But older people who have been able to save are often vulnerable to fraud, not only from family members but also financial professionals. A recent case in New Jersey underscores the threat.
New Jersey Attorney General Gurbir Grewal reports that an investment broker entered a guilty plea to stealing $270,000 from an elderly couple. He reportedly did it by persuading them to put money in a fictitious investment program.
The broker, Michael Siegel, of Livingston, N.J., pleaded guilty to second-degree theft by deception. Under a plea arrangement with the state, he’ll serve three years in prison and pay back the $270,000.
According to the attorney general, Siegel had become friends with the couple before becoming their investment broker. The couple stayed with him when he moved to other firms, accumulating an account that totaled well over $2 million -- certainly enough for a comfortable retirement.
Phony ‘options’ program
In 2014, the broker reportedly urged his clients to invest in what was presented as an “options” program, which he sold as a safe institutional trading program for preferred clients. But the clients were allegedly told to make their investment checks out to the broker personally. Grewal says the options account never existed and that the broker pocketed the money.
“Investors count on their brokers to act with honesty and integrity in managing their investments, but Siegel callously betrayed the trust of his victims by stealing over a quarter of a million dollars from them,” Grewal said.
And therein lies the risk for older investors. Using a friend as an investment broker can cloud judgment and prevent the client from holding the broker as accountable as they might with an advisor with whom there was no previous friendship.
When someone takes financial advantage of an older person it’s a form of elder abuse. According to the Nursing Home Abuse Center, there are signs that elder financial abuse is taking place.
Signs to be aware of are forging the elder person’s name on legal documents; forcing the person to sign legal documents such as wills or power of attorney; and charging purchases to an elderly person’s credit card without permission.