Help Keep Your Parents From Getting ScammedPublished by Dennis Duitch, CPA, MBA, Advisor, Mediator

An expert who’s been through it offers advice to keep elderly parents from getting fleeced

My father, Paul, was valedictorian of his college class, a mechanical engineer who became CEO of a huge contracting firm involved in constructing many skyscrapers and the Smithsonian Institute. At close to age 94, he remains in relatively excellent health thanks to good genes, rigid exercise, and a disciplined vitamin-supplement program. Paul’s mind is still very sharp — until recently, he still personally handled his investment portfolio.

But aging does take its toll on memory and, at times, judgment. In Paul’s case, he became susceptible to a delusion that he had “won a $7.5 million sweepstakes.” The conveyors of this news never sent Paul a single piece of paper or proof of the winnings; they simply appealed to my dad’s trusting nature and perhaps his desire for attention. Despite advice and warnings from family (including this CPA son), attorney, two doctors, three bankers, Western Union, news articles, and TV features to the contrary, Paul — an exceptionally bright, competent, analytical person with common sense — chose instead to trust a series of telephone representations from people with names like Mr. Jones, Mr. Smith, and Mr. Peterson, all of whom had Caribbean accents. The result? He was scammed for some $50,000 over a several-month period.

For many senior citizens, things can be much worse. The FBI documents over $30 million in victim losses to such scams, but most victims are too embarrassed or ashamed to file complaints. Last May, Homeland Security and Jamaican officials finally launched a task force to halt “schemes which prey on the vulnerabilities” of elders. The Federal Trade Commission estimates that consumers lose billions of dollars a year to “cross-border financial crimes … involving telemarketers identifying themselves as lawyers, customs officials, or lottery company representatives.” These criminal gangs are well organized and, according to many articles, capable of serious violence.

These scams work in a variety of ways. In my dad’s case, it played out like this:

1. The Mail

Official-seeming solicitations notify the recipient of “lottery winnings” and request a response to confirm identity, provide contact information, and send a check for $10 or $20 to cover costs. What they’re after at this point is a responsive person willing to send their bank-account number. (The checks are never deposited, since scammers don’t leave a paper trail.) Paul received and responded to several, most likely out of boredom.

2. The Phone Calls

Armed with Paul’s phone number, the calls began: “You’ve won the lottery… We are the agents… We want you to be satisfied and get all your questions answered… Then you’ll just send us $300 for transfer fees… and the money will be wired to you.” Paul indeed had questions and concerns he wanted to confirm with the agents’ “bosses” (including a CFO to discuss tax issues). The scammers always willingly provided a phone number and extension for whomever he wished to speak. (At one point, he was directed to “Mr. Billy, Assistant Manager of the U.S. Government.”) My cautious, analytical father made many “due diligence” calls over a couple of months – in some cases for hours at a time — responding to daily inbound calls to see if he was ready to “collect the prize.”

Part of the scam is that the calls were all made to a prefix in Jamaica (876) and all were charged on his phone bill at $7.14 per minute. (A similar scam, based in the Dominican Republic, which uses an 809 prefix can cost as much as $25 per minute.) Once we figured all this out, Paul was already hooked and continued to phone the numbers in pursuit of his winnings, fully aware that the Jamaican connection would ring up thousands of dollars in charges.

3. “Fees and Expenses”

Once Paul convinced himself that he was talking to “good guys” and not the “scammers” referred to in all the articles we provided him to prove otherwise, he fell for the “fees and expenses” ploy. Only $300 for the “transfer fee” and his winnings would be on the way to the bank. He’d confirmed his check-routing information. What likely saved his account from being looted was that after withdrawing the first $300 and wiring it via Western Union (scammers never accept traceable checks), he phoned his bank to let them know that $7.5 million would be “coming this afternoon.” Of course, the money didn’t show up, and Bank of America officers called him in for a personal lecture on the nature of this scam. They also closed his account.

Undaunted, Paul phoned the scammers to find out why the winnings hadn’t arrived. He was told he had mis-understood; he still needed to pay for closing costs, requiring another $500 — tomorrow. They conned him into repeating the routine — go to the bank, get money (more each time — $700, $1,000, $1,200, $1,500, on up to $3,000), wire the funds, go home to wait for the courier, nineteen times. Unbelievable? Some of the costs he was convinced to fund included insurance, state taxes, paying Mexican border guards, and paying policemen to deliver the cash to his home (once he’d advised that his checking account had been closed).

Paul’s anxiety, combined with the perceived minor risk of sending a few more dollars since he was already in so deep, and his diminished judgment, led him to overlook the fact that he was lied to at every step. He still believed these were legitimate agents.

4. The Refund Check

Finally, after months of this, I was able to get control of Paul’s funds and stop the payouts. But the scammers didn’t stop contacting him. They next told him, “We’re sorry you lost your opportunity for the sweepstakes winnings but we’ll be able to get your expense payments back to you.” Next came a $20,000 check — the first piece of paper ever provided — with instructions to deposit and “immediately withdraw $5,000 to pay our expenses and fee for negotiating this.” The check was obviously counterfeit, as confirmed within minutes by a bank officer, but the scammers had hoped he would deposit it without fanfare, and have enough existing funds or credit to cover a withdrawal to send them before their check bounced.

What Can You Do?

If scammers have worked their way into the trust of a parent or other senior you care about, some steps which can help protect them and their funds are:

  • Pay careful attention to the first evidence that the person is excited about windfall income.
  • If at all possible, review checkbooks and bank records to see whether small checks (usually uncleared) are being remitted in response to mail or phone offers. That’s all the scammers need to begin.
  • Attempt to obtain control (or at least cosign authority) of the victim’s accounts. Ensure that bank officers contact you directly when they detect suspicious withdrawals.
  • Notify Western Union at the first evidence that money is being wired to a scammer. They will block transfers, although the scammers may find other ways to get at the victims’ money. My father’s team taught him about postal money orders and Wal-Mart Moneygrams.
  • Telephone companies generally can restrict outgoing calls but not incoming calls. However, Verizon has a cell phone which can be limited to only 20 pre-programmed numbers. If necessary, cancel the victim’s phone account and offer the restricted phone as a replacement.
  • Be sensitive, but stern. I allowed Paul’s irrational behavior to continue for months, assuming he would eventually come to his senses and recognize the scam, after losing some affordable money. Bad assumption!
  • The most disconcerting thing about this entire situation is that my proud and stubborn father — after five months of a major financial rip-off, the loss of control over his finances, and the loss of his telephone independence — still believes these guys were legitimate and that, but for his inability to get the “final” wiring instructions, he could have received his sweepstakes winnings. The only reason he didn’t is that people (mostly me) interfered in his affairs. It was an emotionally draining, distressing, and thankless task, but it had to be done. If there are seniors you care about in your life, be prepared to do the same.