In elder financial abuse cases, it is often difficult to prove that the defendant intended to commit a fraud against an elder. Many times, the elder is incapacitated and unable to give meaningful testimony at trial and the only eyewitness that can testify is the defendant.
Constructive fraud can then play an important role in proving the case of financial abuse.
The defendant’s actual fraudulent intent is not required. Instead, the law looks to other factors to show that a fraudulent occurrence took place.
These other factors include the existence of a confidential or fiduciary relationship where the defendant had the opportunity to take advantage of, or exercise undue influence over, the elder.
For example, a paid caregiver who spends a substantial amount of time with an elder will have developed such a special confidential relationship. When this occurs, the caregiver owes a moral, social and domestic duty not to take advantage of the elder’s weaker state of mind. But how can a fraud be committed when the defendant did not have an actual intent to commit fraud?
Here’s an example: A caregiver wants to receive a cash gift from the elder and convinces her that it would be wonderful if she would sign several checks to the elder’s children, and then also drops a hint that the caregiver would also appreciate such a gift. The elder agrees, signs all of the checks, and the caregiver agrees to deliver them to the children.
However, the caregiver then decides that she wants all of the money, and forges the signatures of the elder’s children and endorses each of their checks to the caregiver. Under this scenario, the fraudulent intent was not present until after all of the checks were signed by the elder. However, the totality of the circumstances, including the caregiver’s initial desire to receive her own gift, clearly show that the caregiver’s action were fraudulent and that she breached her duty in order to gain an advantage over the elder.
In California, the fiduciary relationship has been extended to every possible case in which a fiduciary relation exists as a fact. Such relation need not be legal; it may be moral, domestic or merely personal (Foster v. Keating (1953) 120 CA2d 435).
When such a special relationship can be shown, the law then imposes a presumption that the elder was subjected to undue influence. This acts to shift the burden to the defendant to prove that fraud did not occur.
This presumption is implemented to further the public policy of securing an elder’s property and money when they have been entrusted to others.
Constructive fraud is another theory to prove that elder financial abuse occurred when the evidence is limited because of the elder’s incapacity. The theory should be utilized by attorneys as one of numerous other causes of action to be included in a lawsuit for financial abuse.
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