Defrauding of elderly getting worse in Hawaii

Hilo resident Milnor Lum is 88 years old, articulate and has a sharp mind. But during a one-week span in late March, Lum said he felt like he was "losing my marbles" when he fell victim to a Jamaican sweepstakes scam that cost him $1,050 after receiving a phone call telling him he had won $3.5 million and a 2015 Mercedes-Benz.

After mailing a $50 personal check and then a $1,000 cashier’s check, he finally realized he had been duped when he waited all day at his farm residence on Hawaiian Home Lands for a Mercedes-Benz that never was delivered "due to car problems." He then was asked to send an additional $3,000 to pay storage fees for the luxury vehicle. Lum’s demand to get his money back fell upon deaf ears.

"I should have known better because all my life I’ve known about these scams and when someone asks you for money, don’t send it to them," Lum said. "At 88 years old, I guess I’m losing part of my mind, losing my marbles. To top it off, recently someone called me and said I had won $950,000 and the same tactics were used. I told them I’ve already been scammed and don’t need to be scammed anymore and hung up."

Financial scams are widespread in Hawaii, according to a new survey of adults 18 and over by AARP Hawaii. More than 4 in 10 people, or 43 percent, say they or someone they know has received a phone call or email that says they won a lottery worth millions of dollars, but to claim the winnings a processing fee must be paid, the survey found.

Oftentimes it is the elderly who are victimized because seniors are thought to have a significant amount of money sitting in their accounts, according to the National Council on Aging.

A 2012 survey by the nonprofit Investor Protection Trust showed that 84 percent of experts specializing in investment fraud and financial exploitation of American senior citizens agree that the problem of fraud targeting the elderly is getting worse. The IPT said it has been estimated that about 1 in 5 Americans aged 65 or older — about 7.3 million senior citizens — already have been victimized by financial fraud.

And as prevalent as scams can be, the number of elderly victimized likely is a lot higher than reported.

"The hardest thing about collecting data is that this is a hugely underreported crime," said Senior Deputy Prosecuting Attorney Scott Spallina, who heads up Oahu’s Elder Abuse Justice Unit. "I liken it to what domestic violence was 30 years ago. Not too many people talk about it because it’s very embarrassing to the victim, because they’re duped out of so much money. If they do reveal to their adult children that they were swindled, they are afraid they will lose their independence because they might say, ‘Dad, you can’t manage your money.’"

Another aspect of financial crimes is that often it is children preying on their parents, said Spallina, whose unit defines elderly as those 60 and over.

"Adult children have literally stolen the homes from their parents by duping them to sign over quick-claim deeds or other types of paper and these same parents will not want to turn their children in to the police because they’re embarrassed or they don’t want to get their children arrested."

Since Spallina formed the state’s elder abuse unit in 2008, he said there has been an increase of more than 300 percent in elderly abuse cases, which includes financial, sexual and physical abuse.

"Anecdotally, most of the cases we get calls on are financial cases," Spallina said. "When I started the unit, I was getting a call once every third or fourth week and now I get multiple calls a day."

In Lum’s case, his scam began when he received a call on March 26 from a person calling himself Joe Johnson, who said he was in Hilo and claimed to be a representative of Financial Freedom. Lum was told that he had won $3.5 million and a 2015 Mercedes-Benz in a sweepstakes and that to claim his prize, he needed to send $50 for processing to a person by the name of Angel Pagan in Old Forge City, Pa. Lum was told to mail a cashier’s check but mistakenly sent a personal check.

The following day, Johnson called Lum again and said Lum needed to send $1,000 to Pagan to cover taxes for the Internal Revenue Service.

"Like a fool, I did it again as instructed," Lum said.

On March 28, Johnson called Lum three times to make arrangements to deliver Lum’s winnings, including the car, to his farm residence. Johnson said he was staying in a Hilo hotel.

"However, he never showed up and I waited all day," Lum said. "I called back and asked what happened and he said he had to cancel due to car trouble."

Then on March 30, Johnson called again asking Lum for $3,000 for car storage of the Mercedes-Benz before the vehicle could be delivered.

"I thought that was an odd storage fee for a few days and I asked to meet him to discuss the matter and he declined and gave me all kinds of excuses," Lum said. "Then I realized this has got to be a scam. I told him not to call me anymore and asked him to give me back my $1,050."

On March 31, Johnson called Lum again still wanting the $3,000.

"I told him to take a hike and hung up," Lum said. "I reported it to the Hilo police department but they said they couldn’t help me because it was out of their jurisdiction. Then I went to my bank to see if they could help me and they said no because sending a cashier’s check was like sending someone cash. I called the state business consumer affairs office and they gave me the number of the police department in Old Forge City, Pa., and they said they couldn’t help me because it was out of their jurisdiction.

"I then wrote to the police department in Old Forge City alerting them they may have one of their citizens involved in a scam. And I wrote a letter to Angel Pagan demanding my money back. Even though I haven’t received anything, I investigated further and found that the area code in Joe Johnson’s phone number is from Jamaica. And stupid me, I should have done this first before everything else happened. So those callbacks, which I didn’t know at the time were to a number in Jamaica, cost me $129 for long distance that I just paid to my phone company. Joe Johnson had said he was in a hotel in Hilo and that was his cellphone."

Although Lum had not entered any type of sweepstakes for more than five years, he said he used to enter Publishers Clearing House sweepstakes regularly even though he had never won anything. And when he received the phone call informing him he had won a sweepstakes, Lum said he starting thinking about all the people he could help with his winnings.

"I’m always in that mode to help people," said Lum, who used to work for the Department of Parks and Recreation on Oahu, a boys’ home in Waimanalo and as a coach for various sports.

He also has a passion for farming and growing plants.

"I teach people how to be in the plant business and how to do things so they can be independent and reliant," Lum said. "I give donations to people who are hungry and help other people and thought if I won $3.5 million, look at all the people who I could help. I was thinking along those lines and should have known better."

Lum requested that his photo not be published because it was embarrassing enough just to tell his story. But despite being out more than $1,000, he said there remains some good that can come out of this experience.

"I’m reluctant to do this story, but if it helps other people, that’s great because all my life I’ve tried to help other people, not just myself," he said. "Teaching people is what I do because I’ve been successful in my business life as well as my personal life."

WATCHING OUT FOR FRAUD
Ten ways Hawaii residents leave themselves vulnerable to fraud and ID theft:

1. Using nonlocking mailboxes. Fifty-five percent of Hawaii residents don’t use a locking mailbox.

2. Not setting up online account access. Thirty-four percent of residents haven’t set up online access to their bank or credit accounts.

3. Leaving wallets, computers or purses in the car. Twenty percent of residents do.

4. Not shredding documents. Twenty percent of Hawaii residents never shred documents with personal information.

5. Not setting passwords on electronic devices. Eleven percent of residents use the same passwords with their online accounts and 20 percent of smartphone owners don’t have a passcode on their smartphones.

6. Not closing inactive credit card accounts. Inactive accounts are less likely to be monitored regularly.

7. Carrying Social Security card in wallet. Leave your Social Security in a safe place.

8. Not regularly monitoring accounts online for suspicious activity. Seventy-four percent of residents do not check their free credit report annually.

9. Not checking or reviewing credit file with the three reporting credit agencies (Equifax, Experian and TransUnion). Only 8 percent of Hawaii residents check their credit regularly with one of the credit bureaus. 

10. Not putting fraud alerts or credit freezes on accounts or credit reports. Seventy-three percent of residents do not have a security freeze on their credit files.

Source: AARP Hawaii 

TOP 10 HAWAII SCAMS IN 2014
As determined by the Hawaii Partnership Against Fraud coalition:

1. Sweepstakes and lotteries. You’re told that you’ve won a sweepstakes or lottery. You’re told you have to pay fees and taxes first to get the prize money. No one receives a penny except for the fraudsters.

2. Caretaker crimes. Be alert for caregivers who try to isolate you from your friends and family; ask you about your will, investments and personal valuables; ask to be given power of attorney; or try to dominate or influence you.

3. Forced cash withdrawals: Bank tellers witness a senior withdraw a large amount of cash while they are in the company of another person. Tip: Do not hesitate to tell the teller if someone is forcing you to withdraw your money.

4. Card fraud. A majority of unauthorized ATM transactions affecting seniors are committed by someone they know. Tip: Memorize your PIN and do not write it down. Store your credit card and ATM cards in a secure location. Shield the ATM keypad when entering your pin.

5. Work at home. Perpetrators will often advertise employment want ads, seeking collector or payment processor positions. After showing interest in the position, you are told that all you need to do is utilize your bank account to process checks collected by another party in the company. You are instructed to wire transfer 90 percent to 95 percent of the funds to their accounting department and will be allowed to keep a percentage for your assistance. You are told that as the company is an international company located abroad, they require the employment of such processors to facilitate the banking transactions in foreign countries like the U.S. Of course, the checks end up being fraudulent and you have lost the funds you just wire transferred out of the country. The secret shopper scam is similar. After responding to the ad, fraudsters send you a check and an assignment to shop at a specific store. You are given a form to rate the store’s customer services, cleanliness and your overall shopping experience. They also will have you rate a money service business such as Western Union. You are asked to wire transfer the majority of the funds from the check and write an evaluation of the overall customer service. Only after you send the funds abroad do you figure out the check you received was a counterfeit.

6. Contractor fraud. Traveling contractors are rarely licensed or insured and often request a large cash payment upfront. They may begin the job, but create an excuse to ask for more money. Tip: Consider using only licensed and reputable companies.

7. Fraudulent loans. Door-to-door or telephone sales people offering “easy financing” for mortgage refinancing or home improvements that may not be needed at all. These fraudsters often work with bogus lenders. The bogus loans have inflated fees and carry high interest rates and/or are designed to eventually steal your home.

8. Investment fraud. Fraudsters convince victims to buy phony investments with promises of unusually high returns. A pyramid scheme works by the fraudster recruiting investors. The fraudster will also provide the initial set of investors with a high return in a short period of time. They then use the initial investors to recruit additional investors. Eventually the fraudsters run off with everything. 

9. Phishing schemes. A term used for emails that claim to be from your bank or a reputable business or government agency. Criminals ask for credit or debit card or account information. The information is used to perpetrate fraud using your identity.

10. Charitable solicitations. Fraudsters use nonexistent or fictitious charities to solicit victims for money that they think is being donated to a worthy cause. They also often use sound-alike names. Tip: Before you donate, check to see if the charity is legitimate by calling the Attorney General’s Tax & Charities Division at 586-1480.

Sources: Hawaii Bankers Association, Better Business Bureau Hawaii, Honolulu Police Department, Hawaii Department of Commerce and Consumer Affairs, Department of the Prosecuting Attorney for City & County of Honolulu.

GETTING RIPPED OFF
The top fraud complaint categories reported by Hawaii consumers in 2014:

Percentages are based on the total number of Consumer Sentinel Network fraud and other complaints from Hawaii consumers (5,957).

Source: Consumer Sentinel Network/Federal Trade Commission