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Gone Without a Trace

See Senior Financial Abuse

Gone Without a Trace

Many times the family, usually the adult children of a senior, believe that the senior has a certain net worth. For purposes this article we’ll assume the senior is the parent. However, this could also apply to other relationships; close friends, etc. This belief comes from discussions with the parent over time, life style, asset owned and so on. But one day it is discovered a substantial amount of is missing. Or more realistically, it is never discovered that any funds are missing and everyone is happy with the deceptive reality of what they believe is true.

Let’s use a real-world example. Your mother reveals to the adult children the amount of money that she has shortly after the father’s passing away. She has never been particularly savvy with finances and was somewhat surprised by the amount of the estate. The money is in a few bank accounts, CDs and investment accounts. Let’s use $1 million dollars as the estate value in this example.

Here's just one, very simple, scenario that may occur:

She recognizes that she cannot manage this on her own and places one of the adult children (“favorite child”) on the bank and investment signature cards. Since there are several accounts and none the of the family has actually seen the accounts or the dollar amounts, the “favorite child” immedicately closes one of the accounts by transferring the balance of about $100,000 money to their own account. As mom gets older and care issue begin to arise more often, the “favorite child” makes a list (performs an accounting) of the bank and investment accounts. The total amount is about $1,000,000, it could be higher or lower, but since no one has ever seen the total in a precise summary form, the amount is accepted as the true balance.

The accounting is then done periodically, showing the total, support by bank and investment statements. The longer the time after transferring the $100,000 to their own bank account, the better. Think about this scenario in terms of the title of this document. In the eyes of mom and the family the funds are truly “gone without a trace”.

I could write an endless series of articles list this, all with true life scenarios. But for now remember, your trust and faith in what appears to be the truth (the list / the accounting) may very well be a very disguised scheme where mom’s money does to be “gone without a trace”.

The CPA and fraud examiner (CFE) world uses the term professional skepticism. We think about these scenarios differently and many time unravel the scheme very quickly. In this paricular cases, the scheme was discovered when I was asked to reviewed the total accounting and the funds were totally recovered. The "favorite child" simply saved the money. In most cases, the funds are spent to live a certain life style, making recovery more difficult and putting more strain on the family relationships.

Review the articles on this site for examples of "gone without a trace" as they become available.

                        Senior Financial Abuse, Fraud and Forensic Accounting