Fraud is a major concern in the context of Elder Abuse. However, recent events in Jamaica demonstrate that fraud is a risk to all. A private investment firm is at the centre of a massive fraud that apparently lasted for thirteen years and most recently claimed renowned sprinter Usain Bolt as one of its victims.

According to news reports, clients were given false statements regarding their balances as part of the alleged fraud. In addition to Bolt, the fraud targeted the elderly and also government agencies in Jamiaca.

In the context of estate administration, we have often blogged on the duty of an estate trustee to exercise the duty of care of the prudent investor. However, where those entrusted to manage investments on behalf of an estate trustee are themselves the victims of fraud or, on rare occasions, themselves committing the fraud, the Estate Trustee can be left out to dry.

After discovering the fraud, what is an Estate Trustee to do? “Tracing” is the process of following the money to the recipient. This process, if successful, imposes a constructive trust upon the traced proceeds. A constructive trust is an equitable remedy that can be applied to non-parties of a fraud for the purpose of recovering property.

The remedy of a constructive trust and the process of tracing typically apply either: (i) where a stranger knowingly assists in a fraudulent and dishonest breach of trust, or (ii) where a stranger has knowingly received property obtained through a fraudulent breach of trust.

Suffice to say, the litigation arising in such circumstances is complex and expensive. While recent events demonstrate that anyone can fall victim to fraud, an Estate Trustee can avoid such a predicament by carefully monitoring investments and investing with a reputable institution with statutory safeguards.

Thanks for reading.

David Morgan Smith