NEW YORK (MONEY Magazine) - On a February day in 2005, Tom Mitchell received a panicked phone call from his dad and stepmom in Columbiana, Ohio.

Len, 82, and Ruth, 64, told him that their entire $100,000 retirement savings was lost in a real estate bond scheme sold to them by their long-time accountant and former neighbor.

"I was shocked. My father and I are close. But when it came to financial issues, I was not aware of any of his dealings until they called me in tears to tell me what happened," says Tom Mitchell, a financial planner who lives in Arizona with his wife and three children.

For Ruth and Len, not only has their comfortable retirement crumbled, but so has their dream to bequeath some of their hard-earned savings to their grandchildren. "We never lived extravagantly. Our home is paid for and we have no debt. But I always thought we'd be able to leave them something when we passed on," says Ruth.

There are any number of ways your family's wealth can be diminished - bad investment decisions, poor tax planning, catastrophic illness or injury - but the most financially and emotionally devastating kind of loss is when your parents are victims of theft or fraud. It's also the most frustrating because it seems so preventable.

"I could have told him in an instant that their accountant wasn't licensed to sell these things," says Mitchell.

If you're not worried about threats to your parents' or older relatives' financial security, you should be.

Whether your parents live next door or 3,000 miles away, a host of people are gunning for their wealth. They range from swindlers like the Mitchells' accountant to shady financial advisers to fast-talking telemarketers to professional caregivers and relatives who steal from the very people they're supposed to be looking after.

The good news is that you don't have to be an investment expert or a detective to protect your parents from financial scams. But you do have to have a plan and be involved in their lives regularly.

Here's what you can do to keep your mom, your dad and their money safe.

The Securities and Exchange Commission says that more than 5 million senior citizens fall victim to financial abuse each year. And it's a myth that only lonely widows are victims. Len Mitchell, an architect, ran his own business for 35 years. "There are a lot of sophisticated salespeople out there who love to separate elderly investors from their money," says Susan Wyderko, head of the SEC's Office of Investor Education.

The Mitchells weren't stupid, they just trusted the wrong person. "No one gives their money to a stranger," says Anthony Pratkanis, co-author of AARP's Weapons of Fraud: A Source Book for Fraud Fighters. "Con artists use hard-core social influence tactics to take them in, both on the phone and in person."

The oldest generation in any family is vulnerable to scammers for a variety of reasons, none of which necessarily have to do with their mental competence.

They're typically home during the day - a prime time for con artists. Once they give up the financial security a paycheck provides, and begin living off the wealth they've accumulated for retirement, they are naturally mindful that the money has to last. This makes them more susceptible to investment schemes and the con artists who sell them.

"It's like what Willie Sutton said. Elderly people are targeted because that's where the money is," says Pratkanis.

Your parents don't have to lose their life savings in one fell swoop to do lasting damage to their financial security - and, by extension, your family's.

In fact, many seniors are nickeled-and-dimed into draining their savings, sending $10 here and $20 there for contests and charities that may not be on the up-and-up.

"Even a small loss for someone on a fixed income is devastating," says Patricia Struck, president of the North American Securities Administrators Association. While the threats come in many varieties, the most common scams against the elderly fall into three categories:

"Free" investment seminars Financial planners often lure older people with a lunch or dinner and promise free advice from advisers who "specialize" in senior issues such as living trusts or estate planning. Once there, the senior "specialists" pressure attendees into purchasing dubious investments.

Favorites are annuities, viatical statements and promissory notes. While these products are usually legal, many are monumentally bad choices for retirees - illiquid, complicated and booby-trapped with high fees. And even if attendees don't buy anything, they're usually required to provide their contact information. That can land them on the "sucker lists" that marketers sell to con artists looking for potential victims.

Other good ways to land on these lists: showing an interest in gambling or filling out entries for sweepstakes.

Telemarketing scams More than a third of the victims of telemarketing fraud are over 60 years old, according to the National Fraud Information Center. The most common scams are sweepstakes, free vacation packages, phony charity fund raisers, and expensive 900 numbers that entice people with money-saving tips and low-interestrate credit cards.

Affinity fraud Among con artists' favorite targets are members of close-knit religious, political, ethnic or social groups. The con joins the group and then tries to sell fraudulent investment schemes to members once he or she has gained their trust.

In one of the scores of cases in the past few years, a Baptist minister named Ronald K. Randolph promised returns of up to 30% in a Ponzi scheme he pitched to elderly members of churches he joined in several southern states. He was able to bilk churchgoers out of $3.5 million from 1997 through 2000, until he was arrested and convicted on fraud charges.

One of the easiest - and most effective - ways to protect your parents is to learn about the most common kinds of senior scams and talk to your folks about them. Tell them it's important they know what's happening - if for no other reason than to warn their friends or other relatives.

Some states have even started "senior sleuth" programs that organize senior citizens into groups that investigate fraud and tell other seniors about it. Research done by AARP shows that talking to potential victims and giving them specific warnings about fraud is the most effective way to prevent it. Such advice is even more likely to be heeded if it comes from a peer.

It's also important to know your family's social circle. Are you hearing a new name mentioned in the conversations you have with your folks? Does your father or mother think that someone has "a lot of good ideas" about money? Or, like the Mitchells, do they depend on a professional, like an accountant or a tax attorney?

Introduce yourself to new people entering your parents' life, just so they know you're involved with your parents' affairs. "Con artists are particularly interested in whether the victim has family or friends looking out for them," says Pratkanis.

One of the more difficult kinds of crimes to uncover is theft committed by a caregiver such as a nurse or aide. Still, there are some warning bells. The record shows that many larcenous caregivers have a history of alcohol or drug abuse. Also watch for signs that they're trying to control your parents' actions or isolate them from family and friends. If you are hiring a professional caregiver, don't just check out their résumé and references; you should also spring for a professional credit or background check conducted by a company such as Experian or ChoiceTrust. It'll cost you $25 to $100, but it will repay you many times over in peace of mind.

And don't forget: More than half of all instances of caregiver fraud are committed by a family member.

Helping manage your parents' money can aid you in noticing trouble early. This is a delicate topic to suggest, but one way to make it easier is to bring up a question or concern you have about your own finances, just to get everyone talking. Again, you don't want to make anyone feel incompetent, but even simple tasks such as looking over their phone bills or financial statements can alert you to large ATM withdrawals or expensive calls to 900 numbers.

Failing that kind of access to your parents' financial records, keep alert to other clues. Are your parents getting a lot of junk mail for contests, free trips, and sweepstakes? Are they receiving calls from strangers offering awards or moneymaking deals?

That may indicate that they've already ended up on a sucker list. Also check around the house. If there are lots of cheap items like costume jewelry or mini-flashlights, they may be purchasing things in order to "win" a contest, one that is a common con-artist lure. If your parents suddenly become secretive or defensive about their finances, that may be a sign that they've already fallen for a con.

If it appears that one of your parents has gotten involved in a scheme, the worst thing you can do is to lecture them. Saying 'I can't believe you fell for this' will not only put an emotional wedge between you and them, it could cause them to start withholding information. "Victims already feel very embarrassed and defensive about being caught up in this crime," says Doug Shadel, a former fraud investigator and now state director for the AARP in Washington.

Instead of judging or getting upset, ask conversationally about the things that worry you. Find out more about how they got that piece of jewelry, say, or what was said at that free lunch. Just remember that it may take a while to get some useful information -- your parents may be in denial. "People don't want to believe they've been scammed," says Shadel.

The best place to report fraud is to your state securities regulator's office (go to nasaa.org to find yours). Even if you don't have concrete proof that something's afoot, it's important to get regulators involved. They may be able to connect the dots in ways you can't.

That's what R.J. Noack did when her mother, an 86-year-old widow who lives in Florida, called her in February. Noack, who lives in Connecticut, said her mother attended a free-lunch investment seminar. After a hard sell, Noack's mom agreed to sign up for a $6,000 onlineinvesting course. She was told that she could always get her money back if she changed her mind.

After she got home, Noack's mom decided the course was too basic and asked the company for a refund. No way. Noack tried contacting the company herself, but to no avail. Fortunately, she found a number for Seniors Against Crime, a local watchdog group. They put her in touch with Florida's Office of Financial Regulation, which got Noack's mother's money refunded. "My mom's pretty savvy -- she even has an E-Trade account. But they used really highpressure tactics on her," says Noack. "We talk every week and e-mail almost every day, so we're in close communication. It could have been much worse."

_____________________________

• Make your nest egg last
• How to invest for the long (long) term
• When your parents need a hand
• Is Medicaid still an option?