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THE LAW OF

FINANCIAL ABUSE
AND EXPLOITATION
____

A PENNSYLVANIA GUIDE FOR


OLDER ADULTS, FAMILIES,
COUNSEL AND COURTS

by

Katherine C. Pearson
and

Trisha E. Cowart

GEORGE T. BISEL COMPANY, INC.


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COPYRIGHT 2011
BY
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DEDICATION
______________________

We dedicate this book to the talented students who have served as Certified Legal Interns
at the Elder Law and Consumer Protection Clinic at The Dickinson School of Law at The
Pennsylvania State University, to the many inspiring clients at our clinic, to the hard-
working attorneys who have served as visiting supervisors, and to members of the faculty at
the School of Law who have patiently listened to our hypothetical fact patterns and shared
their expertise.
We also dedicate this book to our own families, especially our parents.
ACKNOWLEDGMENTS
______________________

We have many to be grateful to, including Visiting Supervising Attorney Nichole


Walters, Professor Laurel Terry, Dorothy Morse, the members of the Elder Law Council
and Elder Law Section at the Pennsylvania Bar Association, private attorneys David
Jaskowiak, Esq., Timothy Hoy, Esq., and Joseph K. Goldberg, Esq., the hard-working
District Attorneys in Dauphin and Cumberland Counties, Researchers-Extraordinaire Elijah
Veenendael, Matthew Noumoff, Joshua Wilkins and Chad Zimmerman, and the inspiring
staff at the Dauphin County Area Agency on Aging, especially Dganit Shefet and Dan
Gemmer.
We appreciate the support and resources provided by George T. Bisel Co., and especially
Tony DiGioia, Editor-in-Chief.
We acknowledge and thank our colleagues and administrators at The Dickinson School
of Law of the Pennsylvania State University.
ABOUT THE AUTHORS
_____________________
Katherine C. Pearson is a Professor of Law at Penn State University’s Dickinson School
of Law and the founder of the Elder Law and Consumer Protection Clinic at the School of
Law. She began teaching law in Pennsylvania after more than a dozen years of experience
as a practitioner in the southwestern part of the United States. She has served as the chair for
the Elder Law Section of the Pennsylvania Bar Association, and is a member of the National
Academy of Elder Law Attorneys. In 2009, she was the Peterson Visiting Scholar in
Gerontology and Family Studies at Oregon State University, and was in residence at OSU
for the Fall term of 2009. In 2010, she was a visiting Fulbright Scholar at Queens University
Belfast in Northern Ireland, where her focus was on international and comparative policies
on law and aging. She has lectured on policies and laws affecting older adults and their
families in Europe, Mexico, Canada, and throughout the United States and is the author of
numerous articles on aging policy topics.
Trisha E. Cowart is a Visiting Assistant Clinical Professor at the Elder Law and Consumer
Protection Clinic at the Penn State University’s Dickinson School of Law. Prior to
becoming a Visiting Assistant Clinical Professor, Ms. Cowart held the role of Elder
Protection Clinical Fellow at Dickinson and the primary focus of her fellowship was
examination of financial exploitation of older adults. She served as the Acting Co-Director
of the Clinic during 2009-2010. She is also involved in outreach to families on a variety of
legal and practical issues facing older adults. Ms. Cowart is a member of the Pennsylvania
Bar Association and the PBA Elder Law Section. She received her B.A. (Accounting and
Journalism) from the Pennsylvania State University and her J.D. from Penn State
University’s Dickinson School of Law.
FOREWORD
_______________

My awareness of a need for better understanding of the laws of financial abuse and
exploitation has been gradual, but increasing, over the course of my thirty year legal career.
One of the first examples was presented to me while I was serving as a visiting assistant
clinical professor at the University of New Mexico School of Law, a supportive place to
make the transition from full-time practitioner to full-time law professor, thereby gaining
the time to write about these topics.
The victim was an elderly Hispanic man who spoke only Spanish. After his English-
speaking wife passed away, he turned to a bi-lingual neighbor for help. The neighbor
escorted him to her own attorney, and she translated for him with the attorney, who spoke
only English. Soon the elder was signing documents—and within a few weeks he learned
he had signed documents that permitted the neighbor unfettered access to his bank accounts
and his home equity, all to a devastating result. UNM’s Clinic worked with a wonderful
resource, the Senior Citizen Law Center in Albuquerque, to save the gentleman’s home.
At first I thought the problem was a “translation” problem—but after more than fifteen
years of witnessing similar fact patterns, I have come, reluctantly, to the conclusion that
seemingly well-meaning friends and family members can often be the source of financial
abuse and exploitation. Sometimes the relationship begins innocently and with good
intentions, sometimes not. During the ten years that I have served as the educational
director of Penn State’s Elder Law and Consumer Protection Clinic, I have had all too many
opportunities to witness the consequences of problematic behavior. Further, in my travels I
have seen coast-to-coast examples of the need for proactive legal advisors and similar
professionals, including bankers, as well as the need for judges and protective service
agency staffers who do not hesitate to intervene when abuse is suspected.
In October of 2010, just as this book was going to press, Pennsylvania’s Governor signed
Act 70 to expand the availability of protective services, including assistance in preventing
“exploitation,” to “younger” disabled adults, those aged 18 to 59. This is a reminder that the
concerns addressed in this book are not uniquely the concerns for older adults. The laws
addressed here have parallels in every state, as we demonstrate in a national, comparative
chart of state laws in Appendix A, and the approaches suggested here may provide relief for
victims of any age. We have written the book with an eye to helping people both in and
outside of Pennsylvania. In our final chapter, for example, we talk about the important roles
for the courts in monitoring guardianships, conservatorships, and in responding to instances
of suspected abuse. We highlight an exciting approach, a volunteer monitor project for
guardianships, adopted by Dauphin County’s Orphans Court. Such innovation is in sharp
contrast to devastating reports of nation-wide abuse by court-appointed guardians in the
General Accountability Office (GAO)’s Report to the Chairman of the U.S. Senate Special
Committee on Aging on Guardianships: Cases of Financial Exploitation, Neglect, and
Abuse of Seniors, issued in September 2010.
For more than four years, first as a student and then as an attorney in our Clinic, Trisha
Cowart, Esq., has been my cherished colleague. While working on this book, we have often
been contacted by members of the public and by practicing attorneys who have questions or
suggestions about how to respond to instances of suspected financial abuse. Often the
concerns are revealed during the probate process, after the death of the elder. While many
of the concepts and strategies presented in this book will be relevant to disputes about
inheritance rights, we write this book in the hope that older adults, disabled adults and
dependent persons will be better represented and counseled while they are still alive. We
want to help prevent financial abuse and exploitation and not simply respond to the civil or
criminal wrongs after offending actions take place.
We welcome comments and suggestions from our readers on how to improve this book
for the future.
I have a final set of people to thank. During the 2009–10 academic year, I was privileged
to take an extraordinary sabbatical leave from my usual role as a teacher and clinician.
Oregon State University hosted me in the fall of 2009 as the Peterson Visiting Scholar in
Gerontology and Family Studies. Under the auspices of the Fulbright Scholarship program,
I spent the winter and spring months of 2010 at Queen’s University Belfast in Northern
Ireland. These opportunities allowed me to conduct comparative research into national and
international aspects of the needs of families and aging adults. My colleagues in Oregon,
Ireland and the United Kingdom also kindly fed me, encouraged me, entertained me and
inspired me while I worked on this book. My very deepest thanks to all.

October 20, 2010 Katherine C. Pearson


Professor of Law
Email: kcp4@psu.edu
CONDENSED
TABLE OF CONTENTS
______________________

Dedication
Acknowledgments
About the Authors
Foreword

Chapter

1. The Public and Private Challenges of Financial Abuse


2. The Importance of Protective Service Authorities
3. Criminal Causes of Action
4. Civil Causes of Action
5. Unfair Trade Practices and Consumer Protection Laws
6. The Role of Filial Support Laws in Cases of Suspected Financial Abuse
7. Reporting Suspected Financial Abuse: Mandatory Versus Voluntary
Obligations
8. The Importance of Attorneys as Counselors
9. The Importance of the Courts

APPENDICES

TABLE OF CASES

INDEX
DETAILED
TABLE OF CONTENTS
______________________

Dedication
Acknowledgments
About the Authors
Foreword

Chapter 1
THE PUBLIC AND PRIVATE CHALLENGES OF FINANCIAL ABUSE
§ 1.1 Introduction
§ 1.2 The Importance of Asking Tough Questions
§ 1.3 Pennsylvania Takes Financial Abuse Seriously

Chapter 2
THE IMPORTANCE OF PROTECTIVE SERVICE AUTHORITIES
§ 2.1 Introduction
§ 2.2 Overview of Service Providers Under Pennsylvania’s Older Adults
Protective Services Act
§ 2.3 Triggering Protective Services: Pennsylvania’s OAPS Act Definition of
Exploitation
§ 2.4 Protective Services: Reports and Investigations
§ 2.5 Protective Services: Interventions
§ 2.6 Protective Services: Individual Rights -
§ 2.7 Other Public Investigations of Suspected Financial Abuse or Exploitation

Chapter 3
CRIMINAL CAUSES OF ACTION
§ 3.1 Introduction
§ 3.2 Paving the Way for Criminal Prosecution of Exploitation: The Bertha Trout
Case
§ 3.3 Initiating a State Criminal Action Arising Out of Elder Exploitation
§ 3.4 Pennsylvania Criminal Provisions
§ 3.4.1 Theft by unlawful taking or disposition, 18 Pa.C.S. § 3921
§ 3.4.2 Theft by deception, 18 Pa.C.S. § 3922
§ 3.4.3 Receiving stolen property, 18 Pa.C.S. § 3925
§ 3.4.4 Theft by failure to make required disposition of funds received, 18
Pa.C.S. § 3927
§ 3.4.5 Access device fraud, 18 Pa.C.S. § 4106
§ 3.4.6 Misapplication of entrusted property and property of government or
financial institutions, 18 Pa.C.S. § 4113
§ 3.4.7 Securing execution of documents by deception, 18 Pa.C.S. § 4114
§ 3.4.8 Identity theft, 18 Pa.C.S. § 4120
§ 3.5 Federal Criminal Provisions
§ 3.6 Crimes Involving Joint Bank Accounts and Powers of Attorney and the Issue
of Consent
§ 3.6.1 Joint Bank Accounts and the Issue of Consent
§ 3.6.2 Powers of Attorney and the Issue of Consent
§ 3.7 Practical Considerations: The Incapacitated or Unavailable Victim
§ 3.8 Penalties, Fines and Restitution Under Pennsylvania Law
§ 3.8.1 Grading of Offenses
§ 3.8.2 Imprisonment Based on Grading
§ 3.8.3 Fines and Restitution
§ 3.9 Elder-Victim Crimes: Should Pennsylvania Adopt Elder-Specific Criminal
Provisions for Financial Exploitation?

Chapter 4
CIVIL CAUSES OF ACTION
§ 4.1 Introduction
§ 4.1.1 Hypothetical: Agatha Albright’s Case
§ 4.2 Preliminary Steps with Agents: Termination of Authority and Seeking
Accounting
§ 4.2.1 Standing to Seek Judicial Relief
§ 4.2.2 Application to Hypothetical
§ 4.3 Jurisdiction in Civil Suits
§ 4.3.1 Personal Jurisdiction
§ 4.3.2 Subject Matter Jurisdiction
§ 4.3.3 Tactical Considerations and Right to Jury Trial
§ 4.3.4 Application to Hypothetical
§ 4.4 Preliminary Injunctive Relief
§ 4.4.1 Application to Hypothetical
§ 4.5 Confidential Relationships and Breaches of Fiduciary Duty: An Overview
§ 4.5.1 Application of Theory of Breach of Fiduciary Duty Arising Out of
Confidential Relationship to Hypothetical
§ 4.5.2 Fiduciary Duty Under Common Law Agency
§ 4.5.2.1 Application of Theory of Breach/Common Law
Agency to Hypothetical
§ 4.5.3 Fiduciary Duty Under Powers of Attorney
§ 4.5.3.1 Application of Theory of Breach/Power of Attorney to
Hypothetical
§ 4.6 Undue Influence
§ 4.6.1 Elements and Burdens of Proof
§ 4.6.2 Remedies Arising from Undue Influence
§ 4.6.3 Application of Undue Influence Theory to Hypothetical
§ 4.7 Lack of Capacity
§ 4.7.1 Application of Lack of Capacity Theory to Hypothetical
§ 4.8 Conversion
§ 4.8.1 Elements and Burdens of Proof
§ 4.8.2 Damages for Conversion
§ 4.8.3 Proper Subject Matter for a Conversion Action
§ 4.8.4 Application of Conversion Theory to Hypothetical
§ 4.9 Common Law Fraud
§ 4.9.1 Pleading Fraud
§ 4.9.2 Elements and Burdens of Proof
§ 4.9.3 Fraud and Real Property Conveyances
§ 4.9.4 Damages for Fraud
§ 4.9.5 Application of Fraud Theory to Hypothetical
§ 4.10 Contractual Theories
§ 4.10.1 Application of Contract Theories to Hypothetical
§ 4.11 Unjust Enrichment (Quasi-Contract)
§ 4.11.1 Application of Theory of Unjust Enrichment to Hypothetical
§ 4.12 Common Defenses to Civil Causes of Action
§ 4.12.1 Gifts
§ 4.12.2 Statutes of Limitation and Laches
§ 4.12.3 Statute of Frauds
§ 4.13 Attorneys’ Fees

Chapter 5
UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAWS
§ 5.1 Introduction
§ 5.2 Complaint Investigation by the Bureau of Consumer Protection and the
Attorney General
§ 5.3 Private Causes of Action Under the UTPCPL
§ 5.3.1 Discussion of the Catch-All Provision in the UTPCPL
§ 5.4 Right to Cancel (Rescission)
§ 5.5 Remedies Under the UTPCPL
§ 5.6 Home Improvement Consumer Protection Act

Chapter 6
THE ROLE OF FILIAL SUPPORT LAWS IN CASES OF SUSPECTED
FINANCIAL ABUSE
§ 6.1 Introduction
§ 6.2 Elements and Application
§ 6.3 Practical Concerns

Chapter 7
REPORTING SUSPECTED FINANCIAL ABUSE: MANDATORY VERSUS
VOLUNTARY OBLIGATIONS
§ 7.1 Introduction
§ 7.2 Pennsylvania’s OAPS Act Provisions on Voluntary Reporting
§ 7.3 Pennsylvania’s OAPS Act Provisions on Mandatory Reporting by Facility
Employees or Administrators
§ 7.4 Federal Law on Mandatory Reporting of Crimes by FacilityEmployees or
Administrators
§ 7.5 Pennsylvania’s Industry-Specific Regulation of Financial Accountability
§ 7.6 Banks and Financial Institutions
§ 7.7 Comparison with Reporting Laws in Other States
Chapter 8
THE IMPORTANCE OF ATTORNEYS AS COUNSELORS
§ 8.1 Introduction
§ 8.2 The Importance of Independent Legal Advice for Older Adults
§ 8.3 Who Is My Client?
§ 8.3.1 Identifying Conflicts of Interest
§ 8.3.2 Dealing with Unrepresented Persons
§ 8.3.3 -Does Limiting Representation to the “Donee” Shield Attorney from
Liability for Harm to Donor?
§ 8.4 What Challenges Exist in Representing Clients with Diminished Capacity?
§ 8.5 As Long-Term Care Planning Becomes More Complicated, Are There
Increased Demands on Lawyers to Have Specialized Competence?
§ 8.6 A Final “Tough” Question: Is “Medicaid Planning” the Equivalent of
Financial Abuse or Exploitation?

Chapter 9
THE IMPORTANCE OF THE COURTS
§ 9.1 Introduction
§ 9.2 Families and Professional Fiduciaries
§ 9.3 Court Supervision of Fiduciary Roles
§ 9.4 Conclusion

APPENDICES
Appendix A: Financial Abuse or Exploitation in Protective Service Laws: National
Comparison
Appendix B: Contact Information for All of Pennsylvania’s Area Agencies on
Aging
Appendix C: Attorney General Elder Abuse Complaint Form
Appendix D: Eileen Bingaman Criminal Charging Document
Appendix E: Bertha Trout—Superior Court Decision
Appendix F: Mail Fraud Complaint Report
Appendix G: Sample Letter of Instruction to POA Agent
Appendix H: Sample POA Termination and Demand for Accounting Letter
Appendix I: Sample Motion to Disallow Further Encumbrances and a Temporary
Ex Parte Preliminary Injunction Order
Appendix J: Sample Civil Complaint 1 (involving loss of savings, home and
physical threats)
Appendix K: Sample Civil Complaint 2 (involving property transferred to joint
names with right of survivorship)
Appendix L: Sample Agatha Albright Complaint
Appendix M: Attorney General Consumer Complaint Form
table of cases
INDEX