The financial exploitation of older adults (often given the age-related labels of senior citizens or the elderly) may occur during the purchase and sale of investments. The exploitation in this context may take the form of theft, but more frequently involves the sale of investments that are unsuitable for older adults based on their age, objectives, risk tolerance, and financial circumstances. Financial advisors and insurance agents may choose to recommend investments to older adults that result in the payment of higher commissions, rather than investments that are the right "fit." Annuities (whether fixed, indexed, or variable) are one example of a type of investment that may be recommended to older adults due to the commissions paid to the financial advisors and insurance agents when annuities are purchased. Financial advisors and insurance agents may also recommend the sale of a recently purchased investment to fund the purchase a new investment, often under the guise that the new investment offers a better return. This scenario - the repeated sale and purchase of investments over a relatively short period of time - is commonly referred to as "churning" and "twisting," depending on the type of investment.
Under Florida law, various legal claims may be pursued to recover losses stemming from the financial exploitation of older adults, including:
- Breach of Fiduciary Duty
- Intentional Misrepresentation (Fraud)
- Negligent Misrepresentation
- Negligent Supervision
- The Violation of Florida Statutes Section 415.1111, which provides a civil action for "vulnerable adults" who have been financially "exploited" as defined in the statute. Pursuant to this statute, the prevailing party may recover reasonable attorneys' fees and costs. Some of the key definitions for terms used in the statute are set forth at the end of this post.
Older adults often do not discuss their investment purchases with immediate family members (such as siblings or children), relatives, or close friends. In addition to viewing investment purchases as a personal and private matter (for good reason), older adults may feel embarrassed or ashamed that they may have fallen victim to a persuasive sales pitch and purchased unsuitable investments. Immediate family members, relatives, and close friends of older adults may wish to inquire about the nature of the investments held by older adults to determine the suitability of their investment purchases.
(8)(a) “Exploitation” means a person who:
- Stands in a position of trust and confidence with a vulnerable adult and knowingly, by deception or intimidation, obtains or uses, or endeavors to obtain or use, a vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive a vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult; or
- Knows or should know that the vulnerable adult lacks the capacity to consent, and obtains or uses, or endeavors to obtain or use, the vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive the vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult.
(b) “Exploitation” may include, but is not limited to:
- Breaches of fiduciary relationships, such as the misuse of a power of attorney or the abuse of guardianship duties, resulting in the unauthorized appropriation, sale, or transfer of property;
- Unauthorized taking of personal assets;
- Misappropriation, misuse, or transfer of moneys belonging to a vulnerable adult from a personal or joint account; or
- Intentional or negligent failure to effectively use a vulnerable adult’s income and assets for the necessities required for that person’s support and maintenance.
(11) “Fiduciary relationship” means a relationship based upon the trust and confidence of the vulnerable adult in the caregiver, relative, household member, or other person entrusted with the use or management of the property or assets of the vulnerable adult. The relationship exists where there is a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the vulnerable adult. For the purposes of this part, a fiduciary relationship may be formed by an informal agreement between the vulnerable adult and the other person and does not require a formal declaration or court order for its existence. A fiduciary relationship includes, but is not limited to, court-appointed or voluntary guardians, trustees, attorneys, or conservators of a vulnerable adult’s assets or property.
(17) “Obtains or uses” means any manner of: (a) Taking or exercising control over property (b) Making any use, disposition, or transfer of property; (c) Obtaining property by fraud, willful misrepresentation of a future act, or false promise; or (d) 1. Conduct otherwise known as stealing; larceny; purloining; abstracting; embezzlement; misapplication; misappropriation; conversion; or obtaining money or property by false pretenses, fraud, or deception; or 2. Other conduct similar in nature.
(28) “Vulnerable adult” means a person 18 years of age or older whose ability to perform the normal activities of daily living or to provide for his or her own care or protection is impaired due to a mental, emotional, sensory, long-term physical, or developmental disability or dysfunction, or brain damage, or the infirmities of aging.