A Bad Note from the Bank: The Financial Abuse of a Vulnerable Adult
It’s now June which means that it is Senior’s Month in Ontario. To compliment this month, on June 15th, a global conversation surrounding the prevention of elder abuse took place on the annual World Elder Abuse Awareness Day.
Looking closely at the situation in Canada, we know that financial abuse is one of the most pervasive forms of elder abuse.[1] In trying to help raise awareness of different scenarios where financial exploitation of older adults can occur, I’d like to share a recent case out of British Columbia.
On Friday June 9, a recently expelled bank manager and mutual fund dealing representative learned her fate on criminal charges which stem from acts of fraud she committed against her 79-year-old mother-in-law (the “Client”) and her employer (the “Bank”).
Justice Phillips of the British Columbia Provincial Court handed Ms. Thomas (the “Former Bank Manager”), a 24-month conditional sentence. The Former Bank Manager, who was previously banned by the Mutual Fund Dealers Association (“MFDA”), misappropriated approximately $157,000 from the Client and the Bank.
The Former Bank Manager told the court that the misappropriation bankrolled her drug addiction, which was brought on by her husband’s infidelity. In his oral ruling, Justice Phillips commented to the defendant, “you were at a time in life when things were going poorly, but it’s still no excuse.”[2]
On April 25, 2023, the MFDA released its decision on the misappropriation.
The disciplinary panel found that from December 7, 2012 to October 25, 2019, the Former Bank Manager was registered in British Columbia as a dealing representative with CIBC Securities Inc. In her position with CIBC, the Former Bank Manager helped the Client open a Tax-Free Savings Account (“TFSA”) and purchase $56,316 worth of mutual funds.
On November 22, 2021, the MFDA commenced disciplinary proceedings against the Former Bank Manager, alleging that between February and August 2019, the Former Bank Manager misappropriated client funds in contravention of the Rules.
Some of the fraudulent acts alleged to have occurred included:
- Processing 12 redemptions out of the TFSA account totalling $59,000 and depositing the proceeds into a fake account;
- Changing the account statement deliver method so it would be delivered online and changing the address associated with the account;
- Misappropriating $34,000 from an account the Client shared with her spouse; and,
- Obtaining unauthorized loans and a Line of Credit in the Client’s name and receiving $59,000 from the Bank.
Analysis
The disciplinary panel held that “misappropriation is among the most serious types of misconduct encountered by securities regulators as it usually involves a serious breach of trust, causes real harm to the client’s affected, and undermines the reputation and integrity of the securities industry.”[3]
The Former Bank Manager held a position of trust, the Client was a vulnerable older adult, one whom she exploited and stole money for her own personal use. What’s more, the Former Bank Manager, with close to decade of experience, was well aware of regulatory obligations. At the time, the MFDA felt she had not demonstrated that she recognized the seriousness of her misconduct and expressed no remorse for her actions and refused to participate in the hearing process or otherwise accept responsibility for her actions.
The MFDA imposed the following penalties:
- Permanent prohibition of authority to conduct securities related business;
- $300,000 fine; and
- $10,000 in costs.[4]
Concluding Remarks
This case demonstrates the means that fraudsters will go to in order to exploit their victims. Here, there was an older adult of vulnerable age, a professional in a position of trust, and easy access to the funds and investments of the victim. The fraudster was calculated in taking steps to prevent her victim from receiving notifications on the nefarious activity taking place in her accounts.
The lesson here is that even those in positions of authority and trust can take advantage of vulnerable clients. In fact, as seen by this case, individuals holding these positions seem to have more access and less barriers to their conduct. It is important to report suspicions of elder financial abuse if and when you see the signs.
—
[1] See Vancity, “Suffering in Silence: The financial abuse of seniors in British Columbia” (2017) accessed online at https://www.vancity.com/SharedContent/documents/pdfs/News/Vancity-Report-Seniors-Financial-Abuse-2017.pdf. The report, which surveyed seniors in the Vancouver and lower mainland regions, found that 41 per cent of elderly adults have experienced some form of financial abuse and 35 per cent choose not to report it to anyone.[1]
[2] Graeme Wood, “Merritt bank manager who stole $157k from mother-in-law avoids prison” June 10, 2023, Castanet News, accessed online: http://www.castanet.net/news/Kamloops/431167/ Merritt-bank-manager-who-stole-157K-from-mother-in-law-avoids-prison [Wood].
[3] Hope Moira Donna Thomas (Re) MFDA File No. 202173, Hearing Panel of the Pacific Regional Council, Decision dated April 25, 2023.
[4] Hope Moira Donna Thomas (Re), MFDA File No. 202173, Hearing Panel of the Pacific Regional Council, Decision dated April 25, 2023 at para. 51.
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Written by: Brett Book
Posted on: June 19, 2023
Categories: Commentary, WEL Newsletter
It’s now June which means that it is Senior’s Month in Ontario. To compliment this month, on June 15th, a global conversation surrounding the prevention of elder abuse took place on the annual World Elder Abuse Awareness Day.
Looking closely at the situation in Canada, we know that financial abuse is one of the most pervasive forms of elder abuse.[1] In trying to help raise awareness of different scenarios where financial exploitation of older adults can occur, I’d like to share a recent case out of British Columbia.
On Friday June 9, a recently expelled bank manager and mutual fund dealing representative learned her fate on criminal charges which stem from acts of fraud she committed against her 79-year-old mother-in-law (the “Client”) and her employer (the “Bank”).
Justice Phillips of the British Columbia Provincial Court handed Ms. Thomas (the “Former Bank Manager”), a 24-month conditional sentence. The Former Bank Manager, who was previously banned by the Mutual Fund Dealers Association (“MFDA”), misappropriated approximately $157,000 from the Client and the Bank.
The Former Bank Manager told the court that the misappropriation bankrolled her drug addiction, which was brought on by her husband’s infidelity. In his oral ruling, Justice Phillips commented to the defendant, “you were at a time in life when things were going poorly, but it’s still no excuse.”[2]
On April 25, 2023, the MFDA released its decision on the misappropriation.
The disciplinary panel found that from December 7, 2012 to October 25, 2019, the Former Bank Manager was registered in British Columbia as a dealing representative with CIBC Securities Inc. In her position with CIBC, the Former Bank Manager helped the Client open a Tax-Free Savings Account (“TFSA”) and purchase $56,316 worth of mutual funds.
On November 22, 2021, the MFDA commenced disciplinary proceedings against the Former Bank Manager, alleging that between February and August 2019, the Former Bank Manager misappropriated client funds in contravention of the Rules.
Some of the fraudulent acts alleged to have occurred included:
Analysis
The disciplinary panel held that “misappropriation is among the most serious types of misconduct encountered by securities regulators as it usually involves a serious breach of trust, causes real harm to the client’s affected, and undermines the reputation and integrity of the securities industry.”[3]
The Former Bank Manager held a position of trust, the Client was a vulnerable older adult, one whom she exploited and stole money for her own personal use. What’s more, the Former Bank Manager, with close to decade of experience, was well aware of regulatory obligations. At the time, the MFDA felt she had not demonstrated that she recognized the seriousness of her misconduct and expressed no remorse for her actions and refused to participate in the hearing process or otherwise accept responsibility for her actions.
The MFDA imposed the following penalties:
Concluding Remarks
This case demonstrates the means that fraudsters will go to in order to exploit their victims. Here, there was an older adult of vulnerable age, a professional in a position of trust, and easy access to the funds and investments of the victim. The fraudster was calculated in taking steps to prevent her victim from receiving notifications on the nefarious activity taking place in her accounts.
The lesson here is that even those in positions of authority and trust can take advantage of vulnerable clients. In fact, as seen by this case, individuals holding these positions seem to have more access and less barriers to their conduct. It is important to report suspicions of elder financial abuse if and when you see the signs.
—
[1] See Vancity, “Suffering in Silence: The financial abuse of seniors in British Columbia” (2017) accessed online at https://www.vancity.com/SharedContent/documents/pdfs/News/Vancity-Report-Seniors-Financial-Abuse-2017.pdf. The report, which surveyed seniors in the Vancouver and lower mainland regions, found that 41 per cent of elderly adults have experienced some form of financial abuse and 35 per cent choose not to report it to anyone.[1]
[2] Graeme Wood, “Merritt bank manager who stole $157k from mother-in-law avoids prison” June 10, 2023, Castanet News, accessed online: http://www.castanet.net/news/Kamloops/431167/ Merritt-bank-manager-who-stole-157K-from-mother-in-law-avoids-prison [Wood].
[3] Hope Moira Donna Thomas (Re) MFDA File No. 202173, Hearing Panel of the Pacific Regional Council, Decision dated April 25, 2023.
[4] Hope Moira Donna Thomas (Re), MFDA File No. 202173, Hearing Panel of the Pacific Regional Council, Decision dated April 25, 2023 at para. 51.
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