HAHN FOR MAYOR
18553 Ventura Blvd.
Tarzana, CA 91356

Combating Financial Crime Against Elders

SUMMER 2000
OP-ED BY JIM HAHN

Since the Elder Crimes Unit was launched in August of last year there has been an increase in the neumber of cases that have been brought to prosecution, particularly in the area of financial crime. In one recent scheme, elders were targeted by high-pressure swindlers selling home-security systems under the business name ITT Security Inc. In another, a woman named Darlene Miller bilked elderly homeowners by falsely claiming to be affiliated with a legitimate home-improvement company and non-existent government programs she called Low-Income Development and Low Income Services.

In the financial-crime cases we seek -- in addition to the other punishment, including jail terms --court orders requiring the defendants to pay restitution in order to help victims recover their money.

Victims of the home-alarm scam, most of whom are in their 70s and 80s, were cold-called and subjected to lengthy in-home sales presentations -- lasting as long as five and seven hours in some cases -- before they signed up for alarm systems. Some persons said they were not told that they were signing up for lengthy monitoring contracts with monthly charges.

One 84-year old woman paid about $5,000 for a home-alarm system and signed a five-year monitoring contract for $35 a month when she already was protected by an alarm system in the retirement complex where she was living. The woman told investigators that when she signed the monitoring contract, she thought she was signing a receipt. The alarm system subsequently was removed from the woman's residence and the pre-existing system was re-installed, but she was unable to get a refund from ITT Security Inc. and also continued to pay the monthly monitoring fee for a system that no longer existed. We are seeking full restitution for her and the other victims as part of our prosecution of this case.

In the Darlene Miller case, she persuaded three victims -- aged 61, 84, and 90 -- to give her money in return for the promise of free home improvements and having their bills paid. One 90 year old man gave Miller a total of $7,776 -- $6,800 in cash and the other $976 in furniture and jewelry he paid for with a credit card -- in return for a promise that all his bills would be paid and his house painted. Later, two people hired by Miller showed up at the man's house and painted it bright pink with green trim. Miller was finally arrested after the son of a 63-year-old woman reported to police that Miller had approached his mother and asked for $1,700 in return for assistance from the non-existent state-funded loan program that Miller said could finance home improvements and pay off the woman's bills.

There is also an increase in complaints regarding problems with real property transactions and predatory lending practices that have resulted in seniors facing the loss of their homes because they were enticed to pay large loan fees and financing charges while refinancing their home mortgages.

In one recent case, an elderly woman inadvertently agreed to exorbitant terms for a home refinance because she did not understand that broker fees and other charges would quickly eat up any savings she might gain from the refinancing. Fearing she had made a mistake, the woman stopped making payments on the loan. A prosecutor in my Elder Crimes Unit intervened at the point when her home was about to be foreclosed and was able to persuade the lender to cancel the loan and renegotiate fairer terms for a new loan.

The case had a happy ending, but my concern is that it may be the exception rather than the rule. That is why we have expanded the Elder Crimes Task Force I formed early last year to include more expertise in the area of financial crimes, and why I agreed to serve on a national task force formed by the U.S. Department of Housing and Urban Development (HUD) to formulate a strategy to combat predatory lending practices. In May, I also participated in the HUD Public Forum on the Elderly and Predatory Lending that was held in Los Angeles.

Predatory lending can take many forms -- home repair contractor loans, reverse home mortgages and high-interest mortgage loans to list a few. The common theme in predatory lending practices is to target seniors who may not understand the implications of often complex loan terms and documents.

The expansion of the Elder Crimes Task Force was undertaken to include such agencies as the Legal Aid Foundation of Los Angeles, Los Angeles County Probation Department, Bet Tzedek Legal Services, Los Angeles County Department of Mental Health, the Social Security Administration and WISE Senior Services.

We also participate in the Financial Abuse Specialist Team (FAST) which is coordinated by Wise Senior Service as a countywide collaborative effort to combat elder financial abuse. FAST consultants include representatives from law enforcement, the City Attorney's Office, District Attorney's Office, Probate Court, Legal Services, county Department of Mental Health, county Department of Health Services, Long-Term Care Ombudsman Program, county Adult Protective Services, county Public Guardians Office, private conservator agencies, and financial and real estate experts. Monthly meeting include confidential presentations by case workers of suspected cases of elder or dependent adult financial abuse. Consultants then develop intervention strategies to address the problems.

Meanwhile, what can members of the public do to protect themselves, their friends and relatives from swindlers and con artists targeting seniors? One way is to keep yourself informed about scams and how to protect yourself. You also should be wary. A good rule of thumb is that if something seems too good to be true, it probably is. And never sign anything that you do not thoroughly understand.

-- James K. Hahn is city attorney and a candidate for mayor of Los Angeles.