Walter Kincherlow Sr., 69, never expected to retire a millionaire. But during his 29 years as a maintenance worker, he managed to sock away more than $80,000. He invested pretty well too, until an "estate planner" took a look at his portfolio while updating his living trust and clucked that Kincherlow's investment returns were paltry.
Claiming that Kincherlow could earn 20 percent per year safely, he persuaded the widower to pour his life savings into real estate investments with an investment firm based in El Segundo, Calif., called Jon W. James and Associates. Kincherlow said he was assured that his principal was safe. But signs of trouble emerged when he wanted to start spending some of his savings. Then, company managers either couldn't be reached or talked him out of withdrawal, he said. Meanwhile, they tried to persuade him to secure a huge home-equity loan to invest more.
Securities regulators filed an emergency action last summer to shut down the firm, which they claimed was operating a $22 million fraud. James maintained in legal filings that the company's investments simply had insufficient time to pan out. In any event, a court-appointed receiver says investors are owed about $13 million, but the company has less than $4 million in assets to repay investors.
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"They're telling me that I might end up with $6,000 or $7,000 out of all of the money I invested," said Kincherlow, who now lives in Victorville, Calif. "I wish I never had done this."
He has plenty of company. More than 200 investors are in similar straits with Jon W. James and Associates, and that's just the tip of the iceberg.
Some sort of financial fraud victimizes about 5 million seniors each year, according to the Securities and Exchange Commission. Fraud against seniors is rising, experts add, but precise numbers are impossible to come by, partly because authorities believe that only one in five such frauds are ever reported.
The tragic part: Once a senior gets taken, there's little chance he or she will ever get the money back. And experts maintain that most of the fraud is easily avoided.
The SEC has been investigating companies offering "free lunch" seminars, which are often used to lure elderly investors. And the SEC has teamed up with the National Association of Securities Dealers and AARP to host a "senior summit" next month aimed at getting regulators, law-enforcement and community groups in the same room to find ways to combat senior fraud.
Karen Liebig of Torrance, Calif., runs a nonprofit group called the Keep Safe Coalition, the aim of which is to arm seniors with the information necessary to protect them from scams.
"If there was somebody that used to sit on the porch and wave at you every day and you don't see them for a while, you need to knock on the door and check on them," she said.
If you suspect there's something wrong, call local law enforcement or adult protective services, she added.
Signs of trouble
About 5 million seniors are victims of financial fraud each year, according to the SEC. Red flags include:
● "Guaranteed" Investments That Pay Double-Digit Returns
Any investment that promises to pay more than a certificate of deposit or Treasury bill bears substantial risk. Most "guarantees" offered on high-return investments aren't worth the paper they're written on.
● Living-Trust Officers Bearing Investment Advice
Regulators maintain that many companies that update living trusts are really just seeking a close look at a senior's portfolio to sell them high-cost and, often, inappropriate investments. Buy legal advice and investment advice separately. Not sure if you need a trust? Contact Healthcare and Elder Law Programs Corp., a nonprofit education and counseling group, at 1-310-533-1996 or www.help4srs.org.
● Free Lunch Seminars
Securities regulators say seminars offering seniors a free meal are too often come-ons for high-pressure salespeople to pitch annuities that can lock up your assets for decades, while paying huge fees to the salesperson. You can go to lunch, but don't invest until you've had a savvy friend or impartial investment adviser review the prospectus or offering circular. If the salesperson says the "opportunity" can't wait for you to examine the details, pass it up.
● "Free Gifts" and Foreign Lottery Winnings
If you need to send a payment for "postage" or "taxes," you haven't won a "free gift" or a foreign lottery, you're being reeled in on a scam. Your winnings won't arrive; and you'll lose the amount you sent — or more. Some crooks use these scams to steal your banking information.
● E-Mailed Bank "Updates," IRS Refund Notices and "Account Warnings"
Your banker, the federal government and even PayPal are not going to ask you to update your account information by clicking on a link in an e-mail, but a con artist wanting your credit-card numbers or Social Security number to commit identity theft will. Don't click through. If you think your banker needs to update your account information, call your bank directly. If you're wondering about a federal tax refund, contact the Internal Revenue Service at 1-800-829-1040 or www.irs.gov.
● Relatives and Caregivers Who Isolate You
Relatives and caregivers are often a tremendous help, but some bad apples take advantage of their trusted positions to commit identity theft and steal from seniors' bank accounts. Beware of anyone who discourages you from seeing others or who won't let you see your mail.
● All For Help
Seniors who are concerned about a caregiver, or friends or neighbors who worry that a senior may be in trouble, should call their county's adult protective services agency.
Personal Finance
Kathy
Kristof