How to Avoid or Defend Against Accusations of Fraud by a Fiduciary

Have you been accused of misusing a client’s money? 

The Consumer Financial Protection Bureau (CFPB) reports that approximately 7% of elder financial exploitation (EFE) cases involve a fiduciary such as a lawyer, trustee, or financial professional who manage older adults’ financial accounts. In 2020, senior citizens lost about $6.3 billion in financial abuse cases referred to state and federal authorities. The cost is presumed to grow while people ages 65 and over are expected to double by 2060. The issue of elder financial exploitation is a real and growing issue.  

However, how does an attorney, trustee, or financial planner defend themself against accusations of elder financial exploitation? 

First, the vast majority of legal and financial professionals do not take money from their clients, and they work very hard for their client’s best interests. They are also an important line of defense against elder financial exploitation.

The Bank Secrecy Act commits financial institutions to report suspicious activity reports (SAR) with the Treasury Department’s Financial Crimes Enforcement Network when they identify suspicious activity in a customer’s account. The Consumer Financial Protection Bureau also requires institutions to report suspicious activity to local, state, or federal law enforcement authorities. Moreover, the Financial Industry Regulatory Authority (FINRA), a Congress authorized industry group, has regulations that detect elder financial exploitation. By way of example, FINRA rules oblige member institutions to identify a “trusted contact” for individuals opening new accounts. This helps the financial institutions spot if an account holder has cognitive skills or if suspicious activity is on the account. The financial institution will have “permission to contact the trusted contact.” 

How to Avoid Accusations of Fraud by a Fiduciary

The following are a few tips to help defend against future accusations of Fraud by a Fiduciary:

  1. Be proactive in explaining changes in your client’s accounts.
  2. Explain, in writing, all changes in your client’s accounts.
  3. Require your client to retain a third party audit the “books” or retain outside auditors. 
  4. Notify “approved” family members of changes and updates.
  5. Keep in touch with all service providers.
  6. Ensure fees and billing processes are clear and part of your client services agreement. 

How to Defend Against Accusations of Fraud by a Fiduciary

The best approach to defend against accusations and charges of Fraud by a Fiduciary is to speak to an experienced Professional License Defense Attorney as soon as possible. The investigative process is swift. That is why it is important that you understand the legal process, you have an advocate protect you from making damaging statements, and your attorney ensures that your legal rights are protected. 

If Your License is Denied or Challenged, You Need Help

A challenge to a professional license or the denial of a license is a stressful event. Those who face such scenarios need to take them seriously and should reach out to Sanger Law today at (785) 979-4353 to discuss your case.