Protecting Against Senior Fraud

Video Chapters & Transcript:

00:00 Intro: Elements of Senior Fraud Explained
02:41 Real Client Stories
04:37 The Role of Technology
07:49 Examples of Phishing Emails
10:18 Ponzi Schemes & Fake Investments
14:00 Reverse Mortgages & Funeral Scam Risks
16:47 Identity Theft, Phishing, & ATM Skimmers
25:08 Selecting Trustworthy Advisors
26:55 Elder Abuse by Family Members & Outro

[Music] Howdy folks. Welcome to yet another edition of Smarter Money Matters with the Wealth Doctor, your wealth doctor, Jeff Camarda, and our super CFPs Lou and Anna. Today’s topic is uh protecting against senior fraud, which I think you’ll find it extremely worthwhile, particularly those of you that in retirement age or near it. Uh but to begin with, welcome to Smarter Money Matters. It’s really your exclusive ticket to advanced wealth wisdom that’s hard to find elsewhere. From retirement, asset protection and smart tax strategy, uh, to paying way less in taxes, uh, to expert trust and estate planning, investments, insurance, and even real estate and business, financial planning. We are your passport to more wealth with less hassle and friction. We try to be entertaining, clear, and to the point, and we make it fun to get richer with less work and less stress. So, thanks for watching today’s episode, which again is about senior fraud. And I’m not sure uh if folks really appreciate how much money is lost to the savings and estates of seniors across the country in an ongoing basis. Um, and I thought it might be helpful first to kind of describe what fraud really is, right? And uh so there are really there are seven elements that are required um the for fraud in United States. First is the fraudster will represent something as an existing fact. Uh that it’s a material fact that it really matters to the decision uh that you’re trying to be duped into making. Uh it’s got to be false. Uh the speaker has to know that it’s false. Uh the speaker’s intent is that you uh as a potential victim would rely on this and act upon it. Um and obviously you would not know that it’s false. um the the victim needs to to rely on the truth of the representation uh and uh and and and suffer consequent damages. And that’s a whole mouthful of bunch of legal ease. But basically, it boils down to um I tell Lou that, you know, I’ve got an investment that u um is guaranteed to return 20% a year, which u um is pretty much impossible, but I make it sound like it’s true. He believes it’s true. It’s material. He’s investing the cost of the of the the purported guaranteed return, makes a decision, puts money in, loses money, and he’s been damaged. That really is the essence, right? And I I I I tell you, this is so prevalent. We you know, this is something we hear horror stories in the news all the time. And unfortunately, many of our clients over the years have fallen victim. Do you have any recent stories? I have. I do. I I’ve got couple couple clients at least that especially with crypto nowadays that have fallen for this type of scam where you know they’re offering cra you know great great returns uh in crypto and uh turned out to be a scam uh at least one of them and you know maybe we’ll have the guy as a u future guest on the show uh but yeah that is you know more and more often they would like to see. So so what you’re saying is somebody approached him or her you know with with a crypto investment. Yes. Yes. That turned out to be, you know, just, you know, baloney, right? And did they actually lose money? Did they They lost a lot of money. What’s a lot? About a million dollars. Oh my goodness gracious. And is that something that they bounced off of us first? Yeah. And we told them not to do it and they still did it, right? Unfortunately, happens all the time. These people can be very, very convincing. Do you have any stories? Yeah. I mean, I’ve I’ve in my career interacted with clients that have be been victims of a romance scam. um similar situation, but they’re approached as like a friend or a potential romantic partner that the old pig butcher employing floor. Yes. Exactly. And then slowly they they get them to send money. Um and it can be, you know, multiund thousands of dollars before the person realize they’re a victim. Which some obviously, well, not obviously, but typically it’s a false photograph and I would love to come and join you. Yes. I needle my wife have my daughter and the plane ticket and they kind of milk and milk until the pig is is laying there, you know, breathless and bled out on the floor. Right. Yes. And and they make it seem like it’s very exclusive club. They don’t want they don’t want you to give this information away. They don’t want you to talk to your advisor. They don’t want you to talk to your family members. They kind of, you know, between you and whoever is trying to scam you. Uh they try to make it seem that, you know, they’re they’re doing it for your best interest. And um unfortunately, you know, a lot of times it’s a it’s a scam. can be very compelling especially for folks that are widows or widowers and you know and get a little bit lonely later on and uh um it can be very enticing. You have to be careful folks. You really do. The FBI has seen a steady rise in the number of cases of uh of investment fraud. I’ say since 2008 cases have increased by 52%. Uh and today seniors are falling victim to these schemes with some regularity. Um, and some of the buzzwords are lower or no- risk investments, guaranteed or higher returns uh than bank accounts, uh, and, uh, some so-called advisors. And remember, we’ll get into, you know, being careful with advisors toward the end of the episode. Uh, but they will even prey on seniors, religious or ethnic groups or other common interests to build trust um, and build a relationship before moving in for the kill. 60% of the fraud related complaints that have been received um were the focused on um the on critical areas of contact 45% from email and 11% from an internet website. Right? So that’s well over half uh that were electronic. And email is a really really big danger area for a lot of reasons and that we’ll get into uh like phishing and so forth. So some of the things that uh in order for fraud to be successful u they have to get your trust right. Nobody’s going to write a check to somebody they don’t trust and and and think is acting in their best interest or got something good you know. So often they will make up designations. They might claim to be an adviser when they’re not even a licensed advisor. Um they u um can use a company name similar to um by Kamarta. There was a fraudster that we identified, Google actually identified and then hook it up with us called Vincent Kamard up in New York. I have no idea who he is. Um but play pray or playing off, you know, the the name of recognized institutions that people trust. Um and they can create the impression uh that the uh often that the elder has been chosen or is lucky and is told not to tell anybody. This kind of exclusive deal. There’s a limited number of people that qualify for this. They don’t even tell your adviser. And that’s another thing, folks. When you get if you probably will have already received a lot of these, ask us if you’re a Kmart client, ask your trusted advisor or your attorney or your CPA to for their opinion on the uh on the proposition. They this obviously will give you information to help to understand what’s going on, help make a better decision. Yeah, absolutely. And what you bring a a point that something reminded me of a client that I had last year um here, you know, was with our Schwab platform, right? that. So, what they can do, and I’m not sure exactly how this works. You may have more more intel on this, but they basically pay Google scammer or or hacker to move a false schwab link when they Google it, they move it up at the top of the list. So, they I don’t think we want to imply that Google is complicit on this, but I think that what they may do is is by basically buying ads, you know, so it’s a hit that that that appears to be legitimate, you know, with some keywords in there. So it comes up earlier in the Google search, right? Yeah. Yeah. It appears to be a company that you trust and believe your bankers, you know, swap, whatever the case may be, but it’s actually the scammer’s website. And you see that a lot with phishing, right? I mean, so you some of the with phishing basically is you get an email that is that is that appears to be from a legitimate source, but it has links in there that if you click, they they can get access to your computer and steal confidential information. And some of these are pretty slick, right? Did you have any any recent that you recall? I mean, even even in, you know, I’ve had clients over the years, you know, receive phishing emails. When I worked um at my prior employer, we saw it very commonly. Um they were a very large institution and like Lou was talking about, they would send these fishy emails that looked legit trying to prompt clients to log in with their login credentials that then the hackers or scammers would take and then use to access client accounts. And I think it’s more and more common with email and and even texting um you know some of these different these I get five or six a day sometimes. Yeah. And some of them some of them are real obvious. Some of them are very very you know carefully done where it looks like it comes from docysine or a bank or a brokerage house social security whatever. Um, and you have to really really be careful. So often that if you look at where the email is sent from, it’s g it’s going to show it’s going to appear to not be a legitimate address. It might be, you know, I’ll just use Camarda. It might be Camarda Advisors, you know, um, biz or something like that. So it’s got the Camarda name in it, but it’s not our legitimate domain. You know, very often the uh, somewhere in the message is it’s urgent. You have to act now. you only have 30, you know, minutes or a day or whatever, otherwise this opportunity would pass. And why do they do that? You think to create a sense of urgency and just, you know, to dup you to do it sooner so you you don’t have to think about it. You don’t you don’t reach out to your trusted contacts and so on. Yeah. Yeah. You make a foolish decision based on incomplete information because, you know, you you leap in with both feet really before you look down. That that’s probably the best way to tell, especially some of the sophisticated ones. But I can tell you they always always are instructing or trying to induce you to click on a link in order to get your statement or here’s your bill or to qualify for your refund or to get your check, whatever. Just click here. And once you do that, that allows their, you know, their malicious code to enter your computer, right? You don’t want to click on those links, you know. So, one of the big, you know, scams, the Ponzi schemes, which have been around, I think, for over 100 years, something like that, right? And of course we all remember the the really big one from about 15 years ago Bernie Maid off you know um the retirement of Bernie’s um where and a Ponzi scheme basically is this you know the fraudster will guarantee or or or suggest that you’ll get um unreasonable returns and they take money in. So maybe Lou is the first investor and I get some money from Lou and then I induce Anna to um to to invest and I take some of his her money and give it to him. So the return appears to be from investments. But you’re building a bigger and bigger base of investors and skim off those and spreading the money around. And obviously the scheme fails when you know if it’s undetected if it fails when you run out of investors because the fraudster is taking most of the money. Um you have to be careful folks. you you really really do. So, you know, typically there’s a lot of schemes uh with uh legitimate appearing investments like precious metals, gemstones, real estate, you know, stocks and bonds, annuities, loans and other investments. Um and very often and you know folks are induced to invest based on unre unrealistic expectations of returns and even by advisors. you know, advisors is a big spectrum as we’ve talked about in previous shows. You know, um to get an investment advisor’s license typically is very easy. You know, to get a security sales license or a life insurance license to sell annuities, um it is not that difficult. And a lot of folks don’t even have those, but they purport to. But there are, you know, a number of licensed advisors that may be engaged in unscrupulous sales practices, uh, selling things like annuities or other investments that, um, the by misstating what the actual terms are inducing people to put money in and they get their commission, they’re gone. Right. Have you seen, you know, many of these? Yeah. Uh, sure. And we I mean we’ve we’ve had our clients we’ve had our clients that we had to kind of walk off uh some some you know similar requests for us to send them money to go into something you know similar similar type of investments. So yeah and if actually if you look at our blog at komodo.com there’s a bunch of blog posts that that are queued up about what I call you know real life annuity horror stories uh from our practice over the decades. really this is just incredible and these were really all legitimate, you know, insurance products that were misold uh and uh to the great misfortune of a lot of people that put money in just the stuff that for instance I’ve seen annuities where guaranteed return can’t lose money and I read the contract and the guarantee is you get 80% of your money back that’s the guarantee at 20% loss but you have to read the fine print you all know and the salesman who’s making a big commission probably wouldn’t tell you that do you have anything any stories that you’d like to add now I mean I would Just say again with the rise of like social media and um texting more technology a lot of these different you know investments that are being offered to clients like crypto and and even you know gemstones precious metals that types of things they can come through those different sources right they might reach out through an Instagram account a Facebook account right to try and get a hold of you um and again it’s not legitimate if there is a sense of urgency or something doesn’t seem right, reach out to a trusted advisor, you know, like your financial adviserss and and they’d be happy to review it with you. Yeah. And even if you’re not a Kamarta client, we’d be very happy to uh to take a look at that for you as well, just in the interest of public service. So, another area, you know, of of frequent fraud of prizes and sweep stakes, right? And I’m I don’t say publishers clearing house, but you won a prize and a half million dollars, whatever. And all you need to do is pay a $500 redemption fee. Yeah. And it’s a way to skim off bits of money by, you know, by duping you into thinking you have a lot more money coming when of course it’s all just fabricated. Um so uh another area that I really wasn’t aware of you know reverse mortgages you know which is a real can be a real swamp of an industry those that have the government guaranteed last time I studied it were a little bit you know were significantly more uh legitimate I think um but reverse mortgages has emerged as an area of uh real abuse for the elderly and the reason is that you know reverse mortgage the pitch is really nice right sign up get the mortgage you have to make any payments. You get a lump sum. You can stay there until you’re you know until you pass on, but you know the charges and cost and and userous interest rates can completely consume the value of the asset. And when you finally check out your kids don’t get nearly what you thought they would. Yeah. And this I was surprised actually I wasn’t aware of this. It’s it’s become you know quite a problem uh where um there was this quote from this report that disreputable lenders can uh can lead to extremely high interest rates. It’s added back to the loan eventually eating away the value of the home because the capital sum and acred interest is repaid to the lender only when the homeowner moves or dies. The effect can have a surprising and devastating impact on your estate for the heirs. Yeah. And another area, you know, frequent abuse is final expenses, right? And we won’t get too much into this, but those of you that have suffered through a family death and had to arrange, you know, um the the funeral and so forth, you know, it’s a time of great vulnerability and grief. And it’s really, really easy to be taken advantage of. I want the best and this coffin and that coffin. you should shop it and think it out in advance when you have clear head because it’s really easy to spend far far more money than makes sense or is even appropriate you know or affordable in some cases uh but I wasn’t aware that you know a lot of pre-ne contracts um and these are often sold by funeral directors who make commissions on the insurance sale but they name themselves as a beneficiary of the policy can you believe that you pay for it and Then when you die, I get the money. Okay? You know, right? Plus, you still get a bill for the casket, maybe. Uh, so you really, really have to be careful. Um, I think we’ll skip time shares and the Nigerian letter and so forth, and talk a little bit about identity theft, which really I I know that that several of our clients have become victims of this. And it’s so easy uh particularly with technology and as you get older and you’re not as tech adept, you know, it’s easy to miss something or believe something or think it’s coming from the bank. Do you have any any recent story? I’ve had a one just this morning. It’s ongoing. This this is a very hot topic in in our in the industry and and we just had one on Friday this past week. Um a client, you know, it appeared to be a client of ours that reached out to me uh via email. And you know, we’ve communicated through email before that there’s no no red flags there, but um it was a scammer and they made it they made an email sound very very urgent. You know, put the red exclamation mark on it, all that and said, “I’m out of town. Please wire.” They had the that had the uh wiring instructions on there for me to send funds to this uh you know, account somewhere. And um sure enough, I just the urgency the way that the email was written, I could see that he wasn’t a client. And obviously our procedure is to reach out to clients and make sure that verify we get verified and get verbal ver verbal authorization and stuff like this. But right away I picked up that this wasn’t the client and you know if you if she’s watching this show she’ll probably you know she’ll know who she is but uh it’s still a you know so they’re in her email and they’re actually sending emails from her email but as soon as they send it out they go in and delete it. So there’s no track trace that um that they actually sent it out. So that’s worth saying again because that’s a slick trick that you know why don’t you explain that you know again. So in a way they they got access to her computer and logged in or actually maybe because of a phishing attempt where she clicked on a link, you know, and and then they put some code on the computer and now um the the fraudster is able to actually send emails out that appear to come from this client. Right. Correct. It’s coming from her email. It’s it’s her legitimate email. But as soon as they send it out, they go in there, they they delete the email and you know, they delete any type of trace that she doesn’t see. She doesn’t see it. She doesn’t know it’s there. But I got it. It comes from her and she almost didn’t believe me. She’s like, I’m going to my I’m going in my email. I’m in my scent files. Can’t see anything in there, Lou. But sure enough, I I show showed her the screenshot and um you know, she believed me then. She took it to the G. And this is the kind of thing like I’m stranded in Aspen. I need $100,000 immediately wire to this account number. Thanks, Lou. Right. That’s the kind of thing. Very very similar plot. Yes. Yeah. So, I mean it’s it’s more and we see it more unfortunately more than than u than we would like to and it’s getting even more and more prevalent now with technology with AI like Anna was saying and it’s it’s scary without question. I mean, there’s so many different tendrils, you know. So, let’s talk a little bit more about identity theft in order to steal your identity. Um, you know, the um the the criminal has to get little bits of information. So, security number, account numbers, you know, what we call confidential financial information in our cyber security training. And there’s a lot of ways to get that through email for phishing, right? uh by sharing you know by not attaching excuse me by not using encryption software. So when we deal with Kamarta clients and folks that are consider using us and we look confidential documents we always tell you to use a document upload link which puts it through an encryption process so that somebody can’t hack it and re open the document only. You can send it encrypted is like a code and you decode on the other end in order to open a document which keeps it safe. But if you just attach documents to emails and you are hacked somehow and there’s a million ways you get hacked these days and you send, you know, an email with an investment statement with your account number on your address. Now, that’s some key information that that a criminal can use to access your accounts. And the more information they have, the bigger the profile, the easier it is to steal your identity and to steal your money. And it’s not all just electronic. You know, there’s uh um dumpster diving, right? You know, where if you throw away statements and it says even if you’re throwing the smelly garbage, you know, with dirty diapers and banana peels, they still will go in there with gloves and so forth. You know, thieves search will search trask using gloves and a fan if they must when looking for sensitive documents that contain any type of personal information, social security numbers, any type of account numbers, credit card information, bank statements, brokerage, confirms, passwords that you put in a postit, whatever. So, you really really need to be careful. If you’re still getting paper statements that uh and other, you know, documents that contain sensitive information, get a shredder or burn it, you know, or to find some way to destroy it because Yeah. odds are somebody’s crawling through your trash. Maybe not today, maybe not tomorrow, but sooner or later, get into wrong hands. That’s right. And another, you know, uh correlary is uh shoulder surfing. I hadn’t heard that term before where you may see somebody, you know, a young person like Anna maybe come up and you’re using the ATM or writing a check and she looks like that she’s playing a game on her phone. She’s actually, not that D would ever do this, of course, but she’s the youngest one in the room um to they’re actually recording your transaction using the video on the phone. Now, they see your keystrokes on the keypad. They see what’s up on the screen. They get it up information. They can probably go in and do it once you leave the ATM and pull out some money. themselves because you really got to be so careful. So careful. And also, do you know what ATM skimmers and handheld skimmers are? Do you guys The machine that you put onto the ATM? Is that what it is? The reason you know what it is? Yeah. It’s it’s um piece, you know, a piece of technology that people will put over a card slot or, you know, on a gas station is a really common one where they can, you know, you insert your card to pay for gas, right? or to pay for something at the store and they pull your information off of the card. It’s extremely common um practice for people to access bank accounts, access money in bank accounts, pen numbers, that type of information. Yeah, it to me at a restaurant, don’t use your debit card, use your credit card so he can dispute the charges. Send it to me with with a uh at a legitimate restaurant. or sometimes it’s just the waiter or the waitress copying it down a picture both sides of the card, you know. But the skimmer is is a device Anna was was uh was mentioning that basically reads, you know, it’s able to interact with the magnetic and the chip that’s on the card um and to read the information off of there to capture your your in this case your your credit card information. You know, it’s common at airports. It doesn’t have to be right next to the card either. You could see somebody, you know, we used to have an FBI agent that was a client of ours that actually used to teach this at, you know, some client events where you could even be across the aisle depend on the power of the device and it’s kind of like spyware, you know, waving over. And that’s why, you know, a lot of wallets these days, I’m not sure if you do, but you know, you want to get a wallet that’s basically like shielding in it. So, if I pass a skimmer, they can’t they are not able to access the the card information that’s in here. um available on Amazon in different prices. I know because I’m a customer. All right. So, we talked a little bit about phishing, right? Yes. And just to summarize that, the sender poses as a brokerage firm, bank, credit card company, internet, auction site, eBay, you know, a host of different areas, electronic payment center, or some other financial services provider or or really, you know, or vendor. The email appears to be genuine, utilizing the same logo, links to the fraudster’s website, and even uses names of real people. Subject lines typically include the follow urgent. Your account can be shut down if you don’t respond, need to update your account, recent change to the law required, update his information, or to protect your account from theft, please verify information, just click here and give it all to me. Um and uh uh Cement intelligence report uh stated that 45% of phishing scams detected um the um that year spook banks. Um so I mean this is really really common and in one way to tell is you look carefully often the logo is off by a little bit or misspellings in error. A lot of this originates obviously from outside of the US but some some of it is pretty obvious. Some of it if you don’t look at it carefully you’ll miss it. Some of it is very very good. It looks authentic, you know. So you got the key for these things is they’re trying to dup you into clicking on a link and once you do they’ve got spyware on your machine and you got to be really really careful. All right. So as you wrap up guys, it’s been a longer segment but I think very interesting and critical information. please pass it on to family, friends, and uh and other folks that you think might uh be uh be exposed. But a couple of quick things, you got to be careful with advisors. They know that’s one of my biggest beef on my academic research areas, advisor credentials and ethics and and misconduct, malpractice. But 79% of respondents and these people that have been defrauded did not check their broker’s background for law violations. go to broker check and if there are public you know disclosures about fines or suspensions or other problems you can you can get a lot of information on broker check not for insurance people but for securities people 65% didn’t check the registration of their investment advisor representative were they even licensed or registered with a firm we’re just making it up 60% of the target respondents chose a broker based on the recommendation of a relative friend or co-orker not based on their own research or the credentials of the adviser and while that seems right John wouldn’t use them if they were good. John probably didn’t look either. You have to be careful. Um, also, you know, you have to be careful with designations. There are so many letters out there and believe me, I know most of them are not worth the hill of beans. You know, the most recognized and and the most important in my view is a certified financial planner, uh, which which of course work I completed decades ago and and Lou and Anna are CIPs. Um, but there there’s so many other letters that don’t really indicate that there there’s much expertise there. you know, it’s kind of just like uh and they’re easy to get. Sometimes they’re just made up, you know, but the CFP and the CFA are the hallmarks of really legitimate designations in my mind. Uh but there’s a lot of fraud, you know, that that where people are know relying on designations and apply expertise and it’s really just kind of part of a sales scam. The other concern is, you know, most um financial fraud against seniors is perpetrated by who? Do you know who? Family, I believe. family members. Yeah. You know, or people trying to get grandma’s money or their children, you know, that that want to take advantage and get the money before it’s split up in inheritance. So, one thing to be very very careful about is uh seniors there’s powers of attorney making sure that if you give someone a power of attorney, you know what you’re giving and you want to. A power of attorney is an extremely powerful unchecked instrument. If Lou gives me a power of attorney, then I can sign his name and sell his house and clean out his bank accounts. I can act as if I’m Lou and take all his money. It’s extremely extremely powerful and while useful as part of estate planning and asset and other control planning, I think trusts are are a much more a much safer ways to go. All right, so uh as we’re running out of time here, any last minute stories here? No, I think we’ve covered it. Yeah, I can go on and on about this, but for the sake of time, I think we we’ve had enough for any quick any quick quips from Anna. I mean, trust your gut. If something doesn’t seem right, it’s always worth a second look. Yeah. And don’t rush in. Fools rush in. We’re angels fear to go. And on that note, thank you for suffering through yet another edition of Smarter Money Matters. Until next week, we really enjoyed sharing this with you. Please, Pat, please pass it on and we’ll see you soon. Bye-bye. [Music]