An elderly couple from Los Angeles County has filed a lawsuit against Charles Schwab, alleging negligence in preventing a sophisticated scam that resulted in an $18.5 million loss.
An elderly couple from Los Angeles County has filed a lawsuit against Charles Schwab, alleging that the financial institution failed to prevent a sophisticated scam that resulted in an $18.5 million loss. The couple claims that Schwab, along with Bank of America and a cryptocurrency exchange, ignored warning signs while scammers manipulated them into transferring their retirement savings.
Lawrence Liu, 84, and his wife, Ling-Ling Liu, 76, became clients of Charles Schwab after their accounts were transferred from TD Ameritrade following its acquisition by Schwab. In July, Lawrence received a pop-up warning on his computer indicating that his Schwab accounts were under attack. Following this, he was contacted by a scammer posing as a Schwab employee, who advised him to move his assets for safekeeping.
The couple was persuaded to transfer nearly $30 million from their Schwab accounts to Bank of America, with a significant portion converted into cryptocurrency and sent to the scammers. The timeline of events is as follows:
Both Schwab and Bank of America continued to authorize the transfers despite the increasing amounts and the couple's lack of prior interest in cryptocurrency. In contrast, Wells Fargo and JPMorgan Chase halted transfers, citing suspicions of fraud. Schwab has publicly stated that the Lius authorized all wire transfers, pushing back against the allegations of negligence.
This case is part of a troubling trend in elder financial abuse, which the AARP estimates costs older Americans over $28 billion annually. Experts argue that financial institutions must do more to protect vulnerable clients from sophisticated scams. Hugh Berkson, an attorney specializing in investor protection, noted that as the baby boomer generation ages, the risk of fraud will likely increase.
The Lius' lawsuit accuses Schwab, Bank of America, and Unchained Trading of violating California's Elder Abuse and Dependent Adult Civil Protection Act, as well as gross negligence. The couple's legal team argues that existing laws should be sufficient to protect seniors, emphasizing that financial institutions must fulfill their responsibilities as gatekeepers to clients' assets.
The lawsuit against Schwab and its affiliates raises critical questions about the responsibilities of financial institutions in safeguarding their clients' assets, particularly vulnerable seniors. As the case unfolds, it may prompt a reevaluation of how financial firms address elder fraud and the measures they take to protect their clients from sophisticated scams.
