Ex-advisor's hate crime highlights one state's crackdown on elder fraud

A barred former financial advisor who pleaded guilty to a hate crime targeting seniors and families of children with special needs was sentenced to five to 15 years in prison.

Louis Cook convinced 11 clients, many of them "financially unsophisticated, elderly or parents of children with developmental disabilities," to sign authorization forms enabling him to withdraw funds from their variable annuities, stealing hundreds of thousands of dollars, according to a FINRA investigation that preceded his criminal case in Staten Island, New York. 

Cook, 62, was ordered to pay more than $1.1 million in restitution to victims under a state law that designates larceny a hate crime when it victimizes a person because of their age, disability or other protected statuses, the Staten Island Advance reported. 

The steep sentence highlights one state's response to the widespread problem of financial scams victimizing seniors, a nationwide issue that has led to pending legislation in Congress. 

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Under New York law, to qualify as a hate crime targeting an older adult or people with disabilities, the victims must be at least 60 years old or "have a physical or mental impairment that substantially limits a major life activity," according to Solomon Syed, a deputy commissioner of the state Office of Children and Family Services, which houses an adult protective unit. The agency received 3,584 referrals in New York City alone for potential fraud cases targeting older adults in 2022, plus an additional 2,814 from the rest of the state, he noted in an email.

Fraud losses across the country rose 30% in 2022 to $8.8 billion, according to the Federal Trade Commission, which noted that adults aged 80 and above lost the largest amounts. Financial advisors can often play a valuable role in identifying schemes exploiting seniors, who experts say are vulnerable because of their isolation and retirement nest eggs. 

'Priority'
Regulators and law enforcement authorities have "made abuse of seniors/elders major priority" in recent years, said fraud expert Douglas Schulz of Invest Securities Consulting in Westcliffe, Colorado. "It is a priority, it should be a priority and there are numerous bad actors who target seniors."

The sentence includes the possibility of parole after five years and the restitution order. At least one victim has received a settlement of $47,498, with no contribution from Cook, according to FINRA BrokerCheck. The last firm to employ him in his 22-year financial career at Advisor Group's Securities Service Network, a Knoxville, Tennessee-based brokerage that has merged into Securities America, terminated him in 2018 based on "our expectation that financial advisors adhere to the highest possible ethical and professional standards," a spokesman for the firm said last year.

Cook pleaded guilty in January to second-degree grand larceny as a hate crime "for intentionally preying on vulnerable seniors and families of children with special needs," Staten Island District Attorney Michael McMahon said in a statement. The prosecutor's economic crimes bureau worked with the office's forensic accountant on the case.

"Staten Islanders should be able to trust that the professionals they hire to assist them with life's most important needs are acting in their best interest," McMahon said. "His sentence of up to 15 years incarceration is a testament to our dedication to our most vulnerable and to justice for victims of crime."

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A lawyer who represented Cook declined to comment. 

Authorities are working on multiple fronts to combat elder abuse. Among other programs, FINRA has a "senior helpline" that recently helped the regulator crack open a $3.4 million fraud case. State regulators have crafted model legislation cracking down on senior exploitation that has become law in 34 states. In the 12 months ending in June 2022, the Department of Justice prosecuted scammers behind elder abuse cases that cost more than 2.6 million older victims a combined $1.5 billion in losses, according to the agency's annual report to Congress. 

In January, the House of Representatives passed a bill called the Financial Exploitation Prevention Act that would require the Securities and Exchange Commission to make regulatory recommendations aimed at prevention and give mutual fund companies more leeway to delay redemptions if they suspect elder abuse. Rep. Ann Wagner, a Missouri Republican, introduced the bill, which drew bipartisan cosponsors and passed in a vote of 419 to zero. 

"Financial exploitation of seniors is elder abuse and, tragically, about 20% percent of senior investors fall prey to financial fraud, losing an estimated $2.9 billion annually," Wagner said in a statement at the time of the bill's passage. "I hope the Senate takes up this bill immediately so vulnerable investors have the protections they deserve."