It has been a few months since I’ve seen anything about a senior being talked into using a reverse mortgage to fund risky investments, until I came across a story late last week. The article is about two Florida insurance agents who ran an investment scheme out of their offices that defrauded clients out of more than $700,000.  

Leesa and Belton Heiman had been using financial seminars at local restaurants to attract seniors with hopes of setting up investment meetings back at their office.  The Heiman’s would then say, “I have something that can make you some real good money,” said FDLE special agent Jim Vogt, who specializes in financial crime investigations.  If the seniors would agree to investing with the couple, they would convert many of the clients old investments into annuities, investigators said.

The company, Funding Resource Group, had a total of 11 clients, including the 73 year old Jean Alers. “I felt very comfortable with them, they treated me like family… What they had to offer me is really what I was looking for” said Alers.  According to the article, the Heiman’s convinced her to use a reverse mortgage so she could invest more money with the couple.  Just a short time later, things spiraled out of control and they started moving money around without her permission.

Local investigators found out about what was going on and last week arrested Leesa Heiman on charges of scheme to defraud, violating securities regulations, and money laundering.  Unfortunately, after using all of the reveres mortgage proceeds to fund bogus investments, Alers owes $160,000 on her mortgage for a house worth $140,000.

Included in the Housing and Economic Recovery Act is a provision which should help prevent seniors from being required to purchase any type of financial product with reverse mortgage proceeds, but it’s unclear how exactly it will work.  It’s expected that HUD will publish a notice sometime soon in the Federal Register seeking input on this topic before issuing final guidance, probably in the form of yet another Mortgagee Letter. 

Couples $700,000 Fraud Discovered