TRAVERSE CITY — As a judge gave a 5-month jail sentence to the conservator who stole more than $10,000 from his bank accounts, George Pappas pointed the finger at his bank.
Within a month of her court-appointment to take over Pappas’ finances, his conservator went on a shopping spree, withdrawing thousands and spending freely at stores like Victoria’s Secret.
To his surprise, his bank never raised flags about the expenditures, even as a quarter of his life savings evaporated at out-of-town ATMs and lingerie stores.
“I blame the credit union for sleeping while she was doing this,” said Pappas, who had a shared account with his conservator at 4Front Credit Union.
On Sept. 26, Michigan enacted new protections for vulnerable adults, mandating that banks step in to spot and report financial crimes that target seniors like Pappas. In theory, the act adds another key oversight as the Michigan Elder Abuse Task Force seeks to reduce instances of elder abuse statewide.
Before last week, financial institutions weren’t required to communicate fraud with Adult Protective Services, the main government artery through which most communication regarding suspected abuse of the elderly occurs. Nor were banks mandated to report to local police departments or local prosecutors.
The act also will give legal cover to banks to freeze accounts on which suspicious activity has been detected, rather than hesitate to do so. Kathryn Barron, an attorney with the Michigan Attorney General’s office who leads the Elder Abuse Task Force, said the legislation will bring banks off the sidelines as elder abuse occurs within their institutions.
“It has the potential to be a real game-changer,” Barron said. “It brings more people and more tools into the fight against elder abuse.”
Barron also hopes passage of the act will help bring more cases of elder financial abuse to light. On average, about 1,200 instances are reported each year, according to APS, which tracks abuse perpetrated by children, spouses, and caregivers. In 2019, the last year where data was unaffected by COVID-19, Grand Traverse County recorded 21 instances of elder financial exploitation.
The AG’s office suggests that APS’ numbers are a massive undercount. In part, that’s because vulnerable adults rarely self-report when they’ve been exploited financially, Barron said. Sometimes that’s because seniors are embarrassed to admit they got duped. At others, it’s because they had no idea.
That wasn’t the case for George Pappas, who found out about the fraud when he went to pay his utility bills. When his check bounced, a clerk from the Harbor Springs billing department referred his case to local law enforcement.
In a police report, Harbor Springs Police Chief Kyle Knight detailed meeting with a risk management specialist from 4Front Credit Union, who advised that “there were several charges on the account that he didn’t feel Pappas would have made.” These included scores of transactions made by his conservator, Elise Page.
Pappas’ bank records show that between Nov. 10 and Dec. 10, Page spent money at Victoria’s Secret, Tractor Supply, GT Vapor, Joann Fabrics, and Kohl’s. She also made a number of sizable withdrawals directly from ATMs.
Pappas’ account, which had more than $63,000 when Page was appointed his conservator, dipped below $50,000 within a month of her receiving a shared debit card.
Representatives from 4Front Credit Union did not respond to multiple requests for comment about how the credit union monitors the accounts of vulnerable adults. During the investigation, however, Pappas said he was told that his credit union periodically checks in on accounts “roughly once a year.”
“It’s a very lax situation,” Pappas said. “I’m surprised at 4Front Credit Union. 35 checks to odd places, how they didn’t peek in and see what was going on.”
It’s not yet clear how much the new protections would have shielded Pappas’ savings. Smaller financial institutions often rely on employee-client interactions in order to suss out elder exploitation, such as when seniors are duped online to wire money to fraudsters posing as their grandchildren.
Other automated software wouldn’t necessarily detect expenses that are out of character for the senior – those are triggered to detect based on location, said Scott Stenstrom, regional marketing manager at Fifth Third Bank.
Stenstrom’s bank wasn’t in any way involved with Pappas’ case, but like all banks, it does regularly handle accounts overseen by conservators.
“There’s nothing really in terms of guardrails that would flag problematic transactions,” Stenstrom said. “Most software does catch some irregular stuff, but dollar amounts don’t necessarily trigger it.”
Stenstrom said banks have long trusted conservators, who have actually helped prevent fraud in some cases by serving as a checkpoint for spending.
That’s no longer the case.
“It used to be that you trusted the conservators. In most cases, they’re good people,” Stenstrom said. “But all too often, you can’t trust everything somebody else says.”
In discussing Pappas’ case, Stenstrom said that it would have been harder for Pappas’ credit union to catch the transactions, which occurred in the same state and weren’t conducted by way of any face-to-face interaction with 4Front employees. It’s even more difficult to catch in the case of older adults, who aren’t often using mobile apps to monitor the ups and downs in their accounts.
And Stenstrom said Fifth Third has been conducting elder abuse prevention training since long before the enactment of the Financial Exploitation Prevention Act this past weekend.
“We do have that responsibility. We’re taking care of their money. For this gentleman, it’s all he has in the world,” Stenstrom said. “You got to take the time and take it seriously.”