When seniors are targeted in fraud schemes

This article was originally published in the Journal of Accountancy and is reproduced with permission.

Elder fraud is on the rise, with seniors especially vulnerable after the COVID-19 pandemic caused further isolation for a population that already faces the challenges of loneliness and mental deterioration in later years, said Josh Epstein, CPA/CFF.

Part of the difficulty in identifying and addressing elder abuse is the shame and secrecy that makes victims reluctant to talk about how they were targeted.

Epstein saw this firsthand when his widowed mother became a target of an online romance scam.

"I did not learn about this till way after the fact," Epstein said. "Luckily, my mother was smart enough not to get into any problems financially, but the potential is there." 

The experience underscored to Epstein why practitioners need to keep abreast of elder financial abuse trends. To help practitioners identify elder abuse risks and signs, Epstein will be speaking on a panel at the upcoming AICPA & CIMA Forensic and Valuation Services Conference, scheduled for Nov. 8–10 in Las Vegas. Sessions can also be accessed online.

Epstein, a senior manager at MNP Forensics & Litigation Support in Toronto, will be joined by Robert Fowlie, CPA, a partner and Ontario Forensic & Litigation Practice leader at MNP, for the Nov. 10 session "Elder Fraud Including Fraud Committed Against Their Estates."

Epstein offered a preview of his panel and supplied tips for identifying how seniors can be targeted with fraud schemes involving estates, fraud schemes that occur after a person has died, and how forensic accountants can help after fraud allegations have arisen.

Identifying red flags: Whether it's a phone call from someone trying to extract key personal and financial information or someone known and close to a senior who is trying to steal money, elder fraud tends to follow similar patterns, Epstein said.

Forensic accountants can help educate a senior's family and caregivers about the red flags of elder exploitation and how to look for red flags, Epstein said. Examples of red flags include unusual purchases on a senior's credit cards, new financial accounts being opened, or distant relatives that have suddenly moved in or have taken on new roles in a senior's life.

Epstein's Canadian mother had been wooed online by an individual posing as an Australian offshore oil rig worker who, in the course of their virtual courtship, asked her for $30,000 to help with a supposed emergency. Epstein's mother did not hand over any money but also didn't fully disclose the situation to her forensic accountant son. That's not uncommon, given the shame many victims feel of being duped and manipulated.

"I knew about the relationship early on, but I was surprised how far it went and the fact that she didn't keep me posted in terms of what was happening, even though I know I was asking at the time," Epstein said.

Disputes after death: Forensic accountants like Epstein are often called in to look at how estates were divided up by angry heirs, and he predicts that there will be an increase in these scenarios. Estate fraud is also quite common, and this is what makes up much of Epstein's workload. 

"Where we are generationally, there are a lot of Baby Boomers that are obviously now either retired or retiring," Epstein said. "They're aging, and they are a pretty wealthy generation with children that may dispute how the assets that those parents built up are allocated."

Sometimes disputed estate cases get resolved without issues. In other instances, and especially where fraud is present, Epstein advises being prepared to examine real estate transactions, purchases, bank account statements, and more to determine the extent of potential fraud and loss. This may include performing a detailed source and use analysis to follow the flow of cash as well investigative interviews of the relevant parties.

When litigation is ongoing: Often forensic accountants are brought in to assess financial information after a lawsuit related to elder fraud has been filed. Epstein recommends getting involved as early as possible to gain timely and accurate information. Epstein also advises that practitioners work with family member attorneys if appropriate and if necessary.

"Getting involved earlier in an investigation related to an estate litigation is a benefit in terms of getting access to documentation and information," he said.

For more information, contact Rob Fowlie, Ontario Practice Leader, Forensic and Litigation Support, at 416.515.3802 or [email protected] or Josh Epstein, Senior Manager, Forensic and Litigation Support, at 647.475.4578 or [email protected]