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Financial Exploitation of the Elderly

As a population ages, protecting the elderly generation from financial predators becomes of paramount concern. The experience, at least in the author’s jurisdiction, is that financial exploitation is a significant problem. Exploitation can be outright criminal, such as threatening to withhold medical care if assets are not transferred or fraudulently conveying assets under a professional’s management. It can also be more innocuous, yet no less detrimental, such as over-compensating caregivers because the vulnerable adult “wanted” it to be done. Aged adults are being taken advantage of by both family members and professional caregivers, by financial advisors and medical providers.

This paper addresses a number of issues that are raised in the context of protecting the elderly. The first section provides a background of the underlying medical afflictions facing an elderly population leading to concerns regarding vulnerability. The second section details a sampling of various states’ efforts to address financial exploitation from a civil context. Section three addresses the criminal aspects of financial exploitation.

I. Aging in America

There are a vast number of debilitating illnesses that give an opportunity for an exploiter to take advantage of a vulnerable adult. The general aging process surely makes the elderly more frail and susceptible to exploitation as a result of generally not being as mobile and relying on others to assist them with activities of daily living. Although physical frailty certainly can generate exploitation, in the author’s experience, it is diminishing mental capacity that really creates the environment for exploitation to occur.

According to the American Alzheimer’s Association, approximately 5,100,000 people over the age of 65 have Alzheimer’s Disease or some other form of dementia. This amounts to roughly 13 percent of people over the age of 65 that have dementia. Needless to say, the proportion of the elderly who have some form of dementia is very high and expected to get higher. In fact, by 2030, the population of the United States age 65 or older will double. The sheer numbers of elderly who have dementia means that there are more people who will be considered vulnerable and in need of protection.

One of the key components of dementia is the decrease in judgment or poor decision-making skills. It is this decrease in judgment that causes such concerns regarding financial exploitation.

II. The Scope of the Problem — What is Exploitation?

As we address the issues in Parts Three of Four of this paper regarding remedies, identifying the behaviors that need to be prevented becomes paramount. One of the concerns regarding any financial exploitation statute is that it must be adequately inclusive to capture all the malfeasance without being so over-inclusive as to capture acceptable behavior.

The inevitable question thus becomes, how do we protect the elderly?

III. Protecting the Elderly, the Civil Side.

There are a number of issues that need to be addressed in order to create an acceptable financial exploitation statute. The first issue is to determine who is going to be protected by the statute. The second issue is to determine who is going to be liable under the terms of the statute. Finally, it must be determined what behavior is acceptable and what behavior is prohibited.

A. Who is going to be protected?

The protections of the statute must be extended to those who are actually in need of protection. Ideally, no one other than those needing protection would be covered in the definition. In this situation, and given the importance of the protections being extended, over-inclusion is certainly preferable to under-inclusion. That is, a well-drafted statute would not fail to include anyone who needs protection, even if that comes at the expense of including some people who should not be covered by the statute.

In Arizona, the protection of the financial exploitation statute is extended to “vulnerable adults.” A “vulnerable adult” is defined as someone “who is unable to protect himself from abuse, neglect or exploitation by others because of physical or mental impairment. Avulnerable adult includes an incapacitated person. . .” The Arizona statute seems to be under-inclusive. Certainly, if a vulnerable adult is unable to protect himself from being exploited, he should be protected.

The Arizona courts, however, have interpreted the concept of who is a vulnerable adult more expansively that the statute would seem to indicate. In Davis v. Zlatos, the court was careful to delineate the differences between being vulnerable and being incapacitated, stating that, “An incapacitated person cannot make informed decisions. A vulnerable person may be able to make such decisions, but is unable to protect herself against being abused, neglected or exploited. The protections of the statute extend to a vulnerable adult even if the person is not incapacitated.”

The first test in determining whether an individual is a vulnerable adult is to determine whether he suffered from an impairment. An impairment was defined by the court in Davis as a “decrease in strength, value, amount, or quality.” This is the expansion on the terms of the statute that attempts, from a judicial standpoint, to limit the under-inclusive nature of the Ariozna statute. The impairment found in Davis — by the appellate court — was that Mrs. Zlatos was “an eighty-six year old woman who was physically frail and unable to walk.” She relied on others for her care.

The second question to be answered in the Davis analysis is whether an individual was unable to protect himself as a result of his impairment. The trial court in Davis found that Mrs. Zlatos had “frequent opportunities to raise concerns with bankers, doctors, escrow personnel and family members if she believed that [the caregiver] was acting inappropriately…” Id., at 526, 1163. The appellate court rejected this as the standard.

Instead, the Court of Appeals stated as follows:

In this case, there is nothing in the record to indicate that Mrs. Zlatos considered herself to be abused, neglected or exploited, but her silence does not control whether she was a “vulnerable adult” under the statute. As mentioned above, a victim may not even realize she is being abused or exploited, particularly when the issue is financial exploitation and she is willingly parting with her money or property. Exploitation may occur with the full participation of the victim, but it is no less exploitation. The legislature plainly intended the statute to increase protection for those who are “unable to protect” themselves. We do not believe the legislature intended the statute to apply only to elderly persons who can prove that they unsuccessfully fought against actual abuse, neglect or exploitation.

From the judicial interpretation of who is covered by the statute, it is clear that an individual with diminished capacity resulting, for example, from moderate dementia, is going to be protected by the Arizona statute.

Although Washington uses the term “vulnerable adult,” in addition to those covered under Arizona law, it also extends protections to anyone in a facility — meaning that anyone in a nursing home or assisted living facility is considered a vulnerable adult.

Under Illinois law, the protections are extended to all individuals over the age of 60 and to anyone with a disability.


Illinois provides that the exploited has 60 days after a demand is made for the return of the property, after which a suit can be maintained for the treble the amount of the property obtained, plus attorneys’ fees and court costs

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Becker & House