The first sign that there was a problem was during our summer vacation to a mountain cabin in Georgia in 2005. We were sitting on a rustic porch taking in the cool evening air. We were having dinner. The menu included freshly caught trout and a bottle of wine.

A cell phone rang; it was our assistant. "Did you know that Jeanice's relatives in Louisiana just bounced a check and have $30,000 in margin?"

This was very strange, since in 15 years they barely withdrew anything from that account and had never used margin. "It's all happened in the last week," she said, "while you've been gone."

We quickly made adjustments to cover the insufficient funds problem, and then called Jeanice's elderly relatives, Fred and Virgie.

Initially, they denied there was any problem, it was just an innocent mistake, they said. We halted our vacation and drove to Louisiana to see what was really happening. After assembling bills, contracts and IOUs on scraps of paper, and talking with local merchants and sheriff's detectives, the scope of the problem began to emerge and a financial and legal odyssey began that would take three years to resolve. Our journey would take us through a near foreclosure, lapsing of a life insurance policy, lawsuits, and the back alley world of "payday" lending offices, which provide loans at 30% plus interest.

This was a tragic experience for our family, especially Fred and Vergie. By telling our story, we hope other financial advisors may learn what to look for to help their clients and their own loved ones avoid similar disasters. Later in this article, we summarize some steps advisors can take to help protect their elder clients from being vulnerable to such scams. 

The Saga Begins

What we found out after arriving at Fred and Vergie's home was that over a period of several years, a con man had talked Fred into entering "business deals." The con man got hundreds of thousands of dollars from Fred by convincing him to take second mortgages, max out his credit cards, use store credit and drain his local bank accounts. It was only when Fred was forced to tap his brokerage account, which we monitored, that we had a clue there was something wrong. Virgie knew the con man, but she didn't seem aware of the financial details.

We would learn that Fred and Virgie's credit rating was in shreds, stores would not take their checks and some local merchants had filed suit for payment. The con man seemed to be on the verge of getting away with these crimes.

At first, we vented our frustration with Fred and Virgie. Why had they allowed this to happen? How could they be talked into so many stupid "deals" and arrangements? Why hadn't they told us earlier?

Then we focused on the real priority, cleaning up the mess. After assembling the paperwork, we systematically paid off or caught up on most of the bills, starting with the 30% "payday loans." We cancelled the con man's cell phone and stopped systematic transfers to his account.

We soon realized that the primary reason Fred became a victim was because his health was failing. Doctors were indeterminate with their diagnosis, perhaps it was Parkinson's, dementia or the effects of "mini-strokes" or his congestive heart condition ... or all of the above. Fred was spending more and more time confused and overwhelmed.

We went to a local attorney to draft powers of attorney and moved all of Fred and Virgie's funds to the brokerage account so that we could monitor all expenses. From now on, we would collect all income and pay all bills. We provided Fred and Virgie with a modest monthly stipend that was transferred to the local bank.

Because of Fred's bizarre behavior, we took the unusual step of having him declared financially incompetent by the courts. This meant Fred was no longer liable for future bills. We were concerned about the powerful sway the con man apparently had over Fred. We wanted to limit future liability for Fred and Virgie in case the con man came back after we returned home to Florida.

Next we had to liquidate Fred's Roth IRA, one annuity and all the remaining cash held locally to clean up the immediate problems. We then instructed our lawyer to deal with the lawsuits from the stores and began to negotiate settlements.

Then we started talking to law enforcement. We had to find a way to convey the situation to the local parish sheriff detectives, who initially seemed put off that this was not a "real crime" and they had better things to do than rifle through documents and conflicting stories. It wasn't until we contacted the state police that we were taken seriously. We assisted them in the investigation by rounding up witnesses, gathering paperwork and providing access to accounting and bank records.

 More Than Health Problems

During this process, we learned that it was more than Fred's health problems that contributed to how two reasonable people could have been taken for so much.

We learned, over time, that there was a lack of marital communication. Fred was a domineering man who apparently felt his "business deals" were too complicated for his wife to understand. Virgie was a traditional wife, not used to making the big decisions and willing to stay away from money affairs.

The con man knew this and made sure Fred understood this was a "man's business" and that Fred didn't need to share the complex details with anyone, especially his wife.

Fred also had a good heart, and had a previous history of trying help "down on their luck" individuals. We also learned that sometimes he was too trusting and had been taken advantage of before, for smaller amounts of money.

The con man had clearly wormed his way into Fred's life, calling him up to 15 times a day to chat, cajole, convince and strong arm. He took advantage of the combination of Fred's failing memory, his ego, his compassion and desire to be a successful businessman. Fred behaved like a delirious moth drawn to a flame.

We would have stepped in much sooner, but Fred and Vergie never told us that they needed help. Since we lived several states away, we only saw them every year or two. During those visits they rose to the occasion, and didn't give much indication of financial concerns or serious health issues, other than what might be normal for 70 year olds.

As time passed, Fred did realize that the "business deals" were not working, but he became embarrassed and increasingly desperate to keep these deals a secret from the family and to somehow to recoup his losses. The con man played his angst perfectly, extracting even more money with ever-stronger assurances that the "big score" was just around the corner.

The Bait

In one deal, the con man told Fred he had an opportunity to buy a shrimp boat. He claimed because of the recent hurricanes many shrimpers were leaving the business, and with less competition newcomers could "make boatloads of money" (no pun intended).

Fred gave him $15,000. Two weeks later, the con man showed up with a bag of grocery-store-bought shrimp as evidence that the boat was producing profits. Of course, Fred never got anything more than the shrimp.

Another "deal" was supposed to make Fred a partner in a hurricane home-repair business in New Orleans under a FEMA government contract. The con man talked Fred into renting a car, buying a cell phone and using his charge account at a local hardware store for $23,000 of roofing supplies.

Of course, the con man wasn't licensed to do anything in construction, and would have been rejected as a FEMA contractor. Instead we learned he used the supplies to do unlicensed roofing on several local houses, pocketing the payment for himself and leaving the homeowners with shoddy workmanship and leaky roofs that didn't meet code. He also left Fred with the hardware bill.

The con man's big "payday" came when he convinced Fred that he had a pending lawsuit in the works against a prominent local doctor. The con man claimed the doctor mangled his thumb during surgery and he was about to be paid a $150,000 settlement.

The con man offered to pay Fred the $150,000 settlement if he would front him $100,000 now. Fred gave him the money, in exchange for an I.O.U. on a scrap of paper. Of course, there was no lawsuit, and his mangled thumb was the result of a construction accident, not a botched surgery.

Getting A Prosecution

We estimated Fred lost a total of about $250,000 to the con man. The local police informed us this was the largest case of elder fraud in parish history.

When the state police had built enough of a case to indict, the sheriff's detectives finally got involved. The state police also put us in touch with the local district attorney, who was motivated to help.

The case led to the con man's arrest in July 2007, but after six months there he managed to talk someone into posting bond for him.

State police told us that in Louisiana it's very difficult to prosecute for fraud. We were told the presumption is simply a business deal "gone bad." But for the fact that Fred and Virgie qualified as "elderly" under state law, the con man could have remained uncharged.

Meanwhile, our attorney did some research on the con man. He has fathered 10 children by four different mothers and had not paid child support. He had no real jobs in the last 20 years, no professional licenses, and had been involved in many "misunderstandings" concerning shoddy and unlicensed roof repairs and other construction work. He once poured a patch of cement on a roof as a way to repair a leak.

During the investigation, Fred's health was continuing to deteriorate. There was some concern that the con man might elude justice because most of the "deals" were just between Fred and the con man. If Fred couldn't testify, it would weaken the case. Fred was so weak that the district attorney took a video of his testimony at home in his hospital bed. In case Fred died before trial, the DA hoped the video would be enough to convict.

 In a victim's statement, we tried to give the judge some insight into the real damage done by the con man.

We ask the court to remember this is not just a financial crime. This is much more than a few dollars of inconvenience. This man has imposed a life sentence of worry, along with the increased possibility of a life in poverty, to a widow who was once financially comfortable. Long after this man has served his short sentence, our [relative's] "life" sentence will continue, and our families' future opportunities will be diminished by this theft. Much more than money was taken; her dignity and financial security were stolen as well.

In the end, the con man pled guilty, after the district attorney explained the harsher sentence he would seek if the con man forced the state to go to trial. The con man was sentenced to 10 years in prison.

Fred died shortly after the con man was sent to prison. However, the con man got out of jail after only two years, and now has an opportunity to make restitution. He has bounced from job to job, and has no financial asset to his name. At best we could try to follow him around and garnish part of his salary from minimum wage jobs. In theory he could go back to jail for not paying the restitution, but we're not holding our breath.

What We Learned

Preventing this kind of crime can be difficult, especially if the victim gets involved with "get rich" schemes and finds allure in exciting "business" opportunities. Other victims can be vulnerable simply because they are trusting and helpful people who can't easily detect suspicious motives. Finally, some con artists will prey on others who are very ill, intimidated or confused.

When we sense that our client is potentially vulnerable, we suggest several steps:

1. Consolidate all cash flows through their cash account with us. While we do not provide active oversight on every transaction, we may catch "out of the ordinary" transactions or "strange" requests. Also this consolidation helps to more easily reconstruct past activity to discern unusual patterns.

2. If the client insists on using a local checking account, we use the consolidated cash account to send a small monthly stipend to the client's local checking account so that cash on hand is limited. Be on the look out for unusual requests for more money.

3. Try to involve trusted relatives as overseers. With the client's understanding and permission, give the relatives or guardian online access to records and statements so they too can keep an eye on things.

4. Try to automate most bills and reduce the need for the client to deal with too much paperwork.

5. Consider hiring a corporate trustee to pay bills and handle cash flow.

6. Encourage the client to identify trusted relatives to which they can give durable powers of attorney or limited trading authorization, along with medical directives, in case they need to respond to a potential problem.

7. During reviews, ask the client if any third party is asking them for money or offering to include them in "business" deals or opportunistic investments.

Financial planners are often the best-positioned professionals to discover and help prevent elder fraud. Although many seniors have families who can be vigilant, relatives are most often they ones to commit elder fraud, according to a recent study Broken Trust: Elders, Family and Finances by the MetLife Mature Market Institute.

The planner is one of the few people close enough to the money to see what is going on behind the scenes and to help prevent fraud from both outsiders and family members.

With a severe economic downturn, it seems reasonable to expect more desperate and unethical people to look to seniors hard-earned nest eggs to feather their own nests. Vigilant planners can make a lifesaving difference.

Jeff Harring, CPF, and Jeanice Harring, WMS, are partners in the Harring Planning Group of Raymond James & Associates Inc. They work in the flagship branch in downtown St. Petersburg, Fla.