons to the fraudster.  The fraudulent activity does not end when the victim ceases sending funds as the schemer then drains bank accounts and racking up credit card charges.  Please be, as these activities are illegal in Nigeria the Nigerian government will offer no assistance to any participant who has lost monies to such a fraud. 

How to avoid Nigerian Letter or 419 fraud

  • Never, under any circumstance, send any form of response to a letter or e-mail originating in Nigeria requesting personal or bank information.  It is important to note that whenever you send an e-mail, all sorts of information can be gained from what is imbedded.  Instead, send the letter to U.S. Secret Service, your local FBI office or the U.S. Postal Inspection Service.  You may also register a complaint with the Federal Trade Commission’s Complaint Assistant.
  • Remain skeptical of any individual representing themselves as a Nigerian or other foreign governmental official requesting assistance or monies.
  • Never fall for the promise of large sums of money in exchange for your cooperation.
  • Maintain account security remembering that no legitimate government official will make such a request.

Learn more by visiting:  http://www.scambusters.org/nigerianfee.html

Should you have questions or need assistance with money management, please feel welcome and encouraged to call Advise & Protect to talk with one of our experienced and compassionate senior care consultants.  We have the experience to assist with securing any service you might need.  For those who would like to share their own experiences of an elder’s passing, please contact us directly.

If you are in need of help with senior care, elder law, moving for seniors, estate management, medical equipment, planning after life services, etc. please do not hesitate to call Advise & Protect Senior Care Consultants at 646-820-9202 so that we may aid in meeting your needs!


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