One in five older Americans is a victim of financial fraud

We hear about it all the time—an older adult being scammed out of their money. A survey released Tuesday as part of World Elder Abuse Awareness Day has found that one out of every five citizens over the age of 65 has already been financially taken advantage of. That’s more than 7.3 million older Americans!

A new program seeks to train medical professionals to assess when older patients might be likely to fall prey to elder investment fraud and financial exploitation. According to Marketwatch.com, this new program, a new partnership between the Investor Protection Trust (IPT), the North American Securities Administrators Association, and the National Adult Protective Services Association (NAPSA) was based on a pilot program that brought fines and prison sentences cases of elder abuse—of note is the case of Edward S. Digges Jr. who raised at least $10 million from about 130 Texas investors, the majority of whom were elderly.

Marketwatch.com reports that according to the Don Blandin, the president and chief executive of IPT, the centerpiece of the new program is the Clinician's Pocket Guide, which contains a list of questions that medical professionals can ask older patients. Doctors can get a sense of their patient's financial capacity by asking the following questions:

• Who manages your money day to day? How is that going?
• Do you run out of money at the end of the month?
• Do you regret or worry about financial decisions you've recently made?
• Have you given power of attorney to another person?
• Do you have a will? Has anyone asked you to change it?

If the answers to those questions raise suspicion, the doctors are then urged to probe for further details by asking whether the patient is having any of the following concerns:

• I have trouble paying bills because the bills are confusing to me.
• I don't feel confident making big financial decisions alone.

Elders at greatest risk of being scammed are those with mild cognitive impairment who can perform most daily functions, but have trouble or become confused with others, such as following their medicine regimen or managing their finances. That will be a lot of people. According to at least one study, more than one-third of the 25 million people over age 71 in the U.S. either have Alzheimer's or mild cognitive impairment. Therefore, that would represent many potential scams.

Feds Bust Billion-Dollar Mortgage Fraud Ring

Federal agents have arrested former mortgage-lending executive Lee Farkas for his involvement in a billion dollar fraud ring. As the former chief of Taylor Bean & Whitaker, a wholesale mortgage lender, Farkas "operated a sophisticated shell game" to prop up his struggling company and take advantage of investors and taxpayers.

According to CNN.com, Farkas could spend life in jail if found guilty. Officials claim he “ripped off the Federal Housing Administration and investors in at least two financial firms, and tried to make off with funds from the Troubled Asset Relief Program”

"The gravity of this fraud is really quite amazing," said Assistant Attorney General Lanny A. Breuer. He said losses from the scheme will be measured "in the billions."

Among other things, authorities said, Farkas filed false information to get TARP loans via an investment in TBW's biggest lender, Colonial Bank of Alabama. Colonial failed last August in the third-biggest bank failure of the year.

Taylor Bean also was a huge lender under Federal Housing Administration programs. Officials said the FHA and Ginnie Mae, another government mortgage lender, lost some $3 billion in the Taylor Bean fraud. It is the FHA program's biggest-ever loss, they said.

Continue reading at CNN.com…

10 Tax Preparers Plead Guilty of IRS Fraud

A scheme to file false tax returns yielded millions of IRS dollars before the tax return preparers involved were caught and convicted. Here’s the scoop:

In an elaborate scheme to file false returns, operators of two tax preparation businesses (Seguros Internacionales and Poz Servicios Para Hispanos) in North Carolina defrauded the IRS of about $13 million between 2006 and 2009. Within these three years, the ten preparers made approximately 10,000 filings of income tax returns that sought more than $22 million in refunds. The IRS paid approximately $13 million of the fraudulently claimed refunds before investigators caught on to the scheme! The two businesses are no longer in operation.

The preparers plead guilty to charges of mail fraud and illegal entry into the U.S. All of them are facing a lengthy prison term of anywhere between 5 and 20 years, and of course, will then be deported to their country of origin after they have served their jail term. It turns out, federal agents arrested even more people in connection with this tax scheme last week—all in all, it is believed that about 20 people were involved.

The IRS has made it clear they are increasing enforcement efforts and are working closely with the Justice Department to increase legal actions against dishonest tax return preparers. The IRS has used investigative measures such as having agents pose as taxpayers to seek out and stop dishonest preparers from filing inaccurate returns. The IRS claims to have conducted 230 undercover visits to various tax return preparers and as a result, dozens of search warrants have been issued.

The IRS is not messing around. The IRS warns it will continue civil and criminal action as appropriate. The increased efforts will ultimately make a difference for taxpayers nationwide and will help protect the many tax professionals who play by the rules.
In January, the IRS has proposed new regulations regarding the registration, testing and continuing education of tax return preparers. You can see the press release here:

Let me end by saying, it is not only the responsibility of the tax preparer but also a responsibility of the taxpayer to choose carefully when hiring a tax professional.

The full article, "10 Illegal Immigrants Plead Guilty of Tax Fraud” can be found here.

Wells Fargo Sued Over Home Equity Lines of Credit

This morning I was surprised when I came across this new Associated Press article reporting that the popular U.S. bank Wells Fargo & Co. has run into some legal trouble. According to the lawsuit, Wells Fargo has been accused of illegally reducing the size of customers’ home equity lines of credit. Check out the full story below.

The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers' houses before deciding to cut the size of their credit lines. San Francisco-based Wells Fargo is being accused of using unreliable computer models that wrongly valued home prices too low to justify cutting the size of customers' loans.

Home equity lines of credit are similar to credit cards in that a customer has a credit limit and can continue to borrow money until the limit is reached. Once a portion is paid off, it again becomes accessible to borrow. But, home equity lines of credit are backed by a borrower's property, whereas credit cares are unsecured.

Michael Hickman, who filed the lawsuit on behalf of himself and is seeking class action status for it, claims Wells Fargo also did not provide proper notice that the bank was reducing the size of the credit lines.

The bank's notice for reducing the lines also did not specifically provide a new estimated value for the property or the method used to determine the houses value. Hickman's lawsuit said that information was needed so a customer could challenge the change in the credit limit and try and reinstate the previous limit.

Hickman is being represented by KamberEdelson LLC, a Chicago-based law firm, which is also representing clients that have filed similar suits against JPMorgan Chase & Co. and Citigroup Inc.

Continue reading here…