Reverse Mortgage Scam

A 96-year-old widow, Violet Evelyn Alberts, was murdered in her Montecito, California home in May 2022 as part of an alleged murder-for-hire plot connected to financial exploitation. Pauline Macareno, identified as the central figure, had manipulated Alberts starting in 2020 through forged documents and fraudulent reverse mortgage schemes to gain control of her valuable property, and was sentenced to six years in prison for fraud; three additional men were arrested on murder and conspiracy charges in connection with the case.

Between June 2022 and June 2023, FinCEN reported over $27 billion in suspicious activity across 155,000 filings related to elder financial exploitation (EFE), with account takeovers being the most common typology and adult children perpetrating nearly 40% of documented cases. Perpetrators primarily used unsophisticated methods like compromised passwords and phishing emails to avoid in-person detection, while financial institutions also reported increases in tech support and romance scams targeting seniors. FinCEN emphasized the critical role of financial institutions in identifying, preventing, and reporting suspected EFE to protect older adults' financial security and well-being.

Mark Steven Diamond, a 67-year-old Chicago businessman, pleaded guilty to wire fraud for orchestrating a reverse mortgage scheme that victimized at least 18 elderly homeowners (potentially 80 total victims). Diamond and co-conspirators deceived homeowners into obtaining reverse mortgage loans by misrepresenting documents as repair authorizations, then fraudulently kept the loan proceeds—approximately $929,000 confirmed and up to $6 million estimated in total losses—while failing to perform promised home repairs. Four co-conspirators, including loan originators and a title agency owner, have also pleaded guilty, with Diamond's sentencing scheduled for September 4, 2024.

Housing scams specifically target seniors through fraudulent rental listings, phantom rentals, fake property management schemes, and reverse mortgage fraud that exploits homeowners over 62 seeking income from home equity. Key protective measures include verifying property listings through reputable websites, physically visiting properties before payment, researching property management company credentials, using traceable payment methods, and seeking independent financial advice before committing to any housing arrangement. Red flags include unusually low rental prices, demands for upfront payment before lease signing, pressure tactics, and reluctance to provide verifiable credentials or detailed agreements.

In 2023, over 101,000 people age 60 and older lost nearly $3.4 billion to financial exploitation, according to the FBI's Elder Fraud Report, with common scams including tech support fraud ($590 million in losses), investment fraud ($4.57 billion, up 38% year-over-year), power of attorney abuse, Medicare/Medicaid fraud, and homeowner scams. AI-driven fraud is making scams increasingly sophisticated, with criminals creating convincing fake audio and video to deceive victims. Protection requires vigilance about warning signs such as unusual account activity and suspicious communications, along with education and open family dialogue about financial security.

Real estate scammers are fraudulently selling properties they do not own, targeting owners with out-of-state addresses and free-and-clear titles. Sasha Henderson of Parker nearly fell victim to such a scam when she and her husband attempted to purchase 10 acres in Elbert County, but the title company detected suspicious emails and contacted the actual owner out of state, preventing the fraudulent sale from closing. Real estate professionals advise that buyers should always obtain title insurance regardless of whether they are paying cash, and should be cautious of remote transactions, as title companies are better equipped to identify fraud than third-party monitoring services.

The New York State Department of Consumer Protection is warning seniors about financial scams ahead of National Senior Citizens Day, noting that older adults lost an estimated $3.4 billion to fraud in 2023. The department recommends vigilance and education to combat common scams targeting seniors, including investment fraud, reverse mortgage scams, and government imposter schemes. Officials advise seniors to verify unexpected requests for personal information or money before responding.

The New York Department of State's Division of Consumer Protection released consumer awareness tips for National Senior Citizens Day warning older adults about reverse mortgage scams, where fraudsters pose as lenders to pressure seniors into signing poorly explained contracts without allowing them to consult trusted advisors or review documentation. Legitimate reverse mortgage professionals encourage clients to seek second opinions and comply with mandatory HUD counseling requirements, whereas scammers discourage outside consultation and rush borrowers into decisions. The advisory recommends seniors research multiple lenders independently and consult resources from the Consumer Financial Protection Bureau before pursuing any reverse mortgage.

The New York Department of State's Division of Consumer Protection released fraud prevention guidance for older adults, noting that financial exploitation is the most prevalent form of elder abuse. According to the FBI's 2023 Internet Crime Report, adults aged 60 and older lost at least $3.4 billion annually to fraud, with investment scams accounting for over $1 billion of those losses—a 38% increase from 2022. The agency advises seniors to recognize red flags in investment and reverse mortgage scams, conduct independent research before committing funds, and avoid unsolicited financial contacts.

New York's Department of Consumer Protection issued guidance for National Senior Citizens Day warning older adults about reverse mortgage scams, advising that fraudsters may impersonate legitimate lenders, pressure clients to sign contracts without full disclosure, and discourage consultation with financial advisers or family members. The bulletin emphasizes that legitimate reverse mortgage professionals encourage borrowers to seek multiple opinions and conduct thorough research, and notes that federal law requires mandatory counseling for FHA-backed mortgages to protect consumers.