Senior-on-Senior Financial Fraud
Jason Zweig and Mary Pilon write in the Wall Street Journal about the increasing frequency of Seniors taking financially advantage of other Seniors.In Louisiana, Judith Zabalaoui, 73, pleaded guilty in February 2009 to five counts of mail fraud and is now serving an eight-year prison sentence after persuading at least 35 clients, many of them elderly, to invest in two nonexistent companies that promised “safe” returns of 13% to 26%. She had clients sign a power of attorney, giving her access to their funds–and spent more than $3 million of their money on her own expenses, including clothing and vacations, according to court documents.
“That’s a definite new trend,” says Denise Voigt Crawford, the Texas securities commissioner. “We’re seeing more cases of older people ripping off other older people. Someone joked that seniors ripping off their peers is becoming ‘the new retirement plan.'” Some older financial advisers use their age as a selling point, telling clients they understand the challenges that older investors face. In many instances, say prosecutors, unscrupulous advisers also tout their professional designations, or credentials, as further evidence of their expertise. Ms.Zabalaoui, the Louisiana adviser, marketed herself as a CFP, say clients, even though her credential lapsed in 2000.
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