Financial fraud against the elderly may be the fastest-growing white-collar crime in America, Minnesota Commerce Commissioner Mike Rothman said last week.
It makes sense. The fast-growing cohort of 65-and-older folks — which 50 years ago was America's poorest generation — is now its richest, thanks to business success, personal retirement holdings and government programs such as Medicare that mean the elderly don't have to spend all of their savings on health care.
"Seniors control about 70 percent of the nation's wealth," said Rothman, a business lawyer who became Minnesota's top financial services regulator in 2011. "And the scam artists know it."
Con artists, whether they are desperate family members or white-collar criminals, always follow the money. The elderly, some in declining health or mental capacity, can be easy pickings.
Rothman said he was startled by the number of consumer complaints coming into the department and the stories he hears in public meetings. As a result, he has shifted an unspecified amount of resources into elderly fraud cases, as has the Ramsey County attorney's office and some local police departments.
Rothman also has spearheaded a public education campaign targeted at seniors.
A 2010 survey conducted by the Investor Protection Trust showed that one out of every five Americans over the age of 65 have been victimized by a financial swindle. The Journal of Elder Abuse and Neglect reports that about 80 percent of elder abuse cases go unreported. Many victims are confused, fearful and embarrassed, if they realize they've been taken.
State officials say the number of complaints, investigations and caseloads are swelling.
• In February, the Minnesota Department of Commerce ordered Jeffrey Rodd of Redwood Falls, a one-time host of "Safe Money Radio," to cease selling securities in Minnesota. Investigators determined that Rodd had taken money from several investors, including one with dementia, who said they had invested the proceeds from the sale of their farms or most of their life savings in unregistered promissory notes. Neither Rodd nor the debt securities were licensed by the state. Rodd was fined $300,000 by the state and is under criminal investigation.
• In late 2012, Robert Stanley Hertz pleaded guilty to theft by swindle. Hertz and an associate in a St. Paul insurance agency in 2009 convinced 19 clients to surrender about 50 annuity policies that had been issued by Allianz Life Insurance Co. of North America and collected about $320,000 in illicit commissions.
According to the Ramsey County attorney's office, which is prosecuting the case, Hertz and associate Stephen Anthony Marrone replaced $4.2 million worth of policies, resulting in huge surrender charges for their clients. The pair convinced the clients that the new annuities were a much better investment, and they then falsified the paperwork submitted to Allianz. Marrone is contesting the case against him.
• Kevin Karl Olson of Alexandria recently pleaded guilty to insurance-recycling fraud charges involving several elderly people in the area, including his own father, after Allianz concluded in 2010 that he was bilking some clients. Allianz dropped Olson as an agent.
"These cases break your heart," said Assistant Ramsey County Attorney John Ristad. "There are 'recycling' insurance-policy cases and other elder fraud. There's a lot more cases being brought to us by the Department of Commerce and other investigators. I even have talked to a retired lawyer who got talked into investing in a United Kingdom lottery fund."
Rothman has stressed consumer education, including forums, written materials and an enhanced website. He's also enlisted Minnesota CPAs, lawyers, securities professionals and insurance agents to be on the lookout on behalf of their clients.
"The vast majority of financial services firms and agents are doing good things," Rothman said. "There are bad apples. We work with the financial sector to let us know of suspicious activity."
More information on consumer education and avoiding scams can be found at www.mn.gov/commerce/consumers.