One in five Americans over age 65 has suffered financial abuse, according to the 2010 Investor Trust Elder Fraud Survey. A study from MetLife Mature Market Institute estimates that financial abuse drains $2.9 billion annually from seniors' pockets. Both numbers could well be higher, since financial abuse is frequently unreported.
Family conflict and shifting alliances - and of course, money - provide fertile soil for financial abuse. Even when abuse occurs, it can be difficult to identify: The National Center for Biotechnology Information states that "It is difficult, even for experienced professionals, to distinguish an unwise but legitimate financial transaction from an exploitative transaction resulting from undue influence, duress, fraud, or a lack of informed consent."
All these factors came together in a perfect storm for Sumner Redstone, the frail, 93-year-old media mogul and billionaire. As I reported last May, Mr. Redstone at that time ordered two longtime companions, Manuela Herzer and Sydney Holland, out of his Beverly Hills mansion where they had been living. It was reported that prior to his evicting them, he had come to depend on them and trust them, and believed them when they said his family hated him. Redstone also removed Herzer as his health care proxy and took her out of his will. Herzer sued, alleging that Redstone was not competent to make that decision. But after viewing Sumner's videotaped deposition, a Los Angeles judge dismissed the suit, finding that Redstone, though frail, was mentally competent.
More recently, Redstone filed a suit in Los Angeles Superior Court against Herzer and Holland, claiming that while living with him they abused him, charging thousands of dollars to his charge cards and having bags of cash, bundled in stacks of $100 bills, delivered to them daily at his mansion - all to the tune of $150 million, which he now seeks to recover. According to the suit, they "manipulated and emotionally abused Redstone to get what they wanted - jewelry, designer clothing, real estate in Beverly Hills, New York, and Paris, and money, lots of it." Redstone claims he had to borrow money from the private company that holds his voting shares of CBS and Viacom to cover the tax debt on the "gifts."
Determining whether these transactions were legitimate or exploitative is at the crux of the latest lawsuit. Did Redstone knowingly allow Herzer and Holland to spend his money and use his charge cards? Or was there fraud, duress, undue influence, lack of informed consent? Herzer's and Holland's lawyers claim that Redstone knew full well what was happening and chose not to stop it. "Mr. Redstone had many checks and balances between attorneys, doctors, and accounting staff," states Herzer's attorney, Ronald Richards. "All of the gifts Mr. Redstone made to my client and to Sydney Holland were made with his full knowledge and blessing." And Holland has noted that "Doctors have testified twice in recent months that Sumner Redstone was of sound mind and, most recently, that he was mentally competent... This is directly contradicted by the claims in this lawsuit that state that Mr. Redstone's physical and mental state were so impaired that he could be easily manipulated."
Certainly one has to feel sympathy for Redstone's emotional plight. But, abuse or no, he remains an extraordinarily wealthy man. Most people who are similarly abused tend to suffer far greater losses, relative to their resources. All of us need to be vigilant to protect ourselves, and our aging loved ones, from this kind of exploitation. For more on preventing financial elder abuse, click here.