Kudos to Greg Andrews on his [Dec. 10] column about the Fair Finance fraud. There is no excuse for this criminal behavior, and Tim Durham and his buddies got what they had coming to them. But Andrews is spot on in highlighting the complicity of the investors in their demise.
In her sentencing, the judge referenced Durham’s “Deceit. Greed. Arrogance.” And it appears the investors engaged in a bit of greed and arrogance of their own. Did they think they were the smartest people in the room when they willingly invested in something that appeared too good to be true? Did they think they were exempt from the caveat emptor (let the buyer beware) rule?
Or were they gullible and ill-prepared to play the game? That great poker aphorism applies here: If you look around the table and you don’t know who the chump is, then most likely it is you. Regrettably, many players score high on the vulnerability index.
The IBJ would do a great service to pre-emptively shine a light on other sectors with the potential to unethically prey on “chumps” and I would like to offer one: senior retirement communities. Many of these communities require residents to pony up significant upfront payments and hefty monthly fees. In return, the facilities promise to spend and invest the money for the long-term benefit of the residents—often involving independent living through nursing home care.
Yet, we read more and more stories, including IBJ’s [Nov. 19] story about conflict questions at The Barrington, about the financial risk faced by elderly residents from the self-serving behavior and actions of facility owners and board members. As was the case with Fair Finance, many retirement community residents invest a significant portion of their net worth but there is little understanding or oversight as to how their “investment” is being used.
Overlay the likely reduced future Medicare payments to existing nursing home portions of these facilities and many of them could find themselves in crisis.
Perhaps a little proactive investigative work by the IBJ might preclude the future reporting of a sad story about a group of seniors being harmed by others’ “Deceit. Greed. Arrogance.”