As Financial Elder Abuse Goes, This Story Could be a Movie

Cloverdale, CAA remarkable financial elder abuse case in California has ended with a settlement before the case had the chance to go to trial, with no admission of wrongdoing on the parts of the various defendants in the case. Defendants in the financial abuse case all said that it would have been too expensive to take the case to trial, and all allegedly lacked the resources to do so. Regardless of the true facts in the case, it appears as if financial elder abuse law won the day—even if the facts and allegations remain somewhat confusing.

But honestly, this one could be a movie.

The case centers around a 98-year-old Cloverdale woman and her mentally disabled daughter, both of whom lived alone in a fine home located in a tony district of California. The woman's sole heir, a doorman who worked at a high-end hotel in Seattle, allegedly wasn't around much, if at all. Thus, the two women were embraced by a kindly couple that lived next door. Michael McManus is a retired Sonoma County sheriff's deputy, who lived adjacent to the two women with his wife, Charlotte. They served as caretakers to Jeannette China and her daughter Mona, aged 67.

Predeceased by Jeannette, Mona died in a nursing home in 2003 and Daniel Shafer came to California to begin sorting out the women's financial affairs. He was amazed at what he found.

The kindly neighbors, it appeared, now held title to the Cloverdale Boulevard property next-door, valued at $1.1 million. It is alleged they also took a mortgage against the property in order to acquire funds to make improvements on their own home and take vacations. That mortgage depleted the equity in the home by $150,000.

Shafer also found that the two women were directed to a collection of financial advisors, who succeeded in depleting the elderly women's financial resources by moving their cash into expensive annuities carrying attractive commissions and fees for the sales agents, together with deep penalties for early liquidation. Shafer, through his lawsuit, claimed that the liquidation of the life savings to purchase annuity policies was inappropriate and unnecessary.

The case never went to trial. In the settlement that was reached, the deed to the China's former home was turned over to Shafer—a $1.1 million value. Additionally, $1 million in cash was returned to the estate by the various financial advisers who participated in the issuance of annuity policies to the two women.

The $150,000 mortgage on the China's property, which was subsequently taken out and spent by the next-door neighbors, was forgiven as part of the settlement.

The defendants denied any wrongdoing, and depositions collected from a couple of dozen neighbors who live on Cloverdale Boulevard all vouched for the McManus family even though, according to their attorney, "there were things that at first blush didn't look right."

Shafer had been fighting for 5 years to get the China's property, and money back, and appeared to be in it for the long haul. The defendants settled solely due to the costs associated with continuing defense of the lawsuit, but admitted no wrongdoing.

There is little doubt that the McManus' next door did a great deal for Jeannette and Mona over the course of many years—decades, in fact. It was alleged as Shafer's lawsuit went forward that Shafer was rarely present in the women's lives, and there was apparently no other family available. Thus, the couple next door served as ongoing caretakers to the women.

It is not known if the two women decided to turn over their property to their kindly neighbors as payment for years of help, or if the neighboring property owners coerced, and persuaded the elderly women to sign over the deed. It is also not known if putting the women in the hands of financial advisors in an effort to eke out a better return for their life savings than what might have been otherwise available from low-interest (and safe) savings accounts, was done out of kindness or opportunism. The case never went to trial, thus there is no resolution of the facts beyond the settlement that was agreed upon based on litigation costs, and not wrongdoing.

However, both scenarios could be true. In the absence of family, it is possible that the Chinas may have offered their home out of appreciation for years of daily care on the part of their kindly neighbors. Whether or not it was appropriate to accept such a gift, given the presence of a living heir, is subject to some question. The McManus' ultimately must have decided that the gift was prudent and earned.

However, the opposite may have also been true. Elder financial abuse is a growing problem, and it is a known fact that as people age, they are more easily confused and subject to become preyed upon by unscrupulous opportunists. Jeannette was 98, and her daughter was mentally challenged. They lived alone. If anyone afforded a likely target for elder financial abuse, it was the two China women. They fit the profile. And their neighbors could just have easily preyed upon their neighbors with kindly acts of care taking as bait, as they might have unwisely accepted the gift of a home in exchange for years of help.

Without wrongdoing admitted or proven, we will never know. Even amidst the collecting dust of a settlement, both sides are adamant in their innocence. Thus, it is left to the individual to interpret the facts in whichever way he may choose.

Either way, it's a sad tale—and the kind of story that is happening with increasing frequency. In spite of the current economic crisis, baby boomers are beginning to retire with much more wealth than their own parents. Meanwhile, their kids are getting bashed by dwindling investments and expensive lifestyles, carried into crisis by the misguided belief that real estate would always rise and the bull market would be forever snorting. Saddled with frightening mortgages and staring down the barrel of bankruptcy, all eyes are now on Granny and her comparative wealth.

Little wonder, then that financial elder abuse is on the upswing. The combination of unparalleled financial crisis in one camp, and the hoarding of cash by older, physically and often mentally frail seniors in the other, is financial abuse waiting to happen. Financial elder abuse law, and the legal professionals who practice it, can help prevent the kind of sad story outlined above.