The pdf for the issue in which this article appears is available for download: Bifocal, Vol. 41, Issue 4.)
The issue of civil litigation to recover assets stolen by financial exploitation seems to come up every time I talk with an attorney who practices elder law, guardianship or conservatorship law, or probate trust and estate law. All indications point to this as a rapidly growing area of civil litigation. If you have not encountered this in your practice, or with friends and family, you probably will.
A starting point in understanding financial exploitation is to review the elder abuse or adult abuse statutes in your state. The most common definition is the illegal or improper use of an older person’s money or property. A handful of state elder abuse statutes have special provisions for civil actions for recovery. One noteworthy statute is Maine’s Improvident Transfer of Title Act, which was enacted in 1988 to better protect victims of undue influence and financial exploitation. The act sets clear standards for the courts to undo transfers of real estate or order other relief.
Most of the causes of action for recovery of assets stolen through financial exploitation are based in tort law, breach of fiduciary duty, undue or unjust enrichment or contract law. These are concepts we all studied in law school, and unless we have practiced in these areas, we have not thought much about it since the bar exam.
A common complaint from people who have been exploited is that they reported it to Adult Protective Services law enforcement and were told that it was a civil matter. This is often true; there is an overlap between civil and criminal law. But there are many forms of exploitation in which intent is nearly impossible to prove and to prosecute as a crime. Orders for restitution are common in the criminal justice system but the civil justice system is the place to seek awards of damages.
Most thefts can also be classified as common law conversion under tort law. Conversion is the taking control of the property of another and depriving the true owner of the property. When a daughter takes her father’s car, does not give it back, and wears it out or sells it, likely conversion would be a viable cause of action for the value of the car.
Financial exploitation is often accomplished by a breach of fiduciary duty. Trustees, executors, administrators and agents are fiduciaries and owe heightened duties of loyalty and accountability. When fiduciaries take advantage of a position of trust, the courts can hold them accountable for breaching their fiduciary duty. Not all people who have access to the money or property of another person are fiduciaries, but if they are and they breach that duty, this is a key cause of action.
Unjust or undue enrichment is based in contract law, where one party essentially is paid more than is fair or just. We see this in exploitation where a caregiver is paid in advance for providing services (such as with the transfer of a home) and then fails to provide the promised services. If there is an agreement, this may also be a breach of contract.
It is common to see financial exploitation in the form of “loans” that are not repaid. Non-payment is a breach-of-contract issue. The challenge is proving the terms of the loan. It really helps if there is something in writing. It is very rare to see a loan case rise to the level of a crime; to do so, you need to prove that there was no intention to repay.
Probably the hardest cases involve money taken out of jointly-owned financial accounts. Often these accounts are created to make it possible for someone to help with managing money. But the way the accounts are often titled make it hard to prove that intent. To succeed on these cases, you must prove the intent when the joint account was created and contributed to the account.
Is Recovery Practical?
Civil actions for recovery only help if there is something to recover. Before agreeing to pursue a case, you need to determine if you will you be able to collect a judgement if successful. The perpetrators often spend or hide the money they’ve taken, making recovery impossible. Real estate is often sold to third parties or mortgaged. But not always. I recall one of the first cases I saw 20 years ago: the $200,000 that was taken from the elder’s bank account was put in a new account -- in the same bank -- in the name of the person who took it.
If you are a litigator, this is an area where you can provide valuable service to your clients. If you are not a litigator, get to know one so when someone tells you about the terrible financial exploitation they suffered at the hands of their caregivers, relatives or scam artists, you know where to send the client.
© 2020. Published in Voice of Experience, January 2020 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.