FINANCIAL EXPLOITATION OF VULNERABLE ADULTS

1. FINANCIAL EXPLOITATION OF VULNERABLE ADULTS For Employees of Financial Institutions, Broker-Dealers and Investment Advisers

2. Introduction In 2010, 17,586 reports of neglect or abuse of vulnerable adults were received by the state of Washington’s Department of Social and Health Services, Adult Protective Services (“APS”). Of those complaints, 26% were about financial exploitation of vulnerable adults. The complaints that APS receives about financial exploitation have increased in every year except for one since 2001, for an overall increase of 74%.

3. Introduction

4. Introduction This means that in 2010, at least 4,566 vulnerable citizens of Washington may have had their income or wealth stolen or improperly taken from them. And, because experts believe that the actual number of these incidents is much greater than that which is actually reported, many more seniors and disabled persons have likely been financially exploited each year. And the problem is only growing.

5. Why Should You Care? Vulnerable adults typically have fixed incomes. They may have accumulated a nest egg, but may have little or no ability to re-build that nest egg if it is taken from them. They may be physically frail or disabled and may have a memory problem or a cognitive disability, making it impossible for them to pay for their food, housing, health care, and other living expenses if their income or assets are taken from them.

6. Why Should You Care? If a vulnerable adult’s income and assets are improperly taken, he or she may need to be supported by the government. This means that the choices that the vulnerable adult may have about where he or she will live, or what services he or she may have, may be limited. It also means that taxpayers will be required to fund his or her care and support.

7. Why Should You Care? But most critically, many vulnerable adults who are financially exploited suffer as a result. They may have to leave their home or drastically alter the plans that they had made for their retirement years. They may feel betrayed, sad and embarrassed. Their quality of life and even their physical and mental health may suffer, both in the short-term and in the long-term.

8. 2010 Legislation Allows You to Help Because of concern about the growing problem of financial exploitation of vulnerable adults, the Legislature adopted a law in 2010, that expands the ability of financial institutions, broker-dealers, and investment advisers to help combat financial exploitation of vulnerable adults. As an employee of one of these institutions, the law requires you to take this training.

9. Training topics This training will cover: (1) Background information – definitions applicable to this training; (2) Indicators of financial exploitation of vulnerable adults; (3) How to report suspected financial exploitation; (4) Tools available to your institution to help combat financial exploitation.

10. Background Information

11. Definitions We need to address the following questions: • Who are “vulnerable adults” and why are they vulnerable? • How does the law define “financial exploitation”? • Who are the perpetrators of financial exploitation?

12. Who Are Vulnerable Adults?

13. Who Are Vulnerable Adults? • The definition of a “vulnerable adult” is included in Washington’s “Abuse of Vulnerable Adults Act”, which is chapter 74.34 of the Revised Code of Washington (“RCW”) • Throughout the rest of this training, we will refer to vulnerable adults as “VA’s”

14. VA’s VA’s include persons age 60 and older, who need assistance in one or more aspects of their life (whether or not they actually receive the assistance) • This can include persons with physical disabilities, such as people who no longer can take care of all of their physical, day-to-day needs, due to frailty or a chronic illness or disability • It also can include persons with a mental decline or disability, such as a person who has developed confusion, short-term memory problems or decline

15. VA’s VA’s also include the following persons age 18 or older: • With a developmental disability, such as mental retardation; • Who live in a residential care facility, such as a nursing home, assisted living, or group home; or • Who receive services from a caregiver or a caregiving agency

16. What Factors Make VA’s Vulnerable?

17. What Factors Make VA’s Vulnerable? • Physical disability or weakness, dependence on others for bill-paying, transportation, shopping, or for care • Living alone and being isolated • Having few family or friends • Experiencing grief over the loss of a family member, friend, or pet • Suffering from depression or mental illness

18. What Factors Make VA’s Vulnerable? • Being naturally naïve or overly trusting; • Have a limited IQ; • Having to assume responsibility for finances or other aspects of life after the death of a spouse and lacking the knowledge or experience to manage these aspects for the first time after such a loss. The combination of lack of knowledge and grief may prompt the VA to quickly turn to others for help.

19. How Does the Law Define “Financial Exploitation?”

20. Definition of "Financial Exploitation” • Financial exploitation is defined as the “illegal or improper use of the property, income, resources, or trust funds of the vulnerable adult by any person for any person’s profit or advantage other than for the vulnerable adult's profit or advantage.” • RCW 74.34.020

21. Financial Exploitation – Criminal Conduct • So, financial exploitation includes criminal conduct • This includes stealing from the VA, improperly using the VA’s debit card, stealing the VA’s identity, or forging checks on the VA’s account

22. Financial Exploitation – Improper Conduct • Financial exploitation also includes conduct that is not necessarily criminal, but is improper • For example, if a professional employed by the VA, or the VA’s power-of-attorney, improperly uses his or her authority to obtain property of the VA, the conduct is “financial exploitation,” even if it is not criminal conduct

23. Financial Exploitation – Improper Conduct • Alternatively, improperly pressuring or threatening the VA to undertake a financial transaction that benefits the perpetrator, but does not benefit the VA, is financial exploitation. • For example, threatening to send the VA to live in a nursing home or threatening to cut off affection or a source of transportation to the VA unless the VA undertakes a financial transaction is also financial exploitation.

24. Not All Poor Choices are Financial Exploitation But it is important to recognize that not all transactions that fail to benefit a VA are financial exploitation. Unless the VA has a legal guardian, the law presumes that the VA is capable of making his or her own financial decisions, even if a decision appears to be unwise. For example, a VA can give all of her money to her adult son, who just lost his job, even if that leaves her without the ability to pay her bills.

25. But… • However, if the VA is directed to make a poor, risky or substantial financial decision, and the VA appears to have suffered a decline in his or her physical or mental functioning, seems confused, fearful, or has developed memory problems, financial exploitation may be occurring.

26. Perpetrators of Financial Exploitation

27. Who Are Perpetrators? Sadly, perpetrators come from all walks of life. They may be family members, caregivers, professionals, contractors, salespersons, or people who don’t know the VA. Based on statistics, common perpetrators include the following people:

28. Perpetrators – Family Members • Includes spouse, a new spouse or recently-acquired “sweetheart” (after the death of a spouse), an adult child, or more remote relatives. • A family-member perpetrator may be unemployed and live with the VA, may be supported by the VA, or may act as the VA’s caregiver or the person who pays the VA’s bills. • A family member may take action under a power-of-attorney signed by the VA, but the action only seems to benefit the family member, not the VA

29. Perpetrators - caregivers, friends or volunteers • Other perpetrators include caregivers or other persons who work for the VA in his or her home, staff of a care facility at which the VA resides, neighbors, friends or acquaintances; • These perpetrators may suddenly become involved in providing advice to the VA, managing the VA’s money, or paying the VA’s bills.

30. Perpetrators - Professionals Perpetrators may also include lawyers, guardians, accountants or other advisers, or clergy or a fellow member of a church or synagogue. The VA may undertake an unusual, significant or risky financial transaction that does not seem to fairly benefit the VA, on the advice of these types of perpetrators.

31. Perpetrators – Contractors or Salespersons • These types of perpetrators may overly-inflate the price of something the VA actually needs. For example, the VA may need to re-roof her house, and a perpetrator charges her twice the usual rate or performs a shoddy job; • Alternatively, the VA may attempt to sell the VA something substantial that the VA does not actually need, such as new windows, claiming that the VA will receive a substantial rebate or tax break

32. Perpetrators - Opportunists • Perpetrators also include people seeking funds from the VA to complete a transaction that appears to be highly suspect; • The VA may claim he has been instructed to send funds to someone in order to collect a prize or lottery winnings; • The VA may claim an unknown person claiming to be her distant relative suddenly contacted her and desperately needs money.

33. Indicators of Financial Exploitation

34. Indicators of Financial Exploitation • Indicators of financial exploitation • Unusual financial activity • Sudden change in legal documents or agents employed by the VA • Unusual behavior exhibited by the VA or the suspected perpetrator

35. Unusual Financial Activity • Withdrawal of or loan transaction for a very large sum for a questionable or risky purpose, such as financing a sports car the VA cannot drive; • Withdrawal needed to benefit someone with a “too good to be true” or “sob” story; • Withdrawal directed by another person accompanying the VA and the VA appears to be confused or frightened • ATM withdrawals or transactions at unusual places not previously frequented by VA, such as a casino

36. Unusual Financial Activity • Sudden, frequent use of an ATM by a VA with physical disabilities, or who has never previously used the ATM; • Increase in withdrawals, typically in round numbers ($50, $100, $500); • Withdrawals or transactions that result in a financial penalty; • Sudden change of account beneficiaries or new authorized signers • Increase in checks, unusual checks (such as more frequent checks to caregiver, checks for items not used or usable by the VA)

37. Changes to Legal Documents or Agents • Sudden involvement of a new lawyer, accountant or other adviser for the VA; • Sudden change in VA’s will, trust, power-of-attorney or durable power-of-attorney; and • VA appears to be confused, uninformed or not to fully understand the changes; • Beneficiaries are changed on documents to a new or much younger “friend”, caregiver, or sweetheart.

38. Concerning Behavior of the VA • The VA is suddenly reluctant to discuss matters that he or she once routinely discussed with you • The VA has a sudden change of behavior • The VA has become depressed, has lost a loved one, or has developed memory problems or suffered some other physical or mental decline • The VA has become dependent on others • The VA seems fearful, confused, or cannot understand the transaction

39. Suspicious Behavior of Perpetrator • Accompanies and directs the VA in the transaction • Speaks for or over the VA; appears to intimidate or frighten the VA • Isolates the VA in his or her home; cuts off contact from the VA’s relatives, friends • Recently has taken over as caregiver or manager of VA’s bills or finances

40. Suspicious Behavior of Perpetrator • The person becomes angry or aggressive if asked about the proposed transaction; • The person is reluctant or unwilling to allow you to speak privately with the VA; • Alternatively, the person is overly “smooth” in response to your questions; his or her answers to your questions are not plausible or are vague

41. Reporting Suspected Financial Exploitation

42. The Law Allows Reporting • Under the law, you are allowed to report suspected financial exploitation to Adult Protective Services and to Law Enforcement. • The law allows you to decide when financial exploitation should be reported, but does not require you to do so. • The law protects persons making reports of financial exploitation in good faith from facing any liability for reporting.

43. How To Report • Reporting to law enforcement can be done by calling 9-1-1 in cases of emergency, or calling local law enforcement’s non-emergency line, in less urgent situations. • Reporting to Adult Protective Services can be done by calling toll-free 1-866-EndHarm (1-866-363-4276) anywhere in the State of Washington.

44. Reporting - Your Employer’s Policies and Procedures Reporting suspected financial exploitation is a very serous matter. You must be familiar with your employer’s policies and procedures on reporting. Those policies and procedures will instruct you on who you report suspected financial exploitation to within your institution, and who at your institution will make the decision to report to APS and/or law enforcement.

45. Responsibilities of APS

46. What Does APS Do When It Receives a Report? • APS is authorized by law to investigate allegations of financial exploitation. • APS is required to report allegations that appear to involve criminal conduct to law enforcement. • APS is required to report allegations that appear to violate licensing or ethics laws or rules to appropriate licensing or certifying agencies or entities.

47. What Else Can APS Do to Help the VA? • APS can also take legal action to protect a VA, including filing a guardianship for a VA who needs protection and appears to lack legal capacity; • APS may also obtain an emergency restraining order to prohibit a perpetrator from taking further action to improperly take income or assets belonging to the VA. • APS keeps a record of perpetrators, which may prevent those persons from being able to exploit VAs in the future.

48. Do Others Have Authority to Help the VA? APS may refer cases to others, who may take further action to protect VAs: • Law enforcement and the prosecuting attorney may take action to criminally prosecute perpetrators; • Advocacy and social services organizations may provide legal representation or services to VAs; • Licensing or certifying entities may take regulatory action against perpetrators.

49. Legal Remedies that Financial Institutions, Broker-Dealers, or Investment Advisors Can Pursue

50. Sharing Information Your employer is authorized by law to share specific information and records with APS, law enforcement and the prosecuting attorney when financial exploitation is suspected or is being investigated.