In yet another case of fraud targeting senior investors, the Securities and Exchange Commission ("SEC") has charged William Neil "Doc" Gallagher, a Texas-based man touting himself as "the Money Doctor," in an emergency action to halt a sizable Ponzi scheme targeting the retirement funds of elderly investors.
Emotional Manipulation of Aging Investors
To promote his fraudulent scheme, Gallagher made appearances on three Dallas-area radio stations, falsely claiming to be a licensed investment adviser. Gallagher leveraged numerous religious references during his radio appearances to gain a foothold among retired Christian investors, allowing him to raise $19.6 million or more from approximately 60 senior citizens between December 2014 and January 2019.Fraudulent Claims of "Risk-Free" Returns
To further convince potential investors, Gallagher guaranteed risk-free annual returns of 5% to 8% on income-generating investments in five categories. Except for one $75,000 annuity purchase, Gallagher purchased no assets to generate the promised returns, instead using investor funds for unrelated personal and company expenses, and for Ponzi-like payments to investors. Gallagher provided investors phony account statements showing false account balances to perpetuate the scheme. For more information, the full SEC press release can be read here.A Responsibility to Protect Aging investors
The number of schemes targeting vulnerable populations is alarming, with this case representing one more instance in a stream of fraudulent activity against aging investors. As a result, regulatory bodies have required firms to adopt effective policies and procedures to protect senior investors, which is one of the priorities on the Commission's SEC exam priority list for 2019. As a fiduciary, firms must be aware of and properly care for seniors' unique investment needs.Know the Signs of Diminished Capacity
The possibility of a declining capacity to make effective decisions is a serious concern for senior investors, with signs and symptoms that render them increasingly vulnerable, such as:- Difficulties with thinking, memory, and judgement
- Disorientation (such as not knowing the date)
- Difficulty following a conversation
- Difficulty making decisions or performing tasks (such as paying bills)
- Significant mood changes and suspiciousness
- Denial
- Loss of initiative
- Restlessness and wandering
Know How and Where to Report Suspected Elder Abuse
Financial exploitation is one of the saddest and most common forms of elder abuse. As one ages, often times vulnerability increases, as seniors often rely upon family members, care givers and other trusted contacts to tend to the elder's needs. Sadly, it these trusted individuals often are the abusers, so it is important to be aware of the common signs of elder abuse and exploitation. Those warning signs include:- Neglect or other indications of physical or emotional abuse
- Blocked access to belongings or assets
- Previously uninvolved relative, caregiver, or friend interjecting themselves into financial affairs
- Isolation from family and professional advisors
- Unexplained change in professional advisors (such as CPA, attorney, or financial advisor)
- Unexplained asset transfers or withdrawals
