I keep meeting older adults who have lost money in exploitative financial investments.

There was the financial adviser who convinced his clients to invest $50,000 in a life settlements, but the company they invested in was put out of business by state regulators. Read that here.

There was the 79-year-old man who lost $20,000 to an ex-convict in a home foundation scam. Read that here.

There were the retired teachers getting hit with postcards enticing them to invest in financial instruments that are loaded with excess fees. Read that here.

As I continue to research why the elderly are so vulnerable, I receive troubling letters from adult children of older adults.

Christine writes me that her father fell for a Jamaican prize scam and lost $50,000. “He is so upset with the final realization that he lost all of his money that he won’t let me help him,” she writes.

Annette writes that her father lives alone and is inundated with mail announcing that he has won lotteries, sweepstakes and other contests. All he has to do is send money to claim the rest of the prize. “He believes the windfall of money will land in his mailbox,” she writes. “This encompasses his daily life. It’s all he talks about, the money he is waiting for.” But it never comes.

There’s a name for this: elder investment fraud and financial exploitation. Although the problem is expected to get worse as more Americans grow older, initial signs are that one possible solution is coming out of Texas.

A pilot program originated by Baylor College of Medicine in Houston looks at how older adults may lose some mental abilities that helped them avoid risky situations. The medical term is cognitive impairment, and one-third of all adults older than 71 show some signs of it.

Couple that with a strong desire for more money, as shown by Christine’s and Annette’s fathers, and you’ve got the making of a financial catastrophe.

The Baylor program trains Texas doctors to detect warning signs of mental impairment that may make people susceptible to fraud. The doctors are shown how to report what they find to authorities such as the Texas State Securities Board and Adult Protective Services.

The experiment has its roots in a revelation by former Securities and Exchange Commissioner Christopher Cox. He said a few years ago that his elderly mother, besieged by throat cancer and unable to talk, was pestered by salesmen with a barrage of annuity schemes and bad mortgage offers.

“Even though my father was suffering from Alzheimer’s disease, the brokers would prey upon him as well,” Cox said.

The products horrified Cox: They included annuities with huge penalties and a low-rate 30-year mortgage with a short-term loan that had a balloon payment and a teaser rate.

“That would have cost my parents their home when it came due,” Cox said.

Robert Roush, an associate professor of geriatrics at Baylor, heard about Cox’s statements and decided to pursue the matter as a field of study.

He learned that older adults can be especially susceptible to schemes where the true penalties of the investment are hidden in fine print. As adults grow older, they may take greater risks. Cognitive impairment is found in half of all adults older than 85, some researchers say.

When baby boomers reach senior citizen status, 1 in 5 Americans will be older than 65.

“We’ve got a large, growing population that is going to roughly double in the next 20 years,” Roush said. “It will change the way this country operates.”

He wants to change the way older adults are protected, too. His project is growing. Regulators from 30 states, including the Texas State Securities Board, have joined.

The program is built around red-flag questions that a doctor can ask a patient. Samples from the project’s Clinician’s Pocket Guide include: Who manages your money day to day? How is that going? Do you regret or worry about financial decisions you’ve recently made?

In Texas, almost 70 doctors participated in the study. About half reported to state authorities that they encountered potential victims before they were hurt and, in some cases, after they lost money.

June 15 was designated World Elder Abuse Awareness Day. The Investor Protection Trust released a study that day showing that 1 in 5 Americans 65 and over has been victimized by financial fraud. That’s 7 million people.

During his research, Roush learned about older adults hurt through cellphone contracts, credit card offers, car loans and “on almost every financial transaction you can think of.”

“If there’s a hell, those scammers are the ones that will burn the hottest,” he said. “At least I hope so.”

His project, if successful, may turn up the heat on them here, too.

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WARNING SIGNS:

You run out of money by the end of the month.

You regret or worry about financial decisions.

Your bills are confusing, and you have trouble paying them.

You don’t feel confident making big decisions alone.

You don’t understand financial decisions others are making for you.

You give loans or gifts that you can’t afford.

Your children are pressuring you to give them money or change your will.

Someone is accessing your accounts, and money is disappearing.

You can’t reach your financial adviser.

Source: Baylor College of Medicine’s Texas Consortium Geriatric Education Center.

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RESOURCES:

Here’s the “Pocket Guide on Elder Investment Fraud and Financial Exploitation.”

Research investment advisors at the Securities and Exchange Commission website here.

Spend some time at the National Committee for Prevention of Elder Abuse website.

Learn about the Duke University student that shows that one in three people over 70 have memory impairment

Read about the Investor Protection Trust study that showed  that one out of five Americans older than 65 have been victimized by financial fraud.

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Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber