By Carol Sewell
Elder Fraud and exploitation are among the most difficult crimes to resolve, and it’s a rare occurrence that the fraud is stopped before it’s carried out. Briefly transforming itself into a rapid response team to stop a crime in progress, CEJC’s A*Team recently showed how it could be done.
The A*Team – a US DOJ-funded project to address systemic obstacles faced by elder abuse multidisciplinary teams – held a meeting with California banking officials to discuss issues around information sharing and reporting during elder fraud investigations. The difficulty of balancing customer privacy, fiduciary responsibilities and mandated reporter duties with customer autonomy were highlighted throughout the meeting. Both A*Team members and bankers expressed frustration with the current system and agreed to work together toward solutions that could serve all parties’ needs.
Following the conversation, one of the bank officials (we’ll call her Banker A) emailed a case-in-point: an older customer had just closed her account and withdrawn all her funds because the bank refused to transfer over $400,000 in what they suspected was a case of fraud. The growing number of fraud cases has banks on high alert, and Banker A’s institution had taken appropriate action to protect their customer’s funds and file the necessary reports.
The customer in this case was undeterred. Withdrawing her funds in the form of a cashier’s check, her goal was to continue the transaction from a different bank. Where the first bank had a history with the customer and could easily recognize a new and dangerous change in her banking habits, the new bank had none. The question arose of how to prevent the new bank from facilitating the fraud? Do banks have the right to share this kind of information without violating customer privacy laws? Time was of the essence, but Banker A felt helpless to prevent the fraud once the account was closed and shared her frustration with the A*Team.
The usual procedure in this type of situation is for banks to file a Suspicious Activity Report (SAR) with the Federal Crimes Enforcement Network (FinCEN), along with the mandated reports to law enforcement and adult protective services (APS). Because the suspected crime is non-life-threatening, neither law enforcement nor APS is mandated to prioritize a fraud case for same-day response, increasing the odds that the customer’s funds will be long gone by the time an investigation begins.
Given the A*Team’s membership and expertise, a very different approach was pursued. Responding to Banker A’s note, our team’s expert in financial abuse prosecution reached out to the appropriate county District Attorney, who assigned an investigator to follow-up on the case. A second banking official (Banker B) contacted her liaison at the new bank, alerting the institution to the situation, and urged Banker A to file an online report with the FBI Internet Crime Complaint Center. At the A*Team member’s notification, a DA’s investigator immediately contacted Banker A to follow-up, then, together with Adult Protective Services, went to the individual’s residence to inform the customer about the fraud. The District Attorney reported later that day the customer was the victim of a romance scam and had already lost several hundred thousand dollars to the fraudster, but the remainder of her funds were saved.
The case points to inherent flaws in the system as it’s currently designed. Following state guidelines, APS responds immediately to reports involving “an immediate life threat, imminent danger, or a crisis in an existing case” (CCR Title 22, 33-510). If the threat level is found to be less, the guidelines require a response “as soon as possible” but no later than 10 days from receiving the report. Counties are able to establish their own, more rigorous, response criteria. Depending on the urgency of the case, San Francisco’s APS, for example, either responds immediately, within 24 hours, within 2 to 5 days, or no later than 10 days after a report is filed.
Financial Abuse Specialist Teams (FASTs) create relationships between relevant partners to review non-urgent abuse cases and strengthen important local networks. Few have the ability to respond immediately to case reports, although if more banks were part of the FAST team, the connection between APS and bank participants could open the door to more timely response.
Normally, law enforcement, and not the District Attorney, would receive the cross-report of suspected abuse. Typically, the District Attorney’s office will not get involved until local law enforcement has generated a police report number. In many jurisdictions, law enforcement views financial abuse as a civil matter and will not investigate cases that involve family members or loved ones. Investigating internet fraud or scams is beyond the scope of many agencies, so these crimes often go uninvestigated.
Banks have legal authority to delay a transaction for 15 days when fraud is suspected, and a court can order a longer hold if it’s warranted, but a customer can still close an account and take their funds elsewhere at any time.
None of the established procedures provide a way to prevent an individual from losing their funds, raising important systemic issues for the A*Team to study. Cumbersome procedures that may slow response times, inability of banks to share information, and the need for clear guidance on procedures for both banks and abuse responders are the types of issues the A*Team was created to address. By demonstrating its knowledge of how to intervene, the A*Team proved it has a head start on developing solutions that can work for everyone.
Carol Sewell is CEJC's Director of Policy and A*Team Project Coordinator