[Senate Hearing 112-716]
[From the U.S. Government Publishing Office]
S. Hrg. 112-716
AMERICA'S INVISIBLE EPIDEMIC: PREVENTING ELDER FINANCIAL ABUSE
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
NOVEMBER 15, 2012
__________
Serial No. 112-24
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.fdsys.gov
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon BOB CORKER, Tennessee
BILL NELSON, Florida SUSAN COLLINS, Maine
BOB CASEY, Pennsylvania ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri MARK KIRK III, Illinois
SHELDON WHITEHOUSE, Rhode Island DEAN HELLER, Nevada
MARK UDALL, Colorado JERRY MORAN, Kansas
MICHAEL BENNET, Colorado RONALD H. JOHNSON, Wisconsin
KIRSTEN GILLIBRAND, New York RICHARD SHELBY, Alabama
JOE MANCHIN III, West Virginia LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut SAXBY CHAMBLISS, Georgia
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Chad Metzler, Majority Staff Director
Michael Bassett, Ranking Member Staff Director
CONTENTS
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Bob Corker.................................. 2
Statement of Senator Bill Nelson................................. 2
PANEL OF WITNESSES
Frank Abagnale, Author and Consultant, Abagnale & Associates,
Washington, DC................................................. 3
Kay Brown, Director, Education, Workforce and Income Security,
U.S. Government Accountability Office, Washington, DC.......... 5
Hubert ``Skip'' Humphrey III, Assistant Director, Office of Older
Americans, Consumer Financial Protection Bureau, Washington, DC 7
Paul Smocer, President, Bits, Financial Services Roundtable,
Washington, DC................................................. 8
Paul Greenwood, Deputy District Attorney, Head of Elder Abuse
Unit, Family Protection Service, San Diego, CA................. 10
APPENDIX
Witness Statements for the Record
Frank Abagnale, Author and Consultant, Abagnale & Associates,
Washington, DC................................................. 28
Kay Brown, Director, Education, Workforce and Income Security,
Government Accountability Office, Washington, DC............... 34
Hubert ``Skip'' Humphrey III, Assistant Director, Office of Older
Americans, Consumer Financial Protection Bureau, Washington, DC 42
Paul Smocer, President, BITS, Financial Services Roundtable,
Washington, DC................................................. 46
Paul Greenwood, Deputy District Attorney, Head of Elder Abuse
Unit, Family Protection Division, San Diego, CA................ 57
Additional Information by Witnesses Submitted for the Record
Questions submitted by Senator Wyden for Mr. Abagnale............ 64
Questions submitted by Senator Wyden for Mr. Humphrey............ 65
GAO Report: Elder Justice: National Strategy Needed to
Effectively Combat Elder Financial Exploitation................ 66
Additional Statements Submitted for the Record
Senator Bernie Sanders (I-VT).................................... 146
Financial Industry Regulatory Authority, Washington, DC.......... 148
Elaine Roberts Musser, Attorney at Law, Davis, CA................ 156
U.S. Postal Inspection Service, Washington, DC................... 165
University of Cincinnati, Center for Aging with Dignity,
Cincinnati, OH................................................. 168
AMERICA'S INVISIBLE EPIDEMIC: PREVENTING ELDER FINANCIAL ABUSE
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THURSDAY, NOVEMBER 15, 2012
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 2:00 p.m. in Room
SD-562, Dirksen Senate Office Building, Hon. Herb Kohl,
Chairman of the Committee, presiding.
Present: Senators Kohl [presiding], Wyden, Nelson, Casey,
Whitehouse, Blumenthal, and Corker.
OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN
The Chairman. Good afternoon. We appreciate very much your
presence at this hearing.
Today we will be talking about ways to prevent a growing
national crisis, elder financial abuse. From the opportunistic
thief working as a home care aide, to the shady telemarketer
who befriends a lonely senior on the phone to take advantage of
him through a sweepstakes scam, the stories this Committee has
heard are alarming.
Seniors are being victimized every day, and the problem is
getting worse. According to the Investor Protection Trust, one
out of every five older Americans has already been duped by a
financial scam. And while the costs associated with elder
financial abuse are estimated to be $2.9 billion every year,
financial abuse often does go unrecognized because victims are
too afraid or embarrassed to report the crime to authorities.
The reality is, many of us may know an older adult who is
at risk, or who has been a victim of elder financial abuse. It
might be a family member, a neighbor, or a friend. In fact,
someday it might indeed be each and every one of us. But there
is hope. Today we will highlight new elder financial abuse
prevention programs being implemented across the Federal,
state, and private sectors. In addition, we will address ways
that older Americans can take steps to protect themselves, as
well as their assets.
We will start today's hearing with Mr. Frank Abagnale, who
earned a Hollywood-worthy reputation for conning unsuspecting
victims. He has come here to share tips for preventing identity
theft and protecting against financial fraud.
We will then review the findings of a Government
Accountability Office report which describes what the Federal
Government can do to help states combat financial exploitation.
We will also hear testimony from the Consumer Financial
Protection Bureau, a member of the new Elder Justice
Coordinating Council.
Finally, our panelists from the Financial Services
Roundtable and the San Diego County District Attorney's Office
will share their knowledge of prevention activities taking
place in private banking institutions and at the state level.
Over the years, I've seen our nation take great strides to
combat elder financial abuse, from the passage of the Elder
Justice Act to the creation of a background check system for
nursing home employees. It is time to build on our efforts to
remedy this invisible epidemic and break the cycle of stigma
attached to this terrible crime.
We thank you all for being here, and I'd like to hear now
from Senator Corker.
STATEMENT OF SENATOR BOB CORKER
Senator Corker. Thank you, Mr. Chairman, for bringing this
hearing today and for all of these witnesses for showing up. I
do look forward to your testimony, and I appreciate you
highlighting this issue that affects so many people.
And I've been told not to make any big deal about the fact
that this is your last hearing, so I won't do that, but thank
you so much----
[Laughter.]
Thank you so much for your tremendous leadership and for
being such a pleasure for me and our staff to work with.
The Chairman. Thank you, Senator Corker.
Senator Nelson.
STATEMENT OF SENATOR BILL NELSON
Senator Nelson. Mr. Chairman, I will make a big deal.
We obviously are going to miss you, and you have brought
great distinguished service to the United States Senate. No one
ever had to question your integrity or your word, and you have
offered that kind of public service not only in leadership
roles in the Appropriations Committee, but here as well.
Even going back to the Good Book in ancient scriptures, it
teaches us that two parts of society that we particularly want
to take care of are the young and the old. And so as our
government has developed over the years, that's one of the
great responsibilities of our American Government, is to make
sure that the young and the old are protected, and what better
subject than the subject of this hearing to underscore that.
And then, if that were not enough, under the Chairman's
leadership, he has already passed the Elder Justice Act, which
was put in as a part of the Affordable Care Act, coordinating
the efforts of the Federal Government with the states' senior
centers, law enforcement organizations, community groups and
social services to prevent the physical, emotional, and
financial abuse of senators--of seniors.
I keep replacing ``senator'' with ``senior'' so that when I
am introduced as the senior senator of Florida, they often get
it mixed up----
[Laughter.]
And they say ``we're welcoming the senior citizen of
Florida.''
[Laughter.]
And the End Abuse in Later Life Act, which enhances direct
services for victims of domestic violence and sexual assault,
which are 50 years of age or older, and that was included in
the Senate-passed reauthorization of the Violence Against Women
Act, another one of your initiatives, Mr. Chairman.
And the Elder Abuse Victims Act, which has been introduced
to ensure Federal, state and local law enforcement agencies are
working together with adult protective services to combat elder
abuse.
So, Mr. Chairman, your legacy is indelibly etched into not
only this committee but the law of this country, and for that
we are exceptionally grateful.
The Chairman. We thank you so much.
Senator Nelson. And if, in a few minutes, I may be excused,
we have the acting director of the CIA coming on a number of
topics that happen to be of currency, and with your permission,
at that appropriate time, I will slip out.
The Chairman. Thank you so much, Senator Nelson, for being
here.
And now we'll introduce our witnesses. Our first witness
today will be Frank Abagnale. Mr. Abagnale was made famous by
the real-life depiction of his years as a con artist in the
best-selling book ``Catch Me If You Can,'' which was also made
into a film directed by Steven Spielberg.
Next we'll be hearing from Kay Brown, the Director of the
Education Workforce and Income Security Team at the U.S.
Government Accountability Office, where she focuses on
improving government performance in delivering benefits and
services to lower-income and vulnerable populations.
Third, we'll be hearing from Hubert ``Skip'' Humphrey, III,
the Assistant Director of the Office of Older Americans at the
Consumer Financial Protection Bureau. Mr. Humphrey has spent
much of his professional life working to protect consumers.
And then we'll hear from Paul Smocer, who is the President
of BITS, the Technology Policy Division of the Financial
Services Roundtable. Previously, Mr. Smocer led BITS work in
promoting safety and soundness of financial institutions
through best practices and successful strategies.
Finally, the committee will hear from Paul Greenwood,
Deputy District Attorney for San Diego County. Mr. Greenwood is
head of the Elder Abuse Prosecution Unit and has been involved
in the prosecution of over 200 felony elder abuse cases.
We thank you all for being here and, Frank, we'll start
with you.
STATEMENT OF FRANK ABAGNALE, AUTHOR AND CONSULTANT, ABAGNALE &
ASSOCIATES, WASHINGTON, DC
Mr. Abagnale. Chairman Kohl and Ranking Member Corker,
members of the Committee, I am honored to be invited to testify
before you today on the seriousness of identity theft and
financial fraud against the elderly, and the need for
education.
I am Frank Abagnale, subject of the book, movie and
Broadway musical ``Catch Me If You Can.'' I have a unique
perspective, having committed fraud as a teenager some 40 years
ago and having spent the last 36 years of my life teaching at
the FBI Academy and field offices of the Federal Bureau of
Investigation. In my 36-year career, I have conducted over
3,000 lectures and written four books on these subjects. For
the past 36 years, I have worked to try to prevent fraud,
forgery, embezzlement, identity theft and other white collar
crimes.
One serious issue we face is financial fraud against the
elderly. This can be perpetrated by family members, financial
advisers, home healthcare providers, friends, scam artists, and
others. As I'm sure you are all aware, in 2010 the Consumer
Financial Protection Board estimated $2.9 billion was stolen
from financially exploited elders, and the instances of
financial theft from seniors grew 12 percent from 2008 to 2010.
This is probably a low estimate because many times the
elderly are too embarrassed to admit that they have been
defrauded, and therefore it goes unreported. Their families may
not even be told.
Last year, white collar crime in America reached $900
billion. Medicare fraud alone was estimated conservatively at
$179 billion. The IRS paid out over $5 billion in fraudulent
tax refunds filed by individuals using stolen Social Security
numbers.
I make my home in Charleston, South Carolina. Last month,
3.5 million Social Security numbers and over 300,000 credit and
debit card numbers were stolen from the South Carolina
Department of Tax Revenue by criminals who hacked into the
state's computer system. It is believed that they not only
stole Social Security numbers and credit card information, but
also the entire return of each person who filed a South
Carolina tax return. This means the criminals have the Social
Security number of the dependents, the home address, bank
account numbers, and copies of the W-2.
What is truly amazing to an individual like me is that what
I did 40 years ago as a teenager is 4,000 times easier to do
today due to technology. Unfortunately, technology breeds
crime, always has and always will. There will always be
individuals who will use technology in a negative, self-serving
way.
I have always believed that the government should take the
lead in education to combat this horrendous crime. However,
sometimes it seems the government makes it easier for
individuals to commit these crimes. For example, the Centers
for Medicare and Medicaid Services uses Social Security numbers
as part of the Medicare number. This means that anyone who sees
the Medicare number can determine the Social Security number.
In a hospital or medical setting, a worker would have
complete access to a senior's Social Security number, home
address, date of birth, possibly credit card numbers, bank
account, and other information. This threat of identity theft
of seniors will not be alleviated until the Social Security
number is removed from the Medicare card.
The elderly are hungry for information but do not know
about legitimate resources where they can turn for help.
Numerous companies on television and radio, as well as talk
show hosts, promote and market solutions which may or may not
actually work. This is an example of the victim going for help
but being victimized again by those companies that are claiming
to help them.
Throughout my career, I have always believed that education
is the best prevention. If you educate and explain to people
their risks, in most cases they are smart enough to take that
information and reduce their risks. I believe education is the
only approach to help eliminate elder fraud. Education is not
only important for our seniors, but it also helps bring
awareness to all citizens so they can recognize the signs of
fraud and know how to protect themselves.
I believe that one of the most powerful tools at the
government's disposal is creative public service announcements
that point out the most common scams and explain how to avoid
becoming a victim. I recommend the government sponsor public
service announcements, mailing stuffers and educational
materials so that individuals can learn to protect themselves
and their loved ones.
Protecting one's identity is an individual's
responsibility. If a person ages to the point that they cannot
take care of their personal issues, then their family and
friends should help take responsibility. Everyone has to be
educated. Government regulation is not the answer.
I recommend the following to seniors to protect their
identity: review your credit report semi-annually; reconcile
your bank accounts in a timely manner; be suspicious of calls,
e-mails or letters asking for personal information; don't give
out your Social Security number--just because a form contains a
space for your Social Security number doesn't mean you have to
provide it; invest in a micro-cut shredder.
Finally, I believe that punishment for fraud and identity
theft and recovery of stolen funds are so rare, prevention is
the only viable course of action. Thank you.
The Chairman. Thank you, Mr. Abagnale.
Mr. Abagnale. Thank you, sir.
[The prepared statement of Frank Abagnale appears in the
Appendix on page 28.]
The Chairman. Ms. Brown.
STATEMENT OF KAY BROWN, DIRECTOR, EDUCATION, WORKFORCE AND
INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE,
WASHINGTON, DC
Ms. Brown. Chairman Kohl, Ranking Member Corker, and
Members of the Committee, thank you for inviting me here today
to talk about our work on elder financial exploitation. My
remarks are based on a year-long GAO study that was released
today.
As we all know, financial exploitation can undermine the
dignity, health and independence of older adults. Of course,
states are primarily responsible for protecting their older
residents, and in our work we found states and local
jurisdictions that were actively striving to do so. But the
problem is large and likely growing, and states need help. Both
the Older Americans Act and the Elder Justice Act have
established a rule for the Federal Government in combating this
problem, and for this report we looked at the efforts of seven
Federal agencies in four states.
Today I will cover three key areas where we identified a
need for additional Federal attention: first, improving
safeguards; second, promoting collaboration across systems; and
third, increasing public awareness.
First on safeguards. Additional safeguards are needed to
protect older adults from exploitation by those they trust,
such as in-home caregivers and financial advisors. For example,
financial advisors can recommend unsuitable or fraudulent
investments, or they can use questionable tactics to market
financial products to older adults.
The Securities and Exchange Commission has published
educational materials on this, and the Consumer Financial
Protection Bureau is studying ways to improve financial
literacy in this population. However, much more remains to be
done.
Also, we have previously identified the need to improve the
process for background checks and oversight of court-appointed
guardians.
Next is collaboration across systems. Elder financial
exploitation is a multi-faceted problem. It cuts across the
social services, criminal justice, and consumer protection
systems. Collaboration between social services and criminal
justice agencies can improve outcomes, but it can also be very
difficult to achieve and sustain because the two systems have
very different cultures and missions.
The Administration on Aging and the Department of Justice
offer grants that require or encourage collaboration, but more
information is needed on how to build these multidisciplinary
teams.
Interstate and international mass-marketing schemes also
pose a challenge. They often target older adults and are
particularly difficult for state and local law enforcement
authorities to investigate and prosecute. Local officials would
like more complete information on the best contacts within the
Department of Justice to ask for assistance or to refer cases.
Banks can be important partners with local social services
and law enforcement agencies. They are well positioned to
recognize, report and provide evidence on elder financial
exploitation. However, local officials told us that banks
generally under-report potential cases, in part because the
staff may not be aware of telltale signs, or some may
misunderstand or be concerned about Federal privacy laws.
Some states require training for bank employees on how to
recognize these crimes, and the Administration on Aging is
considering collaborating with a large national bank to develop
a training curriculum.
Lastly, on public awareness, the best way to fight this
problem is through prevention. Older adults and the public in
general need more information about what constitutes financial
exploitation and how to avoid it. However, local officials told
us it's difficult for them to conduct public awareness
campaigns given their scarce resources.
Each of the Federal agencies we reviewed independently
produces educational materials consistent with its own mission.
However, these efforts could be more effective if they were
part of a broader coordinated approach. The Federal Government
is well positioned to develop such a coordinated, multi-faceted
campaign.
In conclusion, elder financial exploitation is a complex,
nationwide problem. Combating it effectively requires a
concerted, ongoing effort on the part of states and localities,
as well as the support and leadership at the Federal level. The
Federal agencies we reviewed are each taking steps to address
this problem, but a more cohesive and clearly articulated
national strategy is needed, and the recently formed Elder
Justice Coordinating Council can be the vehicle for defining
and implementing this strategy.
This concludes my prepared statement. I'm happy to answer
any questions you may have.
[The prepared statement of Kay Brown appears in the
Appendix on page 34.]
The Chairman. Thank you, Ms. Brown.
Mr. Humphrey.
STATEMENT OF HUBERT ``SKIP'' HUMPHREY III, ASSISTANT DIRECTOR,
OFFICE FOR OLDER AMERICANS, CONSUMER FINANCIAL PROTECTION
BUREAU, WASHINGTON, DC
Mr. Humphrey. Thank you very much, Chairman Kohl and
Ranking Member Corker, to the other members of the Committee.
Thank you for the opportunity to testify today on the Office
for Older Americans at the Consumer Financial Protection Bureau
and its work to address the devastating problem of elder
financial exploitation.
Mr. Chairman, I also want to thank you for your
longstanding dedication and the important role that you've
played in enhancing the well-being of our older citizens.
For the past year, I have been privileged to lead the
Office for Older Americans. Our statutory mandate covers two
broad areas: first, protecting consumers age 62 and over in the
financial marketplace; and secondly, in enhancing their later-
life economic security.
In our first year, we've made preventing and detecting and
redressing elder financial exploitation job number 1. In doing
so, we have recognized that collaboration is critical on the
local, state and national levels, and between public and
private sectors.
To jumpstart and foster these collaborative efforts, we
have traveled throughout the country to meet state, local and
tribal officials, including Attorneys General, financial
regulators, Adult Protective Services administrators,
commissioners on aging, chief justices, court administrators,
and tribal elders. We have also engaged with non-profits,
community organizations and industry groups to explore ways to
help and to partner with them. For example, we participate in a
working group with the Financial Services Roundtable to enhance
the capacity of financial institutions to report suspected
elder financial abuse.
In addition, we have been actively engaged with our Federal
partners. Last month, as was mentioned, was the inaugural
meeting of the Elder Justice Coordinating Council, an 11-agency
body convened to shine a light on the disastrous impact of
financial exploitation and to catalyze the development of a
prevention strategy.
At the meeting, we heard some important themes from
national experts. We heard that older Americans are victimized
by a broad range of perpetrators; collaboration is critical;
diminished capacity is truly the 800-pound gorilla in the room.
We need more and better quality data, and we need a broad-scale
public education campaign to raise the awareness of elder
financial abuse and what to do about it.
The CFPB already has initiatives underway that address
issues flagged at the Council meeting. We are developing ``how-
to'' guides for agents under powers of attorney, guardians,
trustees, Social Security representative payees, and VA
fiduciaries. We are producing a guide to help senior housing,
assisted living and skilled nursing facilities to identify and
intervene in exploitation cases. Our Money Smart for Older
Adults education program, in collaboration with the FDIC, will
focus on preventing, recognizing and reporting elder financial
exploitation.
We are working with several states to create and sustain
coalitions for community education, public awareness, enhanced
response, and increased prosecution; and we're developing
strategies for communicating to financial institutions that the
Gramm-Leach-Bliley Act generally does not prohibit them from
reporting suspected abuse to law enforcement and APS agencies.
Congressional leadership and support is critical to
implementing a multi-faceted solution to the serious problem of
elder financial exploitation. We look forward to continued
information sharing with members of Congress on this important
topic and the CFPB's contributions.
Thank you, Mr. Chairman and members of this Committee, for
the opportunity to visit with you on this.
[The prepared statement of Hubert ``Skip'' Humphrey III
appears in the Appendix on page 42.]
The Chairman. Thank you very much, Mr. Humphrey.
Mr. Smocer.
STATEMENT OF PAUL SMOCER, PRESIDENT, BITS, FINANCIAL SERVICES
ROUNDTABLE, WASHINGTON, DC
Mr. Smocer. Thank you, Chairman Kohl, Ranking Member
Corker, and members of the Committee, for providing this
opportunity for us to speak on the subject of financial
exploitation of older Americans.
My name is Paul Smocer, and I am the President of BITS, the
Technology Policy Division of the Financial Services
Roundtable.
By 2030, the number of Americans aged 65 and older is
projected to double to 71 million, roughly 20 percent of the
U.S. population. With this increase in the number of older
Americans, the threat of financial exploitation is only
increasing.
The Roundtable and its member companies are committed to
encouraging their employees comply with high standards of
conduct when providing financial advice to all customers,
including older Americans and their families. Helping ensure a
secure financial system and retirement for millions of
Americans is central to the mission of the financial services
industry.
Since many older customers still prefer to conduct
transactions in person, financial services employees can often
detect changes in an older customer's behavior and have the
opportunity to react appropriately in the event of potential
exploitation. In identifying and reacting to cases of suspected
abuse, it is essential for the institutions to work with Adult
Protective Services and local law enforcement.
To accomplish this, many institutions participate in both
local and regional task forces composed of all of these groups.
During these meetings, institutions will share trends, suspect
information, and best practices. Through this active engagement
and partnership, cases are able to be resolved more quickly.
Institutions also file Suspicious Activity Reports to the
Financial Crimes Enforcement Network.
For decades, financial institutions have been at the
forefront of fraud detection, utilizing sophisticated
technology, modeling, training and education. These resources
and techniques are employed in protecting older Americans.
Using a variety of safeguards, financial institutions make
every attempt to ensure the reliability and security of
financial transactions, as well as to protect financial
privacy.
Education of all stakeholders is critical for preventing
financial abuse. Many financial institutions have extensive
programs to educate both employees and customers on detecting
abuse against older Americans, and steps to secure accounts
from the lure of fraudsters.
Working closely with community organizations, financial
institutions host panel discussions and community events to
educate seniors and their caregivers about the risk of elder
financial abuse. These efforts provide older Americans and
their advocates educational resources to not only recognize
financial elder abuse, but also to take proactive steps to
protect oneself and one's assets.
Working with our member institutions, the Roundtable's BITS
organization released a white paper to help financial
institutions and their customers identify and combat elder
abuse. In addition, the Roundtable participated in its Seventh
Annual World Elder Abuse Awareness Day this past June,
providing speakers on the topic of elder financial abuse.
Currently, the Roundtable and its members have committed
resources to a working group focused on developing a structure
for training financial institution staff on elder fraud trends
and internal procedures for reacting to suspected elder
financial abuse. The group will also work with financial
institutions and, as Skip mentioned, in collaboration with
groups like CFPB to develop broader, sector-wide, consumer-
facing awareness and education programs.
In discussing this issue more generally, the group has
identified a number of areas where impediments exist to
improved prevention which require the assistance of Federal
agencies to help resolve. We recently presented these
impediments and recommendations for improvement to the Elder
Justice Coordinating Council during its inaugural meeting.
My written comments provide additional detail on these
recommendations, but they cover a variety of areas including
clarifying existing law related to fraud monitoring
capabilities and responding to transaction requests involving
suspected fraud; uniform reporting processes and protection for
reporting parties; clarification and standardization of
reporting requirements across various jurisdictions; and
licensing of financial professionals serving the elder
community.
In closing, please accept my thanks for the opportunity to
offer our thoughts to you today. We recognize the importance of
this issue and look forward to continuing to work together with
the Committee and the member agencies of the Elder Justice
Coordinating Council on this important issue. Thank you.
[The prepared statement of Paul Smocer appears in the
Appendix on page 46.]
The Chairman. Thank you, Mr. Smocer.
Mr. Greenwood.
STATEMENT OF PAUL GREENWOOD, DEPUTY DISTRICT ATTORNEY, HEAD OF
ELDER ABUSE UNIT, FAMILY PROTECTION SERVICE, SAN DIEGO, CA
Mr. Greenwood. Thank you, Chairman Kohl. Good afternoon to
you. If I may be permitted to deviate from my written remarks,
I feel like I'm sort of the closing argument prosecuting in
front of the jury this afternoon. What has come across is very
clear. The speakers have been talking about education and
collaboration and making safeguards, and one thing that Skip
Humphrey mentioned was increased prosecution.
I am privileged to be able to be head of an elder abuse
prosecution unit in our office in San Diego for the last 17
years. It's been the most rewarding, challenging, and equally
frustrating part of my 34-year career as a lawyer.
But I'm also fortunate that, working in California, we have
seen evidence of this collaboration in increased awareness over
the last several years. For example--and I owe a great deal of
thanks to Adult Protective Services, who really have taken the
lead in California in so many initiatives. We developed what
are called FAST teams, Financial Abuse Support Teams, that
bring in several times a year members from the community--
professionals, bankers, lawyers, law enforcement, Adult
Protective Services--to talk over these issues and to study
trends and to learn from one another in how we can improve our
collective response to these cases of financial elder abuse.
We've seen popping up over the last five years forensic
centers for elder abuse in California, and I have to pay
tribute particularly to the one in Orange County led by the
premier expert in this country, Dr. Laura Mosqueda, and it is a
tremendous resource to be able to call up that center and ask
for advice from a medical expert regarding a victim with
dementia or Alzheimer's.
And then thirdly, in 2007, California passed a law that
required all bank tellers and credit union tellers to be
mandated reporters of suspected financial exploitation. Because
of that, we've seen a huge increase in the number of reports
being cross-reported to law enforcement and Adult Protective
Services.
And then finally, Operation Guardian was a program
initiated by the California Attorney General's Office which
makes surprise visits, sometimes at dawn, to various nursing
homes around California, and because of those surprise visits,
many cases of financial exploitation have been discovered in
these facilities where residents have been taken advantage of.
But I also want to comment upon increased prosecution,
because whilst these other initiatives are excellent, I believe
the best form of prevention is to tell these crooks out there
that if you do mess with elders and try to rip off an elder, a
prosecutor somewhere is going to come after you and prosecute
you to the fullest.
It starts with the elected district attorney, and I'm so
glad that I have a boss, Bonnie Dumanis, who has not only
allowed me to come today, but it shows the importance that we
place in our office on this crime of financial exploitation.
But gradually we're seeing across the country more and more
prosecutors understanding that not only are these crimes
provable, but the juries get it, and there are many
misconceptions out there about working with elderly victims.
The biggest one I always hear is, well, they have failing
memories. But that's not the case so often. So often now,
victims are articulate, they are good historians.
But in those cases where we have victims on the stand who
demonstrate a lack of memory, that actually enhances the case
for the jury because the jury gets to see exactly why the
defendant targeted this elder for their diminished capacity or
their forgetfulness.
So what we are looking for is, across the whole of the
states, more and more prosecutors to become emboldened to take
on these cases. We want police departments throughout the
country to develop specialized units. San Diego, fortunately,
developed several years ago a police department where we have
six detectives working nothing but elder abuse cases. Can you
imagine the quality of these cases that come to my desk after
several years? The detectives absolutely believe in the work
they do. They bring me good cases, and we present these cases
to judges and juries all the time, and in most cases we get
convictions.
So the message I have is let's collaborate. We need to talk
more as prosecutors to Adult Protective Services. We need to
give them more resources. We need to have police officers talk
with Adult Protective Services and with prosecutors, get more
education out there for elders, get more training for bank
tellers and credit unions. But together, I think we can make a
difference, particularly in the courtroom, and get more and
more convictions, and get these predators behind bars. Thank
you.
[The prepared statement of Paul Greenwood appears in the
Appendix on page 57.]
The Chairman. Thank you.
For each of you, we believe and heard that only a fraction
of cases of elder financial fraud actually get reported. What
can government do to encourage people to report cases of elder
financial fraud?
Mr. Abagnale.
Mr. Abagnale. Well, sir, I have to first believe that I
think that someone is going to take action, as you just heard
the district attorney say that about prosecution. You know,
crime has become, especially in the realm of fraud,
overwhelming. Federal law enforcement agents are usually
restricted from investigating crimes under $100,000 in face
value. Most U.S. Attorneys won't prosecute cases under a
quarter of a million dollars in face value. Consequently,
criminals know that if they stay under these thresholds, they
are most likely going to get away with it.
And so it's very frustrating not only for the law
enforcement side of it, but for individuals when they know who
did it, they have all the evidence that they did it, but can't
get anyone to act on it or do anything to bring these people to
justice.
So I think we have to do a better job of educating people
how to protect themselves so that they don't become victims.
Once you're a victim, you usually are never going to get your
money back. So it would be much wiser not to become a victim to
begin with. So this is why I'm a big believer in education.
I do believe the government needs to fix some of the things
like the Medicare card. As you know, there's a bill, S. 1551,
which would turn the Medicare card into a smart card, which the
military currently uses. We have 20 million of those cards
currently in use. Not one has been counterfeited. So I would
like to see the government at least do a pilot program to bring
the Social Security number off the Medicare card, which will
eliminate it finally from all of the identification documents
the government has, and come to a smart card that will help
protect as well.
So it's a little bit of that, more enforcement and, of
course, a great deal of education.
The Chairman. You say that less than $250,000 will not be
prosecuted?
Mr. Abagnale. Most U.S. Attorneys, because of the volume of
fraud and crime, they take the highest dollar priority crimes,
the person who has stolen $7 million, $8 million, $20 million,
and go after those individuals and prosecute those cases.
They're under-staffed, under-manpowered. They don't have the
ability to prosecute a lot of those cases. Certainly, local law
enforcement and district attorney's offices in counties and
cities probably do a much better job and have set aside teams
of people and attorneys to work on those cases.
But again, it's very frustrating when you're a law
enforcement person or you are the victim and you know what
happened, you know who did it, you have all the evidence that
there is, but you can't get anyone to act on that evidence.
The Chairman. Thank you.
Ms. Brown.
Ms. Brown. I think I'd like to pick up on the public
awareness theme. I think it's important both to help victims
understand and try to avoid what may be happening to them, but
also to help people around them better be able to identify what
may be happening and feel the confidence to report it. So it's
both seeing what's happening and then being able and willing to
report it and knowing where to go.
The Chairman. All right.
Mr. Humphrey.
Mr. Humphrey. Thank you, Mr. Chairman. You know, time and
again I've had the opportunity to visit with senior groups, and
I usually ask the question: How many of you have had something
like elder financial exploitation, a scam, happen to you? All
the hands go up, or they know somebody that has had that
happen.
And I say how many of you know of someone that's in your
family? And some hands go up.
Part of the challenge here is to get people to speak up and
speak out and to encourage them to report it. What we have
heard from the District Attorney is terribly important, that we
encourage law enforcement to really begin working in this area.
The educational part of this and the prevention part are
terribly important. That's why we've partnered with the FDIC,
with their Money Smart program. It's a well-known program that
reaches out to a very broad range of the population and now
will also focus on older Americans.
The Chairman. Very good.
Mr. Smocer.
Mr. Smocer. By the time you're the fourth witness, you kind
of have much of the same thing to say. But I think education is
probably key. Obviously, we're trying to do improved education
within the financial services community itself. So the tellers
and kind of the folks at the front line that elders come in and
speak to are more aware of not only the kinds of scams but how
to react when they suspect that there is some scam or fraud
situation going on.
As Skip mentioned earlier, we've been working with CFPB and
more broadly with the Elder Justice Coordinating Council around
the issue of clarifying current law with regard to privacy,
because that is a bit of a conundrum in some cases where bank
employees are afraid they're going to violate the customer's
privacy rights by somehow reporting a situation to someone
else. So I think it is important that we clarify that.
I think the consumer education is key, but I think Kay made
a key point. As we think about this, I think one of the
concerns we have is that in many cases the elder him or herself
may not be at a level of capacity that they can actually
understand the education. So education to caregivers, education
to adult children of elderly parents I think is also critical.
And then I think in terms of law enforcement, improved
reporting around these cases and consolidation of some of the
many databases that tend to exist today, this was an item that
we brought up in front of EJCC, that a lot of the agencies
individually are doing a relatively good job at capturing
information, but having a consolidated kind of reporting
mechanism so that, for example, as Frank mentioned, a
prosecutor can see that he or she can actually make a case
because when he looks at the fact that this fraudster is
committing crimes against multiple individuals as opposed to
looking at each case one off, I think would help build the
interest of prosecutors and law enforcement.
So I'll stop there and let Paul speak.
The Chairman. Mr. Greenwood.
Mr. Greenwood. Thank you. One of the most successful
initiatives we were part of with Adult Protective Services was
called Silence Isn't Golden. So we launched this campaign with
posters and public service announcements, telling the public
that the best thing we can do is not stay silent about this
hidden crime. If you suspect that somebody in our family or in
your street, in your neighborhood, in your church is a victim,
you need to call this number, and we encourage people to do it
because it's anonymous. They don't have to say who they are.
Secondly, we had a very successful campaign called Protect
Yourself and Your Wallet. We went around to various libraries,
and we got a female 70-year-old black belt to do a 20-minute
course on protecting the seniors when they're out in the
streets and the shopping malls, and then I came along and did a
15-minute Top Ten Tips on Financial Security, and that really
seemed to help a lot.
But thirdly, one thing I always try to convince seniors of
is, look, we understand why you don't report, or your families
don't report, because you're embarrassed. But there's also a
fear involved, that seniors fear that if they report they're a
victim, that somehow somebody is going to come and take control
of their life and their finances. So we try to allay that fear
and convince them, no, we're not concerned with your
independence; we only want to go after the independence of the
crook who is stealing from you. I think when that message gets
across, and when there's a consumer confidence that if they do
report, something will happen, then there's a difference.
I agree with what Frank is saying. If the citizens out
there think ``what's the point?'' because law enforcement and
the prosecutors aren't going to do anything about it, we're
going to fail.
The Chairman. Very good.
Senator Corker is next, but I would like just a couple of
minutes because Senator Wyden has said he needs to leave. Would
you like to ask a question?
Senator Wyden. If that would be all right with Senator
Corker. Mr. Chairman, Senator Corker has been here a long time.
If he has just a couple of minutes worth, I'd certainly--
because he's been waiting a long time--let him ask.
Senator Corker. It's okay.
The Chairman. Go ahead, Senator.
Senator Wyden. All right. Thank you. Thank you both. I also
want to note that I guess there's been some kind of informal
agreement, almost a gag order, that we're not allowed to go
into Chairman Kohl's accomplishments.
The Chairman. Correct.
[Laughter.]
Senator Wyden. But everybody knows that I never go along
with these gag orders.
[Laughter.]
I only want to say that it's my intent to give a speech on
the floor of the United States Senate when we get back to
outline the accomplishments of Senator Kohl, this thoughtful,
modest man, over the last years through this Committee, because
it is an extraordinary record. I'm going to semi-respect the
gag request for purposes of this afternoon, but I hope folks
will stay tuned because we're going to talk on the floor of the
United States Senate about the extraordinary record of Chairman
Kohl, and I know Senator Corker very much agrees with this as
well.
I just wanted to ask a couple of quick questions.
First, I think we all know, and it's something I've felt
strongly about since the days when I was co-director of the
Gray Panthers, that this history of stealing and ripping off
seniors is a long one, and the bad guys, they're pretty savvy,
and every generation seems to be savvier than the previous one.
So what we're up against is constantly trying to stay out
in front of them as they turn to new techniques, and I wanted
to ask just a couple of questions because my colleagues are
being so patient.
The first I think I want to direct to Skip Humphrey, who
has been doing wonderful work for seniors for lots of years,
and we've worked together on a number of issues. My sense is a
lot of the bad guys, a lot of the worst actors are now shifting
to online exploitation of seniors. It's almost like they
rattled those old windows, you all closed some of them, so they
went to new ones.
If you could, General Humphrey, give us a sense of what
we're doing to beef up our efforts to deal with online
exploitation of seniors, if you would.
Mr. Humphrey. Thank you very much, Senator. First of all,
of course, we're working as closely as we can with our
colleagues at other Federal agencies, and with state and local
efforts in this area. But one of the things that is happening
as the baby boomers shift and as another generation comes
forward is that more and more people are comfortable using the
Internet. Therefore they become more vulnerable, in a sense, to
that kind of exploitation.
One of the things is to just help citizens understand what
the protections are. The first thing to understand, the most
basic, is if it sounds too good to be true, it probably is. No
matter whether it's on the Internet or whether it's coming
through the door or in the mail or any other thing. It's just
to understand that if something really sounds like something
positive, you yourself are probably the best defense.
Secondly, of course, as was indicated, this whole issue of
personal I.D. is very, very important. Our efforts will be
looking towards that as it relates to financial transactions,
and certainly there's a broader range as was indicated by the
testimony here.
The third area that I would suggest is that we are going to
be going online with these how-to guides for fiduciaries. Many
times people are identified in power of attorney documents as
agents, and they don't know the first thing about what they're
supposed to do, or what the risks are with regard to the
resources that they are supposed to manage for another person.
So having those guides available to educate people can be very
important, particularly as it relates to the congregate care
facilities and those who manage the congregate care facilities.
So those are just some of the things that we're working on
within the framework of the new Internet age.
Senator Wyden. Good.
A question for you, Mr. Abagnale, and I want to give credit
where credit is due. The Medicare card legislation, which I am
the Democratic sponsor of, is really the work of Senator Kirk,
Senator Kirk of Illinois. He could not be here today, but I
think he's come up with a logical bipartisan approach, and
we're going to do everything we can to advance his bill.
My question to you on that legislation is what are the
consequences of not doing it? What are the consequences of not
having, for every Medicare beneficiary in the country, a way to
make sure that their name and their full Social Security number
is there to see and it is, in effect, something that can't be
ripped off and stolen the way it is?
Mr. Abagnale. Well, as I mentioned earlier, I think that
the Medicare card with the Social Security number followed by a
letter is just an open invitation for criminals. They know that
if they see the card----
Senator Wyden. It's the status quo.
Mr. Abagnale. Right, as it is today. When you present the
card at a doctor's office, unfortunately I think that many
people believe that doctors' offices close up their files at
night. Most doctors' offices just have straight file cabinets
that do not lock down at night. Consequently, there are people
who tell the janitorial service, ``if you take a Post `Em and
write down the person's name, address, date of birth off the
copy of their Medicare card that the doctor made, and their
Social Security number, I'll give you $100. So if you give me
one Post `Em, $100. You give me five Post `Ems, $500.''
Obviously, it's very enticing to people.
So as it is now, what I'd like to see, as we have done in
many states, we've taken the Social Security number off the
driver's license. We have started to remove it from college
campuses, from identification cards. I would like it if we
removed it from our military cards for identification. The one
final place that we have left that we have not removed it is on
the Medicare card.
So I think it would be extremely wise for the government to
close that final loophole, and that will go a great long
distance to protecting people from having their identity
stolen.
Senator Wyden. Thank you. I'm going to submit two questions
for the record because Senator Corker has been so kind in terms
of giving me this time. One will be a question for you, Mr.
Abagnale, on the question of opening up the Medicare database.
I think you know Senator Grassley and I believe that if you're
ever going to really get a better handle on this relatively
small number of physicians in particular who are exploiting the
program, you've got to get access to that database. I'll submit
it for the record.
And for you, General Humphrey, I'm going to ask you a
question about the question of living facilities and looking at
ways to better control those who somehow find a way to exploit
the residence. This also touches on an issue Chairman Kohl and
Senator Corker know about, and that's the question of these
pension poachers for veterans.
So I will, just in the interest of time, submit that to
you, General Humphrey; one for you, Mr. Abagnale.
Senator Wyden. And to my friend Bob Corker, thank you for
giving me the time.
Everybody stay tuned when on the floor we can list the gag
order and we can talk about Chairman Kohl and go through his
record the way I think it ought to be appropriately discussed.
Thank you.
The Chairman. Thank you, Senator Wyden.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman, and thank each of
you for your testimony. This is a great way to round out this
year and start next year hopefully with a focus on this.
But, Mr. Abagnale, I was interested in you talking about
technology and that it's 4,000 times easier to do something
today than it was 40 years ago, or whatever the number was. In
that same light, I would suppose there are, through technology,
all kinds of ways today to also detect that, and I wonder if
you might--in other words, it's easier with technology to
commit fraud, but I assume there are also ways of detecting
that.
I wonder if you might talk about some of the breakthroughs
that exist there from the standpoint of using technology to
keep this from happening in the first place.
Mr. Abagnale. Yes, sir. Let me clarify what I mean by that.
Forty years ago, for me to forge a check, I needed a Heidelberg
printing press. The press cost a million dollars 40 years ago.
It was 90 feet long, 18 feet high. It required three journeyman
printers to operate it. So as they showed in the movie, I built
scaffolding on the side of the press to eliminate the two other
printers. I had to learn to do color separations, negative
plates typesetting. I used chemicals.
Today, one simply opens a laptop, picks a victim out of
corporate America, Delta Airlines, catches their logo, puts it
on a diagram of a check in full color, and in 15 minutes has
created a beautiful Delta Airlines check.
Forty years ago, I wouldn't know where Delta Airlines
banked. I wouldn't know who the authorized signer of Delta
Airlines checks was, and I certainly wouldn't know their bank
account number. But because we live in a too-much information
world today, all I have to do is call Delta Airlines corporate
office and ask to speak to someone in their accounts
receivables and say that I would like to pay a statement, but I
would prefer to wire them the funds, and they would give me
wiring instructions, which means that they would tell me where
they bank, on what street, what city, routing number, account
number, and all the information I need. I would hang up and
call back and ask for corporate communications today and ask
for a copy of the company's annual report, and they would send
it out to me, but on page 3 would be the signature of the
Chairman of the Board, the CEO, the CFO, the Treasurer, the
Comptroller, and with white glossy paper with camera-ready ink,
I'd just scan it and put it on a check.
So the technology has made it a lot easier, and social
engineering has just changed. It's gone from a telephone now to
a computer. It's the same thing, seeking information from
individuals.
So I think we have technology just like the Smart Card, and
technology that the government has come up with for our new
currency since 1996 to make it much more secure. We've seen a
great decrease in the replication of our currency. We have the
technology to be able to prevent some of these things. Of
course, these things cost money. They take time and research.
But you only fight technology with technology. So you always
have to be one step ahead. So you look at the problem and you
come up with a solution. You can't sit on the solution. You
have to then be working on the next solution forward.
But certainly American know-how and American technology can
prevent a great deal of these things from occurring. We just
have to continue to work on it.
Senator Corker. And does it appear that the enforcement
agencies that care about these things or are doing those things
to stay one step ahead?
Mr. Abagnale. I'm certain that they are. What concerns me
is you rob a bank today and you get $7,500 or the most the
teller might have in their teller window, $4,500, and you might
go to jail for 20 years when they catch you. You rob a car, you
take it across the state line. Both the car and the bank were
insured. They got their money back, if they didn't get their
money back from the thief.
But when you go out and you steal someone's life savings,
you take their pension, you take their entire retirement, their
entire future, they have to go live in poverty because of that
crime. It is ridiculous that that person walks away with a slap
on their hand or ends up with 18 months in a prison. That's
just absurd.
I think we have to see it for what it is. It is a very
serious and devastating crime and should be looked upon that
way by law enforcement and the prosecutors who prosecute the
crime, and the judges who render those sentences to those
criminals. They are much more devastating than the guy who
might rob the bank or steal the car.
Senator Corker. And to whoever wants to answer this, what
is the order of magnitude of crimes against elderly citizens
that are committed by those that are familiar to them, that are
relatives or friends, and that that is perpetrated by people
totally unknown to them and from the outside? What would be the
percentages of each?
Mr. Humphrey. Senator, my best understanding is that over
5% of adults aged 60 and over are victims of financial
mistreatment by a family member. It's a very significant
number, and it's----
Senator Corker. Five percent is by people who are familiar
with the----
Mr. Humphrey. That are familiar, absolutely. I will give
you an example from a conversation that I had in your state,
Senator, with a group of elderly folks who were helping one
another deal with some of these problems. I asked, well, how
are we going to get people to report them? That is a challenge
because it's an individual that they know, and probably a
member of their family. They don't want to report them to law
enforcement, and personally the person reporting is embarrassed
that it's happening. I said, well, how would you see this
happening in your family?
This woman said--she nailed it right on the head. She said,
Skip, I've got seven kids. I love every one of them, but I only
trust three.
[Laughter.]
Mr. Humphrey. In a sense, she was making a judgment on who
was to be the person that she might look to.
Part of the effort here needs to be that education of
helping people understand that they need to make wise choices
with regard to those who are going to be their caregivers,
formal or informal. The other part is just as we have heard, to
have the government structure to be able and ready to take on
that responsibility once a report is made. Part of the
challenge here is to find out where and how best to get that
reporting.
Another example, if I could just take a moment, Senator,
was an opportunity when I was visiting with tribal elders. One
of the ways they come to grips with this within the framework
of a family is the Navajo Nation has developed the concept of a
peace council. It brings together individuals within the tribal
community, and law enforcement to work together to develop the
resolution of the problem, to stop the theft, and at the same
time to work through a way in which to deal with the abuse that
is taking place.
So we're looking at a wide variety of approaches of how to
come to grips with this, including making sure that there is
the opportunity to report directly to law enforcement.
Mr. Greenwood. Senator, if I could just also add, part of
the problem is that we don't really know the answer to your
question because so many cases are unreported, and therefore
undetected. And the cases that we know of that come to my
office, I would say the majority of physical abuse cases are
committed by someone who is close to them. The majority of
financial abuse cases are committed not by a family member,
although some are, but by someone who has got into their life,
a caregiver, an unlicensed contractor, a professional advisor,
somebody who has built up this relationship of trust with the
victim.
But then there's this whole myriad of unknown predators out
there online who serve behind anonymity, overseas, who are
conning their victims. The victims are wiring the money, but
they never tell us because they're too embarrassed. So we
really don't have a good handle on this.
Senator Corker. Mr. Smocer, I'm not much of a buyer, but I
sometimes end up with a credit card, and I hadn't been in for a
while, and it's frustrating as heck to be standing there at the
teller and the person with an American Express gets on the
phone. I mean, it's a major pain. I'm sure most people have
witnessed that before.
And I guess, as you look at some of these transactions that
would occur in financial institutions where maybe something
large is happening that's unusual in a senior's account, you
would think that there'd be some hurdle that people would have
to go through for money just to, all of a sudden, $100,000 or
whatever the number is, to go out of someone's pension.
I'm just wondering why there aren't mechanisms like that
that are employed in many other areas to keep that kind of
thing from occurring.
Mr. Smocer. Well, first, there are mechanisms, and the
example you gave of the credit card situation is an example of
a mechanism. You're in a strange town, you've never used a card
there before, that's why the clerk ends up asking you to get on
the phone to identify yourself. So there are the same kinds of
monitoring systems and, to answer your other question, the use
of technology to try to prevent fraud have been getting more
and more sophisticated as time goes on.
Now, one of the things that we talked to the Elder Justice
Coordinating Council about is really two concerns that I think
apply in this situation. Number one, there is a concern, and we
asked for clarity around the question of--because some
institutions have the question can we really divide out the
elder population from the rest of our consumer population and
treat it in a slightly different way.
Some are concerned of how that deals with age
discrimination laws, because in theory you're not to
discriminate in any way against the elderly, but in a way that
you want to positively carve them out, is that okay to do,
because there we could add some additional monitoring. It might
be lower dollar threshold limits on transactions involving the
accounts of the elderly. It might be more follow-up when, for
example, there's a change of address associated with an elder's
account, that suddenly you want to verify with the elder that,
in fact, they're the one who caused the change, it's not some
fraudulent situation that's occurring.
The other thing they talk about which is a bit of a
conundrum is that ultimately and legally, the account is the
elder's account. So in many cases, even when a suspicion of
fraud is there, the question of can you legally stop this
person from doing with their legally own money what they choose
to do. One of the recommendations that we came up with and
talked to the Council about was the ability to actually put
temporary holds on a transaction. I'm sure Paul would
particularly mention that in some of these situations where
elders want to come in and wire money overseas because there's
a scam involving--one of them being the purchase of a bride, as
an example. Once that money is wired, it's virtually impossible
to get it back, but it is the customer's money.
Ultimately, no matter how much you want to try and convince
them that maybe this is something they shouldn't do, you
contact APS, by the time the customer wants the transaction
executed, it may be too late. So having a way in a suspicious
situation to be able to say, ``Yes, Mr. Smith, we'll go ahead
and do that'', but hold on the transaction for a couple of
days'' until we can get APS or law enforcement involved would
be helpful.
Senator Corker. There's just one other question, Mr.
Abagnale. You mentioned the car theft issue and going across
state lines, doing a couple of things, and you're right, people
end up having insurance, they get their money back. Are you
alluding to the fact that there should be a different sentence,
if you will, for these types of crimes than exist right now?
What were you trying to get at there?
Mr. Abagnale. I was trying to say that, unfortunately,
white collar crime in America, whether it be someone on Wall
Street or it be somebody who is stealing from the elderly or
someone stealing identities, are looked upon as a crime where
there's really no victim, nobody was physically hurt, and
consequently a lot of times it's not treated very seriously. I
think that's a big mistake because I think they are extremely
hurt when someone has lost their life savings and their pension
from those crimes.
So I think we have to look at white collar crime as an
extremely fast-growing crime. I mean, fraud in this country has
become overwhelming, almost impossible to enforce any longer.
And consequently, I think punishment for these types of crimes
has to be more severe.
It is interesting that I committed these crimes 40 years
ago, writing bad checks. I was a teenager, or when I was caught
I was under 21 years old. A Federal judge in Atlanta sentenced
me to prison for 12 years. I served four of those 12 years,
having already served a year over in Europe when the Federal
authorities returned me to the United States. That would have
been considered a harsh punishment back then.
But the truth is had they caught me today for the same
thing I had done 40 years ago, I probably would end up with
community service or probation, or probably 18 months in a
Federal prison. So I, having served the time, know that those
types of crimes where people's money is taken from them, people
need to be punished for those crimes and need to be sent to
prison for those crimes and not be treated as if there was no
victim or it was a harmless crime.
Senator Corker. Most of those sentencing laws, are they
state or are they Federal?
Mr. Abagnale. Most of them now don't--whether Federal or
state, there are no determined laws that says a judge has to
sentence someone for a certain amount of time to jail. It's
usually up to the judge's discretion for the crime. So if the
judge looks at it as somebody wasn't physically hurt, nobody
was really beat up or taken advantage of physically, the judge
may tend to give it a lenient sentence.
I do go out and speak to U.S. Federal judges at their
annual meetings and some of their semi-annual meetings, and in
the Q&A I always bring up the importance of looking at these
crimes in a different light, that they are very serious crimes,
and I think that in America we are slowly starting to see,
because of the Madoffs of the world, and because of the Enrons
and WorldComms and Tycos and Arthur Andersons and all the
things we've gone through over the last 10 years, I think that
people are starting to realize that these types of crimes are
very serious, both on the law enforcement side, on the
prosecution side and even as American consumers we're starting
to realize that these are devastating crimes and people need to
be brought to justice and they need to be punished for those
crimes.
Senator Corker. Did you want to say something, Skip?
Mr. Humphrey. Senator, I would just say that I'm aware that
there are some states that do have enhanced penalties for the
kind of theft that we're talking about against older Americans.
There are some states that have that. There are also some
states that provide for an accelerated process in their
prosecution through docket control. So there are some
mechanisms out there, and part of the effort that we want to do
is to bring some of these interesting ideas and practices to a
place where others can understand what the practice is and how
effective it's been. So that's one of the things that we're
looking at.
Senator Corker. Well, thank each of you for your testimony.
It's been really interesting, and I hope something good comes
out of this. Mr. Abagnale, I'm glad you're on our team now.
[Laughter.]
Thank you very much. Thank you, Mr. Chairman, for a great
hearing.
The Chairman. Thank you so much, Senator Corker. Mr.
Smocer, what percentage of your banks are currently making an
effort to train their tellers to determine whether or not
something fraudulent is taking place?
Mr. Smocer. I don't know if I have an exact number for you.
But I will tell you, with the working group that we formed,
virtually all of our banking members. So almost 50 out of the
50 we have are members of that group who are working to
improve--either they have a program now or improve a program
that they have now. So across the whole industry, I wouldn't be
able to answer that question for you. But I know this is a very
important topic to them.
The Chairman. So you would suggest that there should be
some training in the case of every teller?
Mr. Smocer. Yes, I frankly think so, and part of what we're
attempting to do, the group that we have is not only members of
the Roundtable, but we've invited the other banking trade
associations and credit union trade associations to have their
members involved, and the group also includes a lot of folks
from the agencies as well. For example, we've got CFPB involved
and other agencies, because what we're trying to do is really
build a broad sector-wide program, so something that any bank
or any credit union can use as the base for their training
program.
And it is two-fold. It is not only just--well, it's almost
three-fold. It's internal in the sense of employees, so
employees who are the tellers and the front-end personnel who
customers typically come in to see. It's also internal in the
sense that we're trying to do work with the fraud investigation
and fraud detection folks to make sure that, particularly on
the investigative side, that internally they can build better
cases to be able to hand off to prosecutors.
I think one of the things that we recognize as an industry
is that while Frank is very correct, trying to get in many
cases law enforcement or a prosecutor, whether it's local or
Federal, to take a case, they often have, because of their
workloads, they often have thresholds, and below a certain
amount it's hard to convince them to take an interest in the
case.
But we also know that if internally the financial
institution can help build the case for them and put a lot of
the material together and hand it over, then that typically
incents them to take some action while we're there.
And then the other component besides the internal side is,
as I mentioned earlier, trying to help build this broader
consumer education piece too, and use the banks to help build
it, and use the banks to help distribute it and distribute the
kind of material that others have talked about here.
The Chairman. Mr. Greenwood, I see you pondering this
question, the training of the bank tellers.
Mr. Greenwood. It's key Senator. That's why when we saw the
change in the law, making bank and credit union tellers
mandated reporters, we saw a huge increase in the number of
reports, because unfortunately a lot of banks and credit unions
in other states are fearful of making that call to Adult
Protective Services for fear that they will get retribution
from their customer or their member. So even if a state doesn't
want to make it mandatory, at least they should make it
permissive and give the banks and the financial institutions
the protection that they need to encourage them to make these
calls.
It also creates a responsibility on the part of Adult
Protective Services, on law enforcement and prosecutors to
reach out to these financial institutions. So we try to do
that. In fact, in California we try to recognize good
stewardship by banks and credit unions so that if they have
actually intervened and thwarted a crime or have enabled us to
prosecute, we want to give that bank teller due recognition and
make sure that it's well known throughout the industry.
The Chairman. You mentioned that financial institutions in
California are mandated reporters.
Mr. Greenwood. Correct.
The Chairman. So how has this changed banks' behavior with
regard to preventing and reporting financial scams against
seniors?
Mr. Greenwood. Well, initially what changed was the fact
that because the law came into place, they gave those
institutions a 15-month grace period to train their staff. So
immediately we got awareness for the bank tellers and the
credit union tellers, and that created in itself a lot of
response by saying, wow, I didn't know these scams went on.
For example, the grandma scam is huge all across the
country, and we all know that one where the crook calls up and
pretends to be the grandson, he's in jail and he needs $5,000
bail money to get out of jail, and it's happening all the time.
Well, the victim goes to the bank or the credit union to
withdraw the money in cash so they can then go to Moneygram to
wire it.
It's amazing, until this law came into place, how few bank
tellers and credit union tellers knew of the existence of this
scam. So now they do, and as a result the training and the
awareness in the banks and the credit unions has really
improved the response.
I think it's also helped encourage the bank tellers and the
credit union tellers to know that if they do make the report,
Adult Protective Services is going to cross-report to a trained
detective in San Diego who will bring it to a dedicated
prosecutor in my office, who will then hopefully bring about a
prosecution. And actually the bank tellers are very keen to
come to court and testify because they can see the end result
of their initial phone call, and it's very gratifying to an
employee of a bank to know that what that call meant in the end
was either to stop the damage or to actually catch the crook in
their tracks and put them away, and that's indeed very
rewarding to the financial institution.
Mr. Smocer. And, Senator, if I would follow up, I think
Paul made a good point. As we think about the training, there
are really two key aspects. One is awareness around the types
of scams that are going on, so the grandmother scam, I need to
wire money out of the country because, as I mentioned earlier,
I want to buy a bride scam, which is a common one as well.
But it's also somewhat behavioral. So the teller
recognizing that the customer comes in with a companion, and
that the companion appears to be exerting undue influence on
the customer, actions like trying to pull the customer aside to
question whether, in fact, it's their decision that's going on
here or whether they're being influenced by this individual. So
it's a little bit of both. It's awareness of the kinds of scams
that are going on, but it's also trying to understand the
behaviors that are inhibited when some of these situations go
on.
But the one thing I would also add to it, and we brought
this up at the Elder Justice Coordinating Council meeting, and
Frank kind of mentioned it earlier in a way, as we implement
some of these new technologies, some of those technologies have
an effect that we didn't often think about. So one of the
things we talked about at EJCC was the Social Security
Administration moving to an all direct deposit model, so elders
not getting checks anymore, physical checks.
Those physical checks that they got in the past were often
a trigger for them to go to the branch, to see the teller, to
see the folks that have known them for years that they always
banked with. Now they may still want to do that just because
they want to get out, but there's less of an incentive for them
to actually go into a branch anymore, for someone to physically
see them on an ongoing basis and be able to recognize that
something is askance here or there's a change of behavior that
is causing a red flag to occur.
That's not to suggest in any way that the training isn't
critical, but things are changing as we move into a more
electronic world. That face-to-face just doesn't exist quite as
much anymore.
The Chairman. How often do banks alert the police, and
under what conditions?
Mr. Smocer. I would say any time there's a suspicion that
something is potentially fraudulent, certainly when it's
recognized to be fraudulent. There are situations, obviously,
as we talked about earlier, where there are privacy concerns
that need to be clarified, and I think once we can clarify
those privacy concerns, particularly if we can have a ``hold
harmless'' kind of model put in place, which is I think what
Paul alluded to with the California law, that just report it,
even if it turns out that it's not fraud, which is a key
concern, because what if I report this and it turns out it's
not fraud? Am I going to get in trouble? Am I going to get my
institution in trouble?
Those kinds of ``hold harmless'' agreements would go very
far, I think, to enhancing it, because honestly I couldn't
probably give you an exact number, but I will tell you I have
talked to and heard many, many scenarios where the bank tellers
in particular--I mean, they're looking out for their customers.
They know these folks. They've known them, in many cases, for
years and years and years, and they want to do the right thing.
The Chairman. So are you suggesting that if we had these
``hold harmless'' laws across the country, we'd be in much
better shape?
Mr. Smocer. I think if we can clarify the privacy issue,
and I think CFPB is working on that to some extent. But
certainly I think that would--my personal opinion would be that
would go a long, long way to enhancing the reporting.
The Chairman. A long, long way.
Mr. Smocer. Yes.
The Chairman. Paul, do you think so?
Mr. Greenwood. Well, I do, Senator, because until we had
this law in place, as I said, I would have discussions with
banks and credit unions all the time when I would see a crime
report coming in where a bank teller did not make a report. I
would call up the bank and say why didn't you? And the
immediate response was we're just afraid to do that, we don't
want to get sued. So I think if we provide the protection for
the financial institutions, and the encouragement, then it will
allow institutions to encourage their bank tellers to make that
call.
As my colleague has said, occasionally, 1 out of 100, it
might be a wrong call. But no one is going to blame the teller
for making that call. It's the silence which is the enemy.
The Chairman. Okay.
I'll ask you, Ms. Brown, what are the best practices you've
found across the four states that you studied that work well
for preventing and responding to elder financial abuse?
Ms. Brown. Well, we've been hearing about many of them
right here. I think one of the things that has really struck me
is in this panel the types of best practices that we saw, like
good training for bank employees, like being careful about
background checks. Many of those kinds of things are things we
saw in the states. But also I think what has really struck me
today is that there are so many good ideas and so many
interesting public awareness efforts with brochures that have
really attractive and interesting titles.
But what we see is that there are different areas of the
country or jurisdictions that have a stronger commitment to
this or a stronger interest, and that's one of the reasons why
we recommended that the Elder Justice Coordinating Council
develop a national strategy, because I think the kinds of best
practices like developing brochures that really reach people,
or doing training programs that reach relatives or bank
employees are something that could be beneficial and would be
helpful to be spread out throughout the country and not just in
the spots where there's a much stronger commitment or interest
in this.
The Chairman. All right.
Any other comments from members of the panel?
Mr. Humphrey.
Mr. Humphrey. Mr. Chairman, I would just like to add that
part of the effort here, I think--and it's reflective of what
has happened in California and elsewhere. We're in the process
of developing upwards of four model prevention networks that
are slightly different in each location. We want to try and
develop these coordinated local networks between public,
private, law enforcement, non-profit organizations, and state,
local and Federal agencies to work locally on these efforts.
Part of these efforts will be in the area of education and
training and just getting people to know one another.
What was so successful in California, one of our models,
was just bringing this all together. But then again, it was
also framed with a state law of reporting that encouraged that
effort to take place.
There's a lot of room for these programs to take place.
There are different ways of doing it. That's the wonder of
working in the states. You find different approaches. But the
coordination and collaboration both at the Federal, state and
local level is key, and that's why I think the Coordinating
Council will have a very important role to play.
The Chairman. Good.
We thank you all for coming to speak to us here today.
This is the last hearing of the Aging Committee for the
112th Congress. We've been able to accomplish a lot, and we
worked hard to save taxpayer dollars while protecting our
seniors.
There are many people that made our success possible. First
I'd like to thank my Ranking Member, Senator Corker. He's been
a delight to work with, and I appreciate his open manner and
bipartisan nature, which I think has been obvious here today,
as well as throughout the year. His staff, especially his staff
director, Mike Bassett, have worked well with our side and for
the people of his state, Tennessee.
No senator accomplishes anything in this institution
without staff, and I've had a great one over the years. They
have always focused on doing the right thing for seniors and
protecting our most vulnerable people in this country. Joy
McGlaun, Sarah Levin and Anne Montgomery have been my
preeminent experts on health care. Cara Goldstein and Joel
Eskovitz have done a great job protecting seniors and their
retirement savings. Jack Mitchell, my fearsome, fearless
investigator, has done a great job uncovering malfeasance in
the public and private sector. Ken Willis has been great
ensuring that the work we do gets noticed. Patricia Hameister
has made sure that all of these hearings go off without a
hitch, and for that I'm grateful. I'm also grateful to Zac
Tretow and Carissa Lewis, who make the people of Wisconsin feel
welcome. And as for my staff director, Chad Metzler, who has
been with me in various capacities for the past 16 years, he is
indeed irrepressible and irreplaceable.
So I thank all of them, and we thank you all for being here
today, and we wish you well.
[Whereupon, at 3:25 p.m., the hearing was adjourned.]
APPENDIX
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