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The letters and e-mails from
Leibowitz had reached the end of her rope. Divorced, nearly penniless, and coping with ailments that included an earlier bout with breast cancer, Leibowitz depended on stipends from her mother.
But that lifeline began to fray after her mother turned to Welch for tax advice.
Welch quickly persuaded Leibowitz’s mother, Rose Kogen, then 91 and in a
Rather than send money, Welch more than once urged Leibowitz to get a job.
“My various medical conditions warrant that I get extensive blood work at least every three months,” Leibowitz beseeched Welch. “I now owe the doctor approximately
There was a reason Leibowitz was having trouble gaining access to her mother’s money. But it would take years of costly litigation before she learned why.
Like millions of elderly Americans, Kogen had fallen prey to financial fraud.
Within months, Welch, who in addition to dispensing tax and financial advice had been involved in at least two troubled building projects in
He poured nearly
He paid himself
By the time Welch, who lives in a leafy, prosperous subdivision
“The record demonstrates unremitting self-dealing by
For a short time, Leibowitz and her brother,
But the siblings’ hopes were soon dashed. After years of effort and tens of thousands of dollars in legal fees, they are still trying to get their money back. A law firm hired to collect on Herron’s judgment concluded last year that Welch’s assets didn’t come close to matching the assertions of Leibowitz, her brother, and others.
In effect, it said, get in line.
Stealing from the elderly is the perfect crime.
Thefts typically take place in the shadows. Millions of elderly people, national and regional studies suggest, are defrauded by lawyers and other trusted advisers or close relatives, who can argue plausibly that they are acting on the victims’ behalf.
People older than 50 possess vast wealth, 70 percent of the net worth of individuals in
Where better to recoup money lost in the financial crisis of 2008 and 2009 than in bank and brokerage accounts of seniors who have accumulated assets over a lifetime?
“Desperate times result in desperate measures,” said
Alarmed at the prevalence of investment fraud against older Americans, securities regulators in
But nabbing perpetrators can be exceedingly difficult.
Police and prosecutors say the swindlers avoid prosecution because their victims often don’t have the mental capacity or emotional strength to protect themselves.
Among the frail elderly, victims typically are isolated. Many are involved in family disputes or alienated from children who might otherwise step in. Sorting through who did what to whom is time-consuming and laborious. Moreover, because perpetrators often are relatives, elderly victims can be reluctant to report the crime.
Financial advisers and lawyers are often the culprit because they are in a position of trust and have access to bank and brokerage accounts. But more often than not, Jaskowiak said, a relative is the one making off with the money.
“It is what I call the early-inheritance case,” he said, “where the children want the assets in advance — the son or daughter will come in and suck up all the assets. The problem is the elderly person may need those assets to pay for a wheelchair or medication, but in a number of cases the son or daughter refuses to give the money back.”
The most ambitious study of financial exploitation of the elderly was completed in 2008 by researchers at the
Similar findings emerged in a 2010
Nationally, the Acierno study would translate into more than two million older Americans who have suffered some form of financial mistreatment or exploitation in the preceding year at the hands of relatives — more than 97,000 in
Alone and unstable
At 91, two years before she died, Rose Kogen fit the classic profile of an elderly victim of financial fraud.
She was alone, confined to a nursing home in
Tension over money had coursed through the family for years. Both children said their parents had clashed over money.
When pushed to write a will, Kogen resisted.
She occasionally threatened to leave her assets to the
Kogen said her children’s only concern was self-interest. “They turned on me. All they want is my money,” she told
Kogen’s son said his mother for years had shown paranoid tendencies, which intensified toward the end of her life. Her behavior became erratic, even bizarre, he said.
In spring 1998, she disappeared from her home in
Kogen said she had decided to move in with Michele because they got along and Michele could best care for her.
But this arrangement soon unraveled.
Kogen injured a shoulder in a fall, underwent surgery, and was admitted to the
There Kogen met Welch. The lawyer, who declined to be interviewed for this article and did not respond to written questions, testified in a lawsuit the family brought against him that a nursing-home director had contacted him to assist Kogen with financial planning.
Approached by a reporter in his office
Within a few months, according to court records, Welch had persuaded Kogen to give him power of attorney. By early 1999, he had placed her assets in an irrevocable trust, naming himself as trustee.
The trust meant that Kogen’s money could not be taxed, but it also placed those assets beyond the reach of anyone except Welch.
Welch had an impressive resume, seemed trustworthy, and conveyed competence. He was a 1969
His mother “was in and out of psychotic states,” he said. “She was paranoid her whole life, but at that point she was really losing it. [Welch] said, ‘I convinced your mother . . . to put everything in a trust.’ No one else could convince her to do that, so I appreciated that. I liked him for the first couple of years. I said very directly, ‘I am sure you feel you deserve money out of this, and if you don’t get too greedy, I won’t say anything.’ “
What the Kogen children didn’t know was that some of Welch’s customers and business partners had alleged they had been defrauded. Moreover, city and state authorities filed liens against him to recover unpaid taxes.
Some of his former business partners are still trying to collect.
Karpus alleged, in
In a similar scenario, Welch was sued by a
When Welch failed to pay them, the couple learned the property had been transferred to another aggrieved lender, according to court papers. An arbitrator, finding that Welch had committed fraud and breached fiduciary duties, awarded the Witkowskis
“Welch apparently manipulated many different corporations and investors he courted to obtain and manipulate funds,” said a panel of the
As with his real estate dealings, problems soon emerged after Welch took over managing Rose Kogen’s affairs.
The checks Welch promised Leibowitz often arrived late or bounced.
For a time, Leibowitz said, she had to move into a 24-hour self-storage unit she rented after she sold her house outside
Just as troubling, some of the checks Welch did send were not drawn on Rose Kogen’s trust account but on the corporate account of the
The Kogen children worried Welch was using their mother’s money to underwrite his business activities.
“I said, ‘You are making contributions?’ ” Kogen said. ” ‘Don’t you want to preserve capital in the trust?’ “
When Herron, the
Not only had Welch paid himself
The company, which markets a device for nervous-system monitoring, had been hemorrhaging money during the years Welch invested Rose Kogen’s money in it,
Between 1999 and 2001, Welch funneled
The debentures, essentially loans that were to pay 6 percent interest, gave the Kogen trust the option of converting the loans into stock, which Welch exercised for a portion of the investment.
The advantages to Ansar — and Welch — were huge. By converting some of the loans into an ownership interest, Ansar no longer had to pay interest, nor principal. The stocks had no discernible worth, Herron said.
Under investigation by state bar authorities, Welch gave up his law license in 2008, admitting he had used the Kogen money for his benefit and had engaged in misconduct and violated conflict-of-interest rules.
Meantime, a new court-appointed overseer for the trust, 1N
“Hi, Allie,” High’s e-mail began breezily. “My apologies for the delayed response. I did speak with [the law firm hired to recover assets], and their response was that they’re not sure there’s much more that can be done. It seems that [Welch] has many other judgments against him, and no one has been able to get anything from him because he has no assets. I will inform you if anything changes.”
Where to Turn for Help
Dozens of social service and law enforcement agencies in the region focus on financial crimes or exploitation involving the elderly.
Here are other agencies or institutions that assist exploited or abused seniors:
Center City focuses on providing seniors with legal representation on issues such as housing and concerns about financial exploitation and fraudulent business practices; 1-877-727-7529
For more contact information, go to www.philly.com/elder
Contact staff writer
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