Minnesota’s New Elder Abuse Unit Prosecutes Man For Swindling Mother

image When I read stories like Sentence for swindling mom? Go directly to jail, I can understand why state legislators are concerned about people using reverse mortgages to take advantage of seniors.

Larry Bekis took out $100,000 from his mothers home using a reverse mortgage but failed to use the money to pay $49,000 in nursing home bills.  His mother had given her son power of attorney in in 2006 so he could pay her bills and manage her home while she moved into the nursing home.

For the first several months, the woman’s HMO paid the nursing home bills but when Bekis was scheduled to take over that duty in March 2007, the payments stopped.  According to the complaint, when he finally wrote a check in August 2007 for $2,500, it bounced.  On top of those charges, adult protection officials learned that Bekis was receiving his mother’s Social Security and pension checks, totaling about $3,000 per month.

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Bekis pleaded guilty on April 24 to theft by swindle in the first case prosecuted by the Ramsey County attorney’s office’s new elder-abuse unit. On Thursday, Ramsey County District Judge Paulette Flynn sentenced Bekis to a maximum 30 days in jail and to serve up to five years on probation.

My question to everyone is, how can you draft legislation which protects seniors from this happening without harming the reverse mortgage business?

Sentence for swindling mom? Go directly to jail

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  • I think the answer is yes.

    Every year there are several stories of individuals who have been swindled out of their life savings. We could protect those individuals without harming the reverse mortgage industry by allowing them to buy insurance that would protect their life’s savings if someone has been convicted of defrauding or swindling them, allowing them to replace a portion of the money they have lost and ensuring that they still have money to live on in their old age.

    See the article on the topic below:

  • Reva Minkoff

    Your thoughts for a anti-fraud insurance policy are wonderful, but in reality impossible to underwrite on the broad basis we would wish for. I don’t even think a narrow policy for fraud regarding RMs would be possible for a commercial insurance carrier to underwrite. Perhaps a government type of “insurance” for power of attorney situations would be possible. But be aware, that what the government may call insurance is often merely taking from Paul to pay Peter. I would love to hear from someone in the insurance business and lawyers on this point.
    (BTW: Is it really insurance, that is underwritten, when the shortage is “paid” on under value properties in RMs?.)

  • This is theft and a breach of trust, not a reverse mortgage failure or issue. If the cash had come from the sale of stocks, bonds, or other assets, it wouldn’t have prevented this troubled son from stealing from his mother.

    As the story shows, he stole her social security and pension checks in addition to draining her bank account.

    It is reassuring that he was caught, tried, and convicted. Kudos to the Ramsey County (Minnesota) Elderly Abuse Unit!

    Reverse Mortgage originators should be familiar with elder abuse prevention services in their markets. If they have cause to be concerned about abusive situations, they should alert officials.

  • I areee, this is not a reverse mortgage failure or issue. It’s simply one of the vehicles used in a breach of family trust, as well with the social secuity checks. I look forward to the day fingers stop pointing to issues like this as a mortgage industry issue.

  • Who lied on the application that the borrower lived in the property? The son. This is not a reverse mtg problem, this out right fraud by the son… no matter if it was her social security money or her HECM account that he obtained illegally he just found a new vehicle to defraud tax payers and the lender and HIS MOTHER.

  • admin,

    This comment is being written in response to your request for some ideas on how the industry can avoid such situations in the future. It assumes that 1) the information provided by The Critic is correct, 2) the mother was the sole borrower, 3) she had no possibility of returning home, 4) the originator’s shadow never darkened the “front door threshold” of the security for a face-to-face interview that included meeting the borrower before the loan closed, and 5) none of the parties were in collusion. Of course, any one of these points could be wrong.

    I strongly believe a required face-to-face meeting in the home of a borrower would greatly minimize the possibility of RMs, like the Bekis’s RM, ever closing. Some will cry “old school”; however, one of the strongest deterrents against fraud are face-to-face meetings and costly and unpredictable collusion.

    The son appeared to be bothered by what he did. He seemed to have confessed quickly. Moving his mother to her home, providing the appearance of home care, or finding someone to pretend to be his mother — might have “nipped” this RM “in the bud.” Since the son held the power of attorney and this was about the time (April 2007) that HUD dropped the face-to-face interview requirement (assuming this was a HECM), it is very possible no face-to-face interview was held in the home of the borrower with the borrower present at any time during such a meeting.

    I have been involved in discovering, identifying, verifying, and reporting on fraud for different types of businesses including both for profit and not for profit entities in a number of different scenarios. Many internal controls auditors design or test are created either to deter or detect fraud.

    For example, we discovered that a trusted keeper of cash and fungible items held on hand for employee benefits such as movie tickets, theater tickets, theme park tickets, etc. was pilfering. The employee was so afraid of facing me, she confessed simply by the employer merely saying our firm suspected fraud and I would be questioning her about it. These measures work with amateurs but not experienced perpetrators of fraud; however, safeguards that might not catch a pro on her/his own will cause unexpected breakdowns in executing fraud where collusion is a significant component. Nothing is foolproof but in certain situations some safeguards are better than others.

    Despite the claims of some lenders, applications taken over the phone do not provide the safeguards that at least one required face-to-face meeting with an experienced, conscientious originator in the home of the borrower with the actual borrower present does. By promoting such claims, the spokesperson, the lender, and the industry look ridiculously naïve.

    For someone who was apparently very bothered about what he was doing, hiding behind a phone would have been much easier for the Bekis’s son than answering the direct questions of someone sitting in front of him in a situation where the son was also trying to maintain the appearance that the mother lives in the intended security. Fear of balancing too many balls at once can also be an effective deterrent. For an experienced perpetrator of fraud, hiding things in a face-to-face meeting would have been much easier; however, the perpetrator would still have to expend significant effort to pull it off successfully and might have found significant difficulty if collusion was involved..

    The Critic, thank you for the information. The story makes a lot more sense.

  • It’s funny, when I first started in the insurance business, they used to call us field underwriters. We did the taking of the application face to face to ensure that at least the person weighing 300 lbs, huffing and puffing, beet red was not he perfect physical specimen that they thought they were. Of course times have changed, and telephone interviews for even medical questions are usual on some cases. Insurance companies get a second bite, however, and then it it sometimes becomes “claims underwriting”. Unfortunately, from the viewpoint of an outsider, this case does not seem kosher. if there was a legitimate, loan officer and careful back office checking, plus some kind of counseling, with all signing off, then this guy is one swift dude. In any event, doesn’t this fall under federal law if this was a HECM? I bet it was not.

  • I said BET, only because I am an optimist and figured the safeguards on the HECM would have caught this in the early stages (pre-disbursement). I still wonder, if there were fraud, was it a federal crime?

  • If someone is determined to do wrong they will find away. The reverse mortgage was just another vehicle for this son to steal from his mother.
    A lot of “professionals” were seen by the mother along the way and no one seemed to see elder abuse or since a son with no character.
    I would not think this needs a new law – there are plenty on the books about elder abuse and stealing. It appears that 30 days will not change this sorry son.

  • I am only guessing that it was NOT a HECM, based on the appearance that the son is no Bernie Madoff (by far) and in a similar vein knowing that many not to swift people were talked into those subprime mortgages by unscrupulous brokers.
    I hope this is a fairly isolated case and without more facts we may never know. Still, I would hope that the local law people checked for any possible collusion or undue influence.
    I agree that the RM is not the main piece of the puzzle and this guy probably would have sold any functioning parts of her body, pre death, if he didn’t wangle the RM.

  • Critic

    These very complicated questions will probably take forever to be answered, but they should be interesting.

    Meantime, I hope poor Erika is not representative of too many counselors out there. (See the RM Exam forum for the 4th.)

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