200,000 victims of financial elder abuse each year

UPON TURNING 65 YEARS OLD, a resident of California qualifies for
the dubious honor of becoming one of the more than 200,000 victims
of financial elder abuse each year,1 no matter whether that 65-
year-old is suffering from dementia or other mental or physical infirmities.
Statistics indicate that people over 65 are more heavily targeted
by would-be financial predators. In fact, over 70 percent of people
over the age of 50 have been approached fraudulently, with no less
than $3.8 billion lost by seniors to financial scams.2
As the California Legislature has recognized, “elder and dependent
adult abuse is…indiscriminate…and factors such as one’s socioeconomic
status, gender, race, ethnicity, educational background and
geographic location do not provide an impregnable barrier against
its broad, horrible reach.”3 Financial abuse is estimated to account
for 40 percent of all forms of reported abuse against seniors.4 The statistics
become more alarming when one considers estimates that as
few as one in five elder abuse cases of any type is reported5 and only
one in 25 incidents of financial elder abuse is reported.6
California’s elderly population is substantial and growing.7 In
response to rising levels of crime against elderly persons and the
underreporting of such crimes, the California Legislature has, over
the last 17 years, repeatedly strengthened statutes to protect the
elderly from self-serving relatives and cunning salespeople. One such
law is California’s financial elder abuse statute, Welfare and Institutions
Code Section 15610.30.
The phrase “financial elder abuse” underscores its seriousness, yet
the phrase remains misunderstood. To many people, the term “abuse”
equates with physical abuse. Moreover, California’s financial elder
abuse law does not raise the issue of mental or physical capacity. If
you are 65 or older and incur financial loss due to fraud or other bad
faith conduct, you are the victim of financial elder abuse. You or someone
acting on your behalf may bring a claim under Section 15610.30.
Jurors and even judges (particularly since these cases do not necessarily
get tried in Probate Court, where judges are more familiar with
elder law) may not recognize the abuse element and lose sight of the
wrongfulness of the taking.
To properly present a case, it is helpful to be knowledgeable
about the background of California’s financial elder abuse statutes
and to understand the procedures and issues common to litigating a
financial elder abuse case, including the use of expert testimony.
Financial elder abuse also interplays with issues of competence,
capacity, and undue influence. By understanding the nature of a
financial elder abuse claim, more attorneys will be able to properly
identify cases of elder abuse when dealing with elderly clients and
become empowered to advocate on their behalf.
Definition
Financial elder abuse occurs when a person or entity takes, secretes,
appropriates, or retains (or assists in taking, secreting, appropriating,
or retaining) “real or personal property of an elder or dependent adult
to a wrongful use or with the intent to defraud, or both.”8 It covers
any appropriation or retention of property made in bad faith.9 If the
party knew or should have known that the elder had a right to possess
the property, he or she will be deemed to have acted in bad faith.10
The financial elder abuse statute is relatively new. Unlike other statutory
protections benefiting the elderly, such as provisions regarding
capacity and undue influence in the creation of wills or the intervivos
transfers that are found in the Probate and Civil Codes, the financial
elder abuse statute was designed for the protection of the elderly
regardless of capacity. In creating the statute, the legislature acknowledged
the special vulnerability of elders to financial predators.
In its inception in 1994, the financial elder abuse statute imposed
liability only on those who stood in a fiduciary relationship to an
elderly person. Labeling the violation “fiduciary abuse,” the original
law made it a violation for anyone standing in a position of trust with
an elder to take or appropriate money or property for any use outside
the purpose for which the money or property had been entrusted.11
The legislative intent behind the statute was to improve the reporting
and processing of elder abuse claims and to encourage attorneys
to take elder abuse cases. According to the Assembly Floor Bill
Analysis, statistics in 1994 indicated that only one in 14 incidents of
elder abuse were reported, amounting to half a million instances of
abuse going unreported each year.
Three years later, the legislature expanded the statute to allow
recovery of attorney’s fees in an effort to encourage more attorneys
to take on financial elder abuse cases. It also expanded the definition
of fiduciary abuse to include any person who takes advantage of the
elderly and refuses without good faith to disgorge the property.12 The
following year, the statute was broadened again and redefined as financial
abuse. The legislature focused on financial crimes as a general category
of harm faced by elders.13 The 1998 amendment made the first
attempt to inject the intent required to constitute financial abuse, stating
that financial abuse occurred wherever a person in a position of
trust took the money or property of an elder with the intent to
defraud.
Additionally, mandatory reporting was expanded under the 1998
law to include instances of financial exploitation, and minimum
standards of investigation were established. The legislature expressed
a strong need for these revisions, identifying a sharp increase in incidents
of elder abuse since the late 1980s.14 According to the legislature,
financial abuse was a factor in roughly a third of cases of elder
abuse and was more commonly experienced than either physical or
mental abuse among the elderly population.16 The Assembly Floor Analysis
heralded the bill as “a comprehensive
approach to address the problems of financial
abuse and misrepresentation directed
against seniors.” The analysis continued:
California seniors are losing millions
of dollars by purchasing unnecessary
financial products from [persons] who
have a financial stake in the sale.
Current statutes designed to protect
seniors are weak and ambiguous and
need to be strengthened. This bill’s
multifaceted approach will combat
elder abuse through strengthening protections
and assisting in the prosecution
of perpetrators.17
The 2000 amendment strengthened the
definition of financial elder abuse by providing
that financial abuse occurs wherever
a perpetrator “takes, secretes, appropriates,
or retains real or personal property of an
elder” to a wrongful use or with intent to
defraud or assists in the taking, secreting,
appropriating, or retaining of such property.
18 Again, a use is wrongful if conducted
in bad faith—that is, if a person or entity
knew or should have known that the elder
had a right to have the property transferred
or made readily available, and it is obvious
to a reasonable person that the elder maintained
that right.19 The amendment loosened
the intent requirement. It is not necessary
under the present statute that the taker maintain
an intent to defraud; rather, a person is
guilty of committing financial elder abuse so
long as it would be obvious to a reasonable
person that the taker is not entitled to the
elder’s assets.20
Capacity Not an Issue
The legislature has recognized the special
vulnerability of elders regardless of capacity
and has created a statute that applies to any
affected elder, while acknowledging that elders
with developmental disabilities, mental or
verbal limitations, or in poor health are more
at risk.21 The statute is still evolving. For
example, one bill will provide a right of
attachment in cases involving financial elder
abuse.22 Recently passed by both houses and
signed by the governor, this modification will
incentivize attorneys to handle financial abuse
cases. Presently, one of the difficulties facing
an attorney deciding whether to take a case
is collecting from the perpetrators, who are
often wasteful or irresponsible with the assets
they take. Allowing for attachment would
provide a more promising outlet for recovery
and encourage efforts to recoup funds wrongfully
taken from the elderly.
In addition to still being in evolution, the
statutory scheme is of recent creation, and
there is a lack of case law interpreting what
constitutes financial elder abuse. Most elder
abuse cases have not reached an appellate
level and are therefore usually not reported.23
The dearth of case law is also explained by
the fact that most financial elder abuse cases
never make it to court. The elderly are not
often in a financial position to pay for litigation
or may not want to disrupt their relationships
with their caretakers. Often, an
elder simply does not know that he or she has
a case.24
In dealing with elderly clients, it is important
to have a good understanding of the relevant
documents and donative intentions.
Moreover, to properly investigate a financial
elder abuse claim, it is important to meet the
elder separately from other family members
to ascertain whether the elder truly consents
to the intervivos transfer, modifications to
testamentary documents, or other affairs
affecting the estate. For example, two different
elderly women may seek to transfer ownership
of their houses to their adult children.
One sees this as a potential tax break for
herself or her family, while the other has
been led to believe by her daughter that she
would be better off living in a small apartment
and selling the house at a below-market rate.
The transfers may be the same, but in the latter
case undue influence may have a role.
Some incidents will be clear-cut cases of abuse
(a son changes the locks on a house while his
aged father is hospitalized, or a daughter
trustee of her mother’s life estate does not provide
enough money for her mother’s monthly
upkeep). An attorney with elderly clients
must be alert to the distinctions that turn
simple transactions into situations of abuse.
Under Section 15610.30, financial abuse
of an elder occurs when someone obtains
property of an elder for a wrongful use or
with intent to defraud. The legislature recognized
that old age by itself renders people
vulnerable to financial abuse, irrespective of
whether they are legally mentally sound.25 In
addition, Probate Code Section 850 allows a
personal representative to bring a case on
behalf of a decedent holding a claim to real
or personal property that is possessed or held
in title by another. By utilizing Section 850,
a personal representative may make a claim
of undue influence on behalf of a decedent
under Civil Code Section 1575, which defines
undue influencing as: 1) the use, by one in
whom a confidence is reposed by another, or
who holds a real or apparent authority over
him or her, of such confidence or authority for
the purpose of obtaining an unfair advantage,
2) taking an unfair advantage of another’s
weakness of mind—i.e., the elder lacked the
mental vigor to protect against impositions,26
or 3) taking a grossly oppressive and unfair
advantage of another’s necessities or distress.
27 Undue influence occurs when people
use their role and power to exploit the
trust, dependency, or fear of others. They
use this power to gain control over the weaker
decision-making abilities of another person.28
Case law is more developed in the area of
undue influence than with elder abuse. Like
Section 15610.30, undue influence under
Section 1575 does not require a showing of
mental incapacity. A grantor can be of sound
mind and considered legally mentally competent
yet still be subject to undue influence.
29 Indeed, the concept of sound mind,
typical to an inquiry regarding testamentary
instruments, is not essential in determining
whether an intervivos transfer is invalid.30
Because of the similarity of rights under
the undue influence and financial elder abuse
statutes, there will often be an overlap in
factual circumstance leading to two separate
claims. This presents interesting procedural
challenges. The undue influence claim under
Civil Code Section 1575 is asserted as part of
a petition brought under Probate Code
Section 850, typically accompanied by an
effort to seek damages under Probate Code
Section 859. This cause of action is equitable
and will be tried by the court.
On the other hand, the financial elder
abuse cause of action, which is outside the
Probate Code, is triable by a jury. There will
likely be two simultaneous trials if the facts
significantly overlap—one before the court
and the other before the jury. Generally, the
court first resolves the equitable issues.31
Procedurally, the trial court may try the equitable
issues first, without a jury. The court
may, in this phase, dispose of the legal issues
so that nothing further remains to be tried by
a jury.32 Or, alternatively, the court may
choose to have an advisory jury.33 The court
is also within its discretion to wait to rule on
the equitable issues until after the jury’s decision,
either guided by special verdict findings
or not. The trial court has great discretion to
set the procedures.
One significant difference between pursuing
financial elder abuse claims and causes
of action for undue influence is that in financial
elder abuse litigation, the burden of proof
rests on the petitioner. In undue influence
cases, however, if the respondent is in a “confidential
relationship” with the victim, the
burden of proof shifts. The respondent who
holds a confidential relationship will be presumed
to have taken undue advantage of the
victim’s trust, unless the victim had independent
advice and acted of his or her own volition
and with full comprehension of the
results of his or her action.34 This shows the
importance of conducting pretrial discovery
directed to what the elder knew, what other
advisers he or she had, and whether the per-
20 Los Angeles Lawyer October 2007
petrator sought or suggested independent
advice for the elder.
This more easily met burden makes undue
influence a significant factor for an attorney
to consider. A confidential relationship can be
established with or without a technical fiduciary
relationship, although a fiduciary is
most certainly considered to be in a confidential
relationship. Both exist whenever
trust and confidence is reposed by one person
in the integrity and fidelity of another.35 A
confidential relationship is found when one
party gains the confidence of the other and
purports to act or advise with the other’s
interest in mind.36 Typically, when a stranger
abuses a confidential relationship with an
elder, he or she does so in a deliberate, predatory
fashion. In contrast, a family member
tends to be more opportunistic, for example
taking funds “just once,” discovering no one
is watching, and then taking more. This family
member may argue that he or she “would
have been there” for the elderly person if
need arose. However, the spending patterns
of the person committing financial abuse
generally belie that argument.
Presumptive Disqualification
Recent case law has made a caretaker a prima
facie suspect if he or she becomes the beneficiary
of a testamentary instrument, and the
scope of who is considered a caretaker is
being expanded. Care custodians are presumptively
disqualified from receiving testamentary
transfers,37 and this includes longtime
friends who assume a healthcare role.38
Under these conditions, in which courts and
juries may be sympathetic to a wrongdoer for
having performed at least some minimal care,
expert testimony can substantiate a financial
elder abuse claim. The requirements for
expert testimony are that it relate to a subject
sufficiently beyond common experience so as
to assist the trier of fact, and that it be based
on matter that is reasonably relied upon by
an expert in forming an opinion on the subject
to which his or her testimony relates.39
An expert can explain the particular vulnerabilities
of the victim with a depth outside the
normal experience of a lay person.40 For
example, while everyone is influenced and
persuaded in various ways, vulnerability to
influence varies. The elderly are, under the
financial elder abuse statutes, presumed to fall
into a vulnerable category. Some of the factors
that contribute to their vulnerabilities
include mental and physical infirmities, dependence
on others for help with finances and
daily needs, loss of a spouse, lack of financial
sophistication, and isolation. These factors
underscore why, typically, the person who
takes advantage is a family member or caretaker.
An expert witness is critical to explaining
how a seemingly competent and self-suf- ficient elder can nonetheless get fleeced by a
son or daughter, salesperson, or neighbor.
California courts have deemed such an opinion
“virtually indispensable” to understanding
the relationship between the facts and
the results.41
As the population of elderly Californians
continues to grow, financial elder abuse is an
increasing concern. Knowing how to recognize
financial elder abuse requires an understanding
that anyone over the age of 65 can be the
target of abuse. Situations of abuse may not
always be readily apparent, and a good attorney
will investigate any transaction affecting
the financial affairs of an elderly client.
Moreover, as the legislature continues to
improve upon the recovery avenues available
in financial elder abuse cases, such as through
attachment or reimbursement of attorney’s
fees, the likelihood of a positive outcome in
any financial abuse case should improve dramatically
and encourage more attorneys to
come to the aid of elderly clients. ■
1 See Elder Financial Abuse Task Team Report to the
California Commission on Aging, available at
http://ccoa.ca.gov/pdf/Elder_Financial_Abuse.pdf (last
accessed June 26, 2007) [hereinafter Task Team
Report].
2 See id.
3 2005 CA A.C.R. 8.
4 See Task Team Report, supra note 1.
5 See National Center on Elder Abuse, National Elder
Abuse Incidence Study (1998), available at
http://www.aoa.gov/eldfam/Elder_Rights/Elder_Abuse
/ABuseReport_Full.pdf [hereinafter NCEA Study].
6 See John F. Wasik, The Fleecing of America’s Elderly,
CONSUMERS DIG., Mar./Apr. 2000.
7 The 2000 census reported nearly 3.6 million
Californians over age 65, and it is estimated that by
2010 the number of Californians over 65 will approximate
4.5 million. See Census Tables 83 and 121,
available at http://www.aging.ca.gov/html/stats
/2000Census_aging_data.html (last accessed June 26,
2007).
8 WELF. & INST. CODE §15610.30(a).
9 See id. §15610.30(b).
10 Id. §15610(b)(1)-(2).
11 WELF. & INST. CODE §15610.30, added by 1994 Cal.
Stat. ch. 594 (S.B. 1681).
12 See WELF. & INST. CODE §15610.30, amended by
1997 Cal. Stat. ch. 724 (A.B. 1172).
13 WELF. & INST. CODE §15610.30, amended by 1998
Cal. Stat. ch. 946 (S.B. 2199).
14 SeeWELF. & INST. CODE §15610.30(1)(a), amended
by 1998 Cal. Stat. ch. 946 (S.B. 2199).
15 See id.
16 Senate Judiciary Committee Bill Analysis of A.B.
2107, 2-3 (Aug. 9, 2000).
17 Assembly Floor Analysis of A.B. 2107, 2 (Aug. 29,
2000).
18 WELF. & INST. CODE §15610.30, as amended by 2000
Cal. Stat. ch. 442 (A.B. 2107).
19 See id.
20 See id.
21 SeeWELF. & INST. CODE §15610.30, added by 1994
Cal. Stat. ch. 594 (S.B. 1681).
22 See 2007 Cal. S.B. 611 (Steinberg).
23 See Brisk & Flynn, No Bad Deed Should Go
Unpunished: Evaluation and Discovery of Cases of
Financial Elder Abuse of Elders, 16 Fall NAELA Q. 8,
9 (2003).
24 See id.
25 See WELF. & INST. CODE §15600.
26 See O’Neill v. Spillane, 45 Cal. App. 3d 147, 155
(1975).
27 CIV. CODE §1575.
28 See Margaret Thaler Singer, Ph.D., Undue Influence
and Written Documents: Psychological Aspects, 10
THE CULTIC STUDIES J. 1, 19-32 (1993).
29 See Balassi v. Balassi (Estate of Gelonese), 36 Cal.
App. 3d 854 (1974); see also Potter v. Coleman (Estate
of Baker), 131 Cal. App. 3d 471 (1982); Jamison v.
Johnson, 41 Cal. 2d 1 (1953).
30 See O’Neill, 45 Cal. App. 3d at 155.
31 See Connell v. Bowes, 19 Cal. 2d 870 (1942).
32 See Raedeke v. Gibraltar Savs. & Loan Ass’n, 10 Cal.
3d 665, 671 (1974).
33 See id.
34 See Sparks v. Sparks, 101 Cal. App. 2d 129, 135-36
(1950).
35 See Sime v. Malouf, 95 Cal. App. 2d 82, 98 (1949).
36 See Kudokas v. Balkus, 26 Cal. App. 3d 744, 750
(1972).
37 See PROB. CODE §21350.
38 See Bernard v. Foley, 39 Cal. 4th 794 (2006).
39 See People v. Olguin, 31 Cal. App. 4th 1355, 1371
(1994); EVID. CODE §801.
40 See Estate of Duhaney, 246 Cal. App. 2d 653, 657
(1966).
41 Natural Soda Prod. Co. v. City of L.A., 109 Cal. App.
2d 440 (1952).
22 Los

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One thought on “200,000 victims of financial elder abuse each year

  1. Pingback: A Heartbreaking Story of Elder Abuse and Legal Thievery | The Life & Likes of Lark

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