Source: United States Attorneys General 13
Remarks as prepared for delivery
Thank you Robert for that kind introduction and for your leadership and dedication as CEO of Financial Industry Regulatory Authority (FINRA). And thank you to the Stanford Center on Longevity and the FINRA Investor Education Foundation, for hosting this conference and for the great work that you do. It is an honor to join with the many people in this audience who dedicate their lives to combatting financial fraud and protecting elderly Americans. This is a noble and enduring effort.
As many people here know, financial fraud targeted at the elderly is a serious problem. At the beginning of 2011, the first Baby Boomers reached the age of 65. I reached that milestone myself just last year. Indeed, 10,000 Americans turn 65 every day, and the percentage of Americas over 65 is growing. 5.8 percent of this group experiences identity theft in a given year. I had that ugly experience just last month. 13.8 percent experiences consumer fraud in a given year. 4.5 percent of people over 50 experience financial fraud in a five-year period. While there are varying accounts about how much the overall financial loss is, it is well into the billions of dollars.
Statistics aside, we are here together because we know all too well that this is a problem that takes a personal toll. Almost all of us know someone who has been the victim of financial fraud. And while it affects people of all ages, it can be especially devastating for elderly people, many of whom are dependent on their savings and are concerned about their own mental decline or other people’s perception of their mental decline.
I recently saw letters written by the victims of a set of schemes that we took action against. One described having sent “hundreds of checks” for a company’s “great offers” and tried to explain to the fraudster that “due to bad eyes, [he] has to use magnifying glasses to read” and had “been caught paying many times for th[e] very same offer.” Another, believing that the con men would send him a promised gift, tried to explain that he had sent his prior payments by money order and was now enclosing cash, “all [he] can send.” Another explained that when she gets the vast inheritance she’d been promised, she would use it to help her family, the homeless and needy children.
The nature and scope of elder fraud varies tremendously. At the Department of Justice, we see small, family based schemes, such as caregivers tricking elderly victims out of their savings or abusing powers of attorney. We see institutional schemes, such as nursing homes that provide unnecessary services or bill for services never provided. And we see global fraud networks that are—quite literally—organized crime. These schemes involve networks of businesses with careful divisions of labor. They target millions of Americans, maintain lists of victims, and, once someone has been duped, target those people again and again. One recent victim wrote a letter explaining: “Each day I keep getting more and more offers and it’s almost impossible for me to keep up with them.”
Large and diverse problems like this require broad based solutions. We at the Department of Justice know we can’t solve this problem alone. Coordination is essential not only with our federal partners, but with local, state and international authorities. And public and private partnerships are key to our understanding of the scope of the problem and to the lasting success of any solution.
Research into basic questions, such as why are elderly people vulnerable, and how can we detect fraud and abuse, is critical to attacking the problem. The FINRA Foundation and Stanford Center on Longevity launched the Financial Fraud Research Center five years ago. As some of your ongoing research has demonstrated, there is a natural decline in cognition as people age, especially ability to think fast and process new information. The elderly are sometimes lonely or otherwise socially isolated. Some are uncomfortable with technology. Many have pools of relatively liquid retirement assets. Some are dependent on caregivers. All of these factors make the elderly particularly susceptible to certain schemes.
There is much more to learn. The Department of Justice has invested in partnerships to help us all better understand the causes and risk factors associated with elder financial exploitation. For example, just a few weeks ago, we announced an award of nearly $800,000 to the Urban Institute and the University of Southern California to develop and test prevention programs that will address elder abuse, neglect and financial exploitation. To enhance our understanding of financial exploitation by conservators and guardians, last year our Office for Victims of Crime funded a project to search for innovative, evidence-based programs and practices that successfully detect and remedy conservator fraud. And people like you are furthering our understanding. This conference is highlighting emerging research on susceptibility to fraud and fraud prevention.
Beyond efforts to understand how and why elder fraud occurs, continuing dedication to enforcement is required to stop it. This is not a partisan issue. We have seen Democratic and Republican administrations alike express a shared commitment to using all tools in the Department of Justice’s enforcement arsenal. Back in the 1990s, under Attorney General Reno, the Department of Justice created the Elder Justice Initiative to centralize information, facilitate training, and coordinate within the Department and across the federal government. During the Bush Administration, the Department of Justice initiated an elder mistreatment research grant program, funding cutting edge research on elder abuse and financial exploitation that continues today.
During this Administration, Congress created the Elder Justice Coordinating Council as part of the Affordable Care Act to facilitate interagency cooperation at the highest of levels. At the Department of Justice, we formed the Attorney General’s Advisory Committee’s Elder Justice Working Group, which is comprised of U.S. Attorneys from across the country who are dedicated to improving our information sharing on financial scams targeting the elderly. And just this year, we created ten regional Elder Justice Task Forces that operate throughout the country, partnering with state and local law enforcement and prosecutors to enhance our collective response to elder financial fraud and abuse.
Our Elder Justice Initiative has also been assisting with community capacity building. This includes supporting the training of local law enforcement and prosecutors. And to enhance civil legal aid to seniors, in June 2016, the Department of Justice, in collaboration with the Corporation for National and Community Service, launched the Elder Justice AmeriCorps, the first-ever army of lawyers and paralegals to help elderly victims of abuse and exploitation. The program will support 300 AmeriCorps members throughout the country and is expected to reach over 8,000 older adults over the next two years.
A multi-faceted problem requires coordination between different federal agencies; it demands a whole of government approach. Mail is involved; we must coordinate with the Postal Inspection Service. Money is involved; we must coordinate with the Treasury Department. People target the elderly; we must coordinate with agencies that serve the elderly, such as the Social Security Administration.
And more and more, we are seeing schemes that are highly complex and global. Stopping these schemes require extensive cooperation—not just with state and local authorities, but also across the federal government and with our international counterparts. For example, the Department of Justice’s Consumer Protection Branch co-chairs the International Mass-Marketing Fraud Working Group, a network of civil and criminal law enforcement agencies from Australia, Belgium, Canada, Europol, the Netherlands, Nigeria, Norway, Spain, the United Kingdom and the United States.
We can point to meaningful progress. In the past several years, we have successfully shut down several international lottery scams where con men and women have contacted elderly victims in the United States, told the victims they won cash and prizes, and persuaded them to send thousands of dollars in fees to release the money. Of course, the victims never received cash or prizes in return. In a series of cases, perpetrators made calls from Jamaica using Voice Over Internet Protocol technology that made it appear as if the calls were coming from the United States. They convinced victims to send money to middlemen in South Florida and North Carolina, who forwarded the money to Jamaica. We have had great success breaking up these networks through joint efforts between Jamaican law enforcement and U.S. agencies including the Postal Inspection Service, Department of Homeland Security, U.S. Marshals Service, Federal Trade Commission and Internal Revenue Service. Since 2009, the Department of Justice has prosecuted or is prosecuting over 100 individuals linked to such lottery schemes, and has convicted and sentenced over 40 defendants.
We have had similar success going after global “psychic schemes.” Con men and women send letters purportedly written by “world-renowned psychics” stating that they had a vision revealing that the recipient has the opportunity to obtain great wealth. The letters appear personalized, refer to the recipient by name, and often contain portions that appear handwritten. The solicitations urge victims to purchase products and services that will ensure this good fortune. Investigations by the Department of Justice and Postal Inspection Service, among others, revealed the complexity of these schemes. Not only were there the fraudsters themselves, but there were separate companies performing different roles, such as processing victim payments and maintaining databases of consumers who responded to solicitations. In a two-week period, one company in the United States processed as much as $500,000 in payments for just one psychic scheme. We have discovered similar companies in Quebec, Hong Kong, Switzerland and France.
Perhaps the most significant example of cooperation to date were our wide-ranging enforcement actions taken in September of this year to dismantle a global network of mass mailing schemes targeting elderly and vulnerable victims. The schemes involved a network with components in Canada, France, India, the Netherlands, Singapore, Switzerland, Turkey and the United States. The network included an India-based printer that manufactured solicitations and arranged for bulk shipment to U.S. victims; a mailer in Switzerland; list brokers in the United States who bought and sold lists of victims so that once victims had fallen prey, others could target them; a “caging” service in the Netherlands that collected money; and a Canadian payment processor that, for more than 20 years, helped dozens of international fraudsters gain access to U.S. banks and take money from Americans. Stopping this network involved coordination between the Department of Justice, Department of Treasury, Postal Inspection Service, Federal Trade Commission, Iowa Attorney General’s office and counterparts in other countries. Just to give you a sample of the coordinated actions, on Sept. 22, 2016:
- The Treasury Department’s Office of Foreign Assets Control blocked assets from the Canadian payment processor and a network of individuals and entities across 18 countries.
- The Justice Department filed criminal charges and a civil injunction against a Turkish mass mailer.
- The Justice Department brought a series of civil actions to shut down companies based in the United States, India, Switzerland and Singapore. These companies were responsible for mailing millions of multi-piece solicitations to potential victims throughout the United States.
- The Justice Department entered into a consent decree with two Dutch “caging” businesses that collected and forward money. Our efforts were coordinated with Dutch authorities who executed search warrants on the businesses and took control of the Dutch post office boxes used to receive victims’ funds.
- The Federal Trade Commission filed a case against a related mass-mailer, printer, and list broker.
- The Iowa Attorney General negotiated a compliance agreement with two firms that brokered victim lists.
Of course, what matters even more than going after these schemes is preventing people from falling prey in the first place. Here too, federal agencies are working in cooperation and dedicated to the effort. The Department of Justice has distributed educational materials about these kinds of scams, the U.S. Postal Inspection Service has developed an electronic press kit for media outlets, my former colleagues at the Federal Trade Commission operate a “Pass It On” campaign that encourages people to share information about frauds that affect older Americans, the Social Security Administration is educating beneficiaries through its network of over 1,200 field offices nationwide, and the Consumer Financial Protection Bureau has produced a mail fraud alert placemat in coordination with Meals on Wheels America to distribute to seniors nationwide. Similarly, private organizations that work in the area of elder justice and consumer protection are doing their part. For example, AARP will be posting information through its Fraud Watch Network. And the Consumers Union, the policy arm of Consumer Reports, is alerting consumers about a variety of elder scams.
Going forward, the Department of Justice will continue to work with private, local, state, federal and global partners. And we urge all of you to tell us where the Department can do more. The federal government’s work on behalf of the elderly began long before this Administration, and it will continue long after. I expect that my successors, and my successors’ successors, will share our commitment to making sure our parents, grandparents and friends age with grace and dignity. And I look forward to all of you, who have worked so hard in this area, working with the next Administration to combat financial fraud and protect elderly Americans. Thank you again for having me here today.