Published on ACFE.com
By Brett Darken, April 13TH, 2022
In nearly every state, guardians are considered fiduciaries. As such, they have a duty to act in their clients’ best financial interests. Sadly, that’s not always the case.
Anti-fraud professionals know that fraudsters often target victims when they’re most vulnerable. When people are processing strong emotions — like dealing with the mental or physical decline of a family member — it’s easy to ignore red flags that something’s amiss. During these times courts may appoint a guardian with the idea that an impartial third-party is better equipped to handle the financial responsibilities involved with taking care of an incapacitated individual. Unfortunately, in some cases, this can open the door for fraudsters to commit fiduciary fraud.
Guardianship can be ordered by a judge when they determine that a person is unable care for their own affairs. The judge orders an independent guardian, or conservator, to oversee and look out for the well-being of the person who can’t care for themselves. Guardianships frequently involve the elderly, or adults who have some form of dementia or mental incapacitation, but as demonstrated in the recent Brittany Spears case that garnered worldwide media attention, a ruling for guardianship can be made for people of any age.
It’s a bleak truth that the issue of a handful of unscrupulous individuals committing fiduciary fraud against those they are supposed to protect will likely remain an ongoing problem. However, the more attention anti-fraud professionals can bring to this issue, the more likely it is that systems can be put in place to shield victims and their families from fraud. While new oversight tools work their way through the halls of government, ACFE members can help in these cases by clarifying the duties of a fiduciary and the “standards of care” that should be upheld.
Brett Darken, Researcher and trustee for those who have been targeted by financial predators
