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Inside Job: Could Trusted Family Members Turn to Fraud? (CA)

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Perpetrators of family fraud often are those family members who people would least suspect, says Tiffany Couch CFE CPA CFF, one of North America’s leading forensic fraud experts, Principal at Acuity Forensics, and a Chairwoman of the Board of Regents of the Association of Certified Fraud Examiners.

Couch is often hired by lawyers, beneficiaries including families themselves, as well as social service agencies to investigate family fraud.

“In cases of family fraud, it’s not typically the black sheep of the family. In fact, it’s usually the last person anyone would suspect – the most trusted member of the family,” Couch noted. “One of my cases was a professional with a six-figure salary and nice family, who was well-known and connected in the community.

“His elderly mother once had $500,000 in the bank and, when authorities found her, she was living in a trailer with a disabled son using towels and blankets to keep warm. Over two years the professional son responsible for her care had depleted her bank account to $695. The Department of Health and Human Services became involved when her rent check bounced and the son who robbed her reported he couldn’t take care of her anymore.”

Unlike many fraud cases, fortunately this one had an ending in which justice prevailed, Couch noted. Since the son had used his mother’s money to pay off his home mortgage and credit debt, along with building up his retirement savings, he did have assets. He was prosecuted and his mother received 100 percent restitution.

“You don’t need a lot of money to be the victim of fraud. If there’s money in the bank, there’s money to steal,” Couch said.

What Drives a Family Member to Commit Fraud?

There’s interesting psychology behind family fraud and what Couch called the fraud triangle:

  • Perceived Need. The motive is generally a perceived need. “I need money to pay off a mortgage or credit card or gambling debt.” That need could be short-term – such as the need to get the brakes fixed on the car. But when that need is gone, some people can’t stop. For some, that fraud just gets easier to continue, Couch noted.
  • Sense of Entitlement. Along with that perceived need comes a sense of entitlement. “My loved one is going to die anyway. This is my inheritance.”
  • Opportunity. Finally, that individual has opportunity, for example, to access to their loved one’s accounts or investments as was the case in the example above.

You can help an older adult minimize the risks of family fraud by suggesting they put safeguards in place, Couch recommends. For example, recommend they make a will and clearly define who is entitled to what and when. And put in place a system for a trusted third party, such as a banking or accounting professional, to regularly check their account.

It can be difficult to believe that a family member is taking advantage of an older adult. If you believe this is happening, first try to approach that older adult. If the individual doesn’t believe you, contact your local Victim Services Unit.

For more about Protecting Seniors from fraud, visit ProtectSeniorsOnline.ca.

Last revised: February 8, 2017

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Thoughts and stories from others
  1. July 27, 2019 at 1:37 pm | Posted by Victoria

    My mom is 79, my father is 83! I have four brothers, I am the only girl. My parents inherited a lot of money 25 years ago! My one brother who is 55, moved in with in with them shortly after inheritance, and has never left! About 12 years ago my now 47 year old moved in for the second time with parents, and also not left! They pay no bills, when my parents get take out, they buy the men theirs too! Groceries, and rent and utilities, are all paid for by my parents, one 55 year old has a paper route, which takes a few hours, that has been his job for the last 8 years! The other occasionally lays carpet, but only afternoon, because he sleeps late! They golf all the time, weather permitting,one has a son, every other weekend for 48 hours, pays very little child support! They are draining my parents, what can I do, I have two other brothers, we don’t know what can be done, please help!

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