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Con artists' old tricks

A no-risk investment? A 'nephew' in distress? Don't believe them. Senior citizens need to be vigilant.

August 19, 2007|Kathy M. Kristof | Times Staff Writer

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% per year safely, he persuaded the widower to pour his life savings into real estate investments with an El Segundo investment firm called Jon W. James & 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 even 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.

"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. "I wish I never had done this."

He has plenty of company. More than 200 investors are in similar straits with Jon W. James & Associates, and that's just the tip of the iceberg.

About 5 million seniors are victimized by some sort of financial fraud each year, according to the Securities and Exchange Commission. California law enforcement authorities believe that about a million of those victims live in the Golden State. Fraud against seniors is rising, experts add, but precise numbers are impossible to come by, partly because authorities believe that only 1 in 5 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.

Karen Liebig of Torrance runs a nonprofit group called the Keep Safe Coalition. Its mission is to arm seniors with the information necessary to protect them from scams. They go everywhere: convalescent homes, senior centers, libraries, bridge clubs. Anywhere seniors gather and might want information about the hallmarks of elder abuse -- financial or physical -- will draw Liebig and her reams of tip sheets and little giveaways, such as pens and whistles with a message: "Blow the whistle on fraud!"

With PowerPoint presentations and gentle talks, she explains to people like Kincherlow that there is no such thing as a "safe" or "guaranteed" investment that pays 20% annually. She cajoles them to beware of "trust officers" bearing investment advice. She pulls in district attorneys and detectives to talk about salesmen who are willing to take seniors to the store and run errands for them as a way of gaining their trust before they sell them investments that could bankrupt them.

"We have a case now where the girlfriend of the grandson served as a caregiver and she's taken money out of this woman's account; she's taken home equity loans in her name," Liebig said. "The lady, who is in her late 80s or 90s, is never going to get her money back."

More than anything, Liebig urges seniors to seek help when they're being pressured to buy something and report it when someone takes advantage. And she counsels friends and family members of older folks living alone -- the most vulnerable targets -- to keep in close touch and look for telltale signs of trouble.

Just as you watch the people your teenagers hang out with, friends and relatives of senior citizens should be watchful when the senior takes up with new caregivers and friends. They should also worry if the family's "lost soul" takes such good care of grandma that everybody else loses contact.

"We have had immediate family members, who are in line to inherit the money anyway," said Det. Sgt. Peter Grimm of the Redondo Beach Police Department. "But the greed factor kicks in, and they say, 'I want it now.' "

That's one reason seniors are such attractive targets, officials say. Because they're embarrassed or infirm or have such a close emotional connection to the con artist, they're far less likely to report and pursue prosecution of the criminal. They're also, demographically, a wealthy group, holding billions in assets and home equity.

"It's just like Willie Sutton," said Donn Hoffman, a Los Angeles County deputy district attorney who prosecutes cases of elder abuse. Crooks "go where the money is."

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