Scamming the Elderly | Tax Fraud, the IRS and The District Attorney Will Get YOU

In this episode, Lisa Shoalmire and John Ross discuss what might happen to the perpetrators scamming the elderly through tax fraud schemes.

Episode Transcript
Lisa
Welcome everyone to another edition of Aging Insight. This is Lisa Shoalmire and I'm here live in the studio with John Ross.
John
That's me.
Lisa
Amazing.
Lisa
Well, You know John? In another life, I guess, or in a previous career, I should say. I don't know, if many of our listeners know. But I use to be a CPA or I guess I still am, I just don't practice.
John
Right, that's right.
Lisa
I don't want people to get the wrong idea. [laughter] But, of course that's a Certified Public Accountant, and I used to help all kinds of people deal, calculate their federal income tax, and fill out tax returns.
John
Yeah. As a matter of fact, when I finished my degree in accounting, I went to law school because I wanted to be a tax attorney.
Lisa
So, and of course, if there's any place where there's lots of laws and rules, it's the tax area. There are others who are certainly debating, whether or not to simplify our tax system, and whether we pay the right amount of tax, or too much, or this and that, but...
John
We pay too much.
Lisa
Okay. Yeah, just to make that clear.
John
Just to the side, yeah. [laughter]
Lisa
Al Capone, he wasn't brought down for his murderous, criminal ways, he was brought down for...
John
For taxes.
Lisa
For tax evasion.
John
Yeah. I had a client one time, when I first got out and started doing tax law, and I had a guy who was a tax evader, tax protester, did not believe in taxes.
Lisa
Yes, that the 19th Amendment to the Constitution was unconstitutional.
John
Improperly ratified and...
Lisa
Was it 19th?
John
No.
Lisa
13th, maybe. Don't know.
John
I'd have to look at that.
Lisa
Yeah.
John
But regardless he did not believe that the IRS had the power to tax him. Unfortunately, it's not what he believes. And within the tax realm, you've got your tax collectors, and then you've got tax collectors that have guns.
Lisa
Yeah, that's true. That's been a big deal lately.
John
The IRS Criminal Investigation Division.
Lisa
Yeah, they have guns and ammo.
John
They have guns and ammo. And yeah, so yeah, the IRS is serious business out there.
Lisa
If you steal money from an elderly family member or a community member, is that taxable? [laughter]
John
Well, so this case, this is a United States Tax Court case and it came out in April 21st, 2016. So this is brand new stuff.
Lisa
Yeah for the law, this is brand new.
John
For law, this is brand new. And The story begins with Art Marsh, and Art Marsh was born in Montana, in December of 1915.
Lisa
Yes, so that's... Now to me folks, 1915, he quite aged.
John
Yeah. Grew up on a farm as the fifth of seven children. Mother worked all day doing laundry and preparing meals. His father would tend to the farm, probably with all the kids.
Lisa
I'm sure that's why you had seven kids.
John
Not a lot of education, they were very, very poor.
Lisa
Then the depression came and they were even poorer.
John
And then, knuckle-scraping themselves through the depression, and then what do you get? World War II.
Lisa
Which frankly, was an out, it looks like for Art Marsh.
John
Right, who after Pearl Harbor, signed up, volunteered, as an enlisted man, went off to war, got back. And like so many of that greatest generation, was able to use his GI Bill, coming out of World War II to go back and get himself a college education. Probably one of the first in his family, if I were guessing.
Lisa
I would guess. And so, he actually became an optometrist, a doctor of optometry.
John
Yeah. Moved to the city of Gilroy, California.
Lisa
That's where they have the Garlic Festival.
John
Is it?
Lisa
Yeah.
John
How did you know that?
Lisa
Because, I know random trivial facts.
John
Yeah, that is... [chuckle]
Lisa
But Gilroy, California...
John
Anyway, so Dr. Marsh has... He's got his optometry practice, has a successful upper middle class lifestyle.
Lisa
Yeah. And Gilroy... California after the war was certainly a booming state, and Gilroy and Dr Marsh, they also benefited from "the boom" of this. And so, like you say, he became a upper middle class gentleman, but he never lost his respect, and his memories of those very poor years.
John
No. Throughout his life, first of all, he never married and he never had any kids. But he did lots of vacations with his brothers and sisters, and stuff like that.
Lisa
Nieces and nephews.
John
Nieces and nephews. But he lived very frugally.
Lisa
Yeah. So the tax court describes that Dr. Marsh, he lived in the same second floor apartment in Gilroy, California, which was an 800 square foot apartment. And he lived there for years, and years, and years. And he lived a very modest life, I mean this was a sparsely furnished apartment and...
John
Yeah. In his retirement, that apartment cost him $175 a month.
Lisa
In California.
John
In California.
Lisa
Which is really amazing.
John
And this is not an old case. This is even during his retirement. And despite his earnings as an optometrist throughout his life, when he retired, he basically didn't even spend the self-security money that was coming in.
Lisa
Right. So he got by on his social security, and still put a little bit in the bank. But he'd accumulated by the time he retired, over a million dollars, and with his investments and things...
John
And that was in the 80s.
Lisa
Right. So, by the time... A lot of the facts in this case, that investment had grown to about three million dollars.
John
Yeah. So, here's a guy who retires in the 80s with a million bucks, and 20 years, 30 years later, he's got three million dollars. He's making money in retirement, because... You know, one of the easiest ways to make money? Is don't spend it.
Lisa
Right. [chuckle] Well, and Dr. Marsh clearly got that message. Some of his friends would kinda joke with him about, how "frugal" he was. But he would just say, "Hey, my savings is my insurance. I don't ever wanna have to need nursing home care. I plan to stay in my apartment. And so my savings is a way that I'm gonna make sure that I can do that."
John
Yeah, that's right. Once we start getting into the 2000s, a number of things... Again, we're talking, this man was born in 1915, so by the year 2000, he's 85. So we're rolling into the late 80s, early 90s and his, of course his brothers and sisters that were really his big family...
Lisa
Yeah, they start dying off.
John
They start dying off.
Lisa
And he starts having some of his own health challenges. He fell and he broke a hip at one point. So he had to start using a walker, and he lived in a second floor apartment. And this was what you would call a "walk-up" apartment.
John
Right. So no elevator, or any of that sort of business.
Lisa
So, essentially he became very home-bound...
John
Couldn't drive...
Lisa
Yeah. He had heart problems, some hearing loss, some arthritis. The time catches up with everyone. And it was finally catching up here with Dr. Marsh.
John
Yeah, so about 2007, Mr Marsh is 91 years old. He can't drive, can't get to the doctor on his own, can't prepare his own food. He's got some incontinence, got some heart problems, got chronic back pain, hearing loss. He's even had a mild stroke, and he's looks like he's starting to show some signs of dementia.
Lisa
Right. So, he's got some poor short term memory and even his long term memory is affected. He really can't perform simple arithmetic, like balancing a check book, that just requires simple arithmetic. But we're at a point now, where he has trouble with that, and...
John
Yeah. And so here we are it's January 2007, and Dr. Marsh gets admitted to St. Louise Regional Medical Hospital for dehydration. His Doctor... They know he lives alone...
Lisa
In a second floor apartment.
John
In a second floor apartment. They know he has no family. And basically, the Doctors are saying look, "There's no way, you're going to be able to go back home without help." Now Lisa, in our speeches all the time we say, "Here's what we see, we see you have a health crisis." And what immediately happens after that health crisis?
Lisa
Yeah. That turns into a housing crisis.
John
A housing crisis. Because you're at the hospital, or the rehab and somebody says, "Look, you can't stay here because we've done everything we can for you, but you can't go home, not like you did before you got here. You're just not well enough."
Lisa
Right. Or you need too much supports, or whatever it is. So it's now we have a housing crisis... And that's the position Dr. Marsh found himself in. And so he's desperately trying to figure out how he's going to return home to his beloved apartment, and figure out how he's going to get by.
John
Yeah. And enter Angelina Alhadi. All right, stick around after the break will keep going with our story.
John
Welcome back to Aging Insight everybody. We're talking today about a situation where we have this gentleman, Dr. Marsh, very frugal man throughout his life. Single, no kids, retired in the 80s. But, still lived very frugally, until he had accumulated a couple of million bucks for his retirement needs, that he was gonna use to keep himself out of a nursing home.
John
This independent guy don't spend a lot of money, but health caught up with him. And by 2007, when he is 91 years old, he has eventually gotten to the point where he's got some cognitive dysfunction. His physical health is a train wreck. He still lives in this little cheap two-storey, or a second floor apartment, that he can't even get into or out of. And he is at the hospital, and the doctors are basically saying, "Look, you just can't go home. I mean you don't live in a home that you can go back to. You're gonna have to figure something out." And here comes Angelina Alhadi to the rescue.
Lisa
Right. So, while Dr. Marsh is convalescing at the hospital, and considering his very limited options, Angelina Alhadi... She slips him a note and says she was an employee of the hospital, a nursing assistant. And even though, the hospital had a policy in place that their employees could not moonlight or work for patients. She slipped a note to Dr. Marsh, saying that she had heard that he would not be able to go home without help, and she was willing to become his primary caregiver.
Lisa
And so, she was supposed to prepare his meals, bathe him, make sure he took his drugs properly, provide basic nursing services, shop for groceries, do his banking, drive him where he needed to go, help him get in and out of the apartment, as needed, keep the apartment clean, do laundry, and provide companionship.
John
Yeah, and let's be perfectly clear. If Dr. Marsh did not have somebody to provide these services, he was going to have to go to a nursing home.
Lisa
Which he did not want to do.
John
And he certainly didn't wanna do. So, he jumps on this, he says, "You know what? This is why, I've saved my money."
Lisa
Right. So, he hires Miss Alhadi, who was a... She'd immigrated to the United States from the Philippines.
John
Yeah. Was married but estranged from her husband. Looks like Filipino background, but clearly part of the small Muslim community from the Philippines, based on the last name. And I think, she typically wore hijab and stuff like that. So she's a Muslim Filipino lady and here she is immigrant, and she's going to get hired. She's got this great new job that she has convinced Dr. Marsh to hire her. And she is going to get paid $6,000 a month.
Lisa
Well, and of course initially it was even less than that. Her first month, Dr. Marsh paid her the going rate, I guess of about 3,750 bucks. But that was the only time he paid her such a small amount. And then from then on, the next month it was $6,000. And then he would give her $1,000 additional a month for groceries. Even though he himself didn't use $1,000 [chuckle] a month in groceries.
John
Right. He had rarely needed more than $400 to feed himself, and yet he's writing her checks for $1,000, in order to buy groceries.
Lisa
Now, and she was hired in April... Excuse me, she was hired in January, but by April he had...
John
January, February, March, April. We're four months into it.
Lisa
Dr. Marsh wrote her a check for $100,000 and bought some expensive equipment for her, and then, gosh, Mrs. Alhadi's lifestyle began to increase.
John
Yeah, she's doing alright now. Yeah, by 2007, Mrs. Alhadi had...
Lisa
In June, so again, hired in January, by June of 2007.
John
Yeah, Dr. Marsh has made a down payment on a $1 million home in Gilroy, California for Miss Alhadi.
Lisa
Yeah. By November of that year, so 11 months into their arrangement, he had written her checks which added up to about $400,000.
John
Because not only did she convince him to make the down payment for her, but then he also immediately... She turned around and said, "Oh, but you know what? I can't afford the mortgage payments. You're gonna have to help me with those too."
Lisa
Yeah. So, she bought $7,000 worth of furniture, she spent $34,000 on landscaping at her new million-dollar home.
John
Yeah. And, you know what? You know what goes good in a new million-dollar home?
Lisa
A brand-new swimming pool. [chuckle]
John
A brand-new swimming pool, one that costs $73,000. This is starting to sound like she's about to win a prize on... [chuckle]
Lisa
Yeah, that's right.
John
The Price is Right.
Lisa
Well, apparently, she thought she had.
John
Yeah. So, you should start... Yeah, you should be getting a picture here of what's going on. And to be perfectly honest, it actually gets worse from here. So we're gonna take our bottom of the hour break, and when we come back, we're gonna keep talking about this situation, so stick around.
Lisa
Welcome back everyone, this is Lisa Shoalmire, here with John Ross on Aging Insight. And today, we are talking about the case of Dr. Art Marsh, which has been detailed quite well, in of all things, a tax court opinion. And so, so far, we've gotten up to Dr. Marsh had accumulated a nice little nest egg for retirement. And he's now gotten to his 90s and his health is bad, and he needs care services to remain in his home. And a nurse assistant at the hospital he had been admitted to, offered her services and within... Hired in January of 2007 and by November of 2007, Dr. Marsh has given her, transferred to her, paid on her behalf, half million dollars of expenses and just...
John
Including buying a new house, all kinds of stuff.
Lisa
Yeah, and then it looks like she convinced him, too. She told him that she had won a cruise. [chuckle] Miss Alhadi...
John
Yeah. She comes in and says, "Hey, Dr. Marsh, guess what? I've won a cruise and I want you to come with me."
Lisa
Right. And so apparently they do do the cruise, but of course, she had not won a cruise at all.
John
And so, again, I wanna play this out, "Hey, Dr. Marsh," now remember, Dr. Marsh at this point is trapped. He's in a second floor apartment, he cannot get downstairs, he cannot drive, he cannot feed himself, or clothe himself, or bathe himself. So she comes in and says, "Guess what Dr. Marsh, I won a cruise. And if you stay here, there's nobody to take of you. But I really want you to come with me. But of course, you'll have to pay for yourself, and of course the cost to pay for yourself is... "
Lisa
$25,000.
John
Yeah. [chuckle]
Lisa
So of course, Dr. Marsh and Miss Alhadi, and her whole family take a nice cruise, but...
John
Although she basically, according to the statement, she just leaves him in his room for the entire cruise.
Lisa
Right. Now, Dr. Marsh did... He still had some family, of course they lived off. He had a niece in particular who would contact him every Sunday evening, and check-in on him. And this niece, with Miss Alhadi taking care of Dr. Marsh, suddenly she wasn't able to get in touch with him as frequently.
John
Yeah. He seemed to always be asleep.
Lisa
Yes.
John
Or he just wasn't feeling well.
Lisa
Or the phone would ring and ring, and where is he going to be?
John
Right.
Lisa
So, the niece actually got... She got concerned, but she didn't know what the situation was exactly. But the caregiver, Miss Alhadi, she used this isolation and she would express her affection to Dr. Marsh. She would tell Dr. Marsh, how much she loved him and how he was family to her, even suggested they get married, or that he come live with her. And then, she would cry on his shoulder about her financial struggles, and how she was worried about taking care of her children. And so Dr. Marsh, I mean, he certainly had a connection with her, and she certainly cultivated that.
John
Yeah. Just sit around and cry, and I bet there's people listening to our show out there that have had this similar type experience.
Lisa
Yes. A child, a grand-child, coming in.
John
So talk about how bad their life is and if only they could just get a little of yours...
Lisa
Yeah, a little extra money would go a long way.
John
That might help.
Lisa
Well, when it came time in 2007, for Miss Alhadi to file her taxes, she reported only her income from her "real" job.
John
Yeah, her real job at the hospital.
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