The retirement racket: Bleed them dry until they die

It was June 23, 2009, when Gwyneth Jones was admitted to a psychiatric ward after complaints about her behaviour at Aveo retirement village The George in one of Melbourne’s bayside suburbs.

“It was like a horror story,” she tells a joint Fairfax Media-Four Corners investigation into retirement villages.

She claims Aveo had ulterior motives for diagnosing her with dementia: “They had me deliberately diagnosed with this particular form of dementia so that they would have ammunition in which to evict me. Making me go to the Biala Unit as an involuntary patient gave them even more ammunition. I don’t have dementia, and everybody knows that.”

Documents obtained by Jones through a freedom of information request into her health records support her accusations of a deliberate plan being hatched to evict her from her home at the retirement village.

READ MORE: The ‘get poor quick scheme’: retirement villages swallowing vulnerable people’s money

A joint Fairfax Media-Four Corners investigation has uncovered a litany of questionable business practices at Aveo including churning of residents, fee gouging, safety issues and misleading marketing promises, such as safety and emergency services, made to some of the country’s most vulnerable people.

The investigation has found that many retirees don’t know what they are signing until it is too late.

Residents such as 86-year-old John Hayto were attracted to the promise of safety and emergency services, believing he would be in good hands if something ever went wrong. He is still in a rehabilitation centre after a fall seven months ago which left him on the floor of his Aveo unit for five days without food, water or medication.

Driving this business model are three brutal engines: exit fees; ongoing management fees that continue even after you die or leave; and service fees for things such as food, the administering of tablets and, more lately, higher care services under Aveo’s new Freedom Aged Care program.

Regulation is left to the overstretched and underfunded consumer affairs bodies in each state which administer state retirement village legislation. Despite successive governments over the years conceding that something needs to be done – including in a landmark 2007 federal government report recommending intervention by the Australian Competition and Consumer Commission – there has been little reform.

It’s a problem that’s only going to get worse.

Currently, 200,000 Australians live in retirement villages. This number is expected to almost double by 2025.

Aveo, Australia’s biggest ASX-listed pure-play retirement village operator, has more than 13,000 residents across 89 villages around the country.

The company’s cornerstone shareholder, Mulpha Australia, is a Malaysian company majority-owned by the billionaire Lee family. It is headed by Seng Huang Lee, the 42-year old son of famed corporate buccaneer Lee Ming Tee. Lee Ming Tee was jailed in 2004 in Hong Kong for corporate fraud after being found guilty of inflating the profits of a listed company he chaired.

Read more: The price of freedom

Aveo is viewed by some lawyers and consumer advocates as the most aggressive listed operator in the country, slugging residents with various fees that erode life savings within a few years. Some of its more recent contracts, notably the Freedom Aged Care contract, charge exit fees of 40 per cent after two years.

The exit fee can be extremely lucrative for Aveo. Some units in their Freedom Aged Care villages are now selling for $600,000, which means that for each unit that changes hands every two years or so Aveo pockets a cool $240,000.

It also means that the higher the churn or “turnover” of residents, the more exit fees the company collects.

On top of the financial rip-off, which has been referred to by former resident John Lander as a “get-poor-quick scheme” and financial abuse of the elderly, the joint media investigation can reveal that some of Aveo’s behaviour is affecting the mental health of residents.

Aveo refused to be interviewed but responded to questions in a 19-page document. In it the company denies allegations it is the most aggressive retirement village operator. It said it was “committed to enhancing the lives of older Australians by improving living choices”. It said Aveo conducts resident satisfaction surveys with 89 per cent saying they feel safe and secure in the village.

It said its “exit” terms were more favourable and substantial than those available “from almost any other operator” and that it does not churn residents. It said it doesn’t generate profits from ongoing service fees. It said its recent contracts, including the Aveo Way, are simpler and provide residents with certainty.

Gwyneth Jones, 77, says Aveo’s treatment of her has changed her. “It has damaged my psyche,” she says. “I have become a person I no longer like ... I’m full of anger and bitterness about the trauma I was subjected to.”

Jones’ medical records itemise a series of complaints made by Aveo to Monash Health (then Kingston-Southern Health) in 2007, including intimidating and anti-social behaviour, sitting naked with the curtains open, excessive eating and that Jones alleged a staff member was stealing from her. Jones denies the claims.

In June 2010, the plan to evict her was hatched. File notes obtained from her records, obtained through a freedom of information request, include a document that was written three weeks before Jones was informed about what was going on. It says: “Plan. Discuss at team meeting tomorrow meeting (sic) with all interested parties to discuss and formulate plan re – eviction and all parties on same page, using same language and working towards same goal and for message to Gwyneth to be clear and consistent.”

If the eviction failed, Aveo village management had a plan B: “The eviction process will take up to 90 days and if her behaviour settles as it has done in the past, then the eviction process would not be valid. So we will apply for VCAT guardian for accommodation.”

The “team” that included Aveo staff and management realised they had no legal grounds to evict Jones but if they could get a guardian appointed through the Victorian and Civil Administrative Tribunal (VCAT) to assist with her eviction, they could find alternative accommodation for her.

VCAT can appoint a guardian for an adult who, because of a disability such as cognitive impairment, is unable to make their own reasoned decisions. A guardian makes personal lifestyle decisions on behalf of a person with a disability, including decisions about their living arrangements.

Luckily for Jones, Alan Kohn, an auditor in disability services and an advocate, took up her cause. “I noticed how Gwyneth was being treated by the village management and staff ... She mentioned to me that she believed she was going to be evicted so she asked me to assist her in that area.”

He supported her emotionally and organised a psychiatrist (and later, a second one) to assess Jones. Neither considered she had frontotemporal dementia. One psychiatrist wrote that he did not find the “neuropsychology assessment particularly convincing of this”. He gave her a perfect score of 30 out of 30 for cognitive testing and said that as she didn’t want to move from the retirement village it would be in her interest for someone to try and negotiate on her behalf. He said it was important for her rights as a tenant to be exercised as actively as possible “so that attempts are made for her to stay if she can”.

The VCAT application was lodged by a nurse from Kingston-Southern Health who had been dealing with Jones and knew the village manager. But the application fell apart when the nurse left her job just as the VCAT hearing began. The hospital withdrew the application, apologised and offered an offered an ex-gratia payment for “the distress and upset” it caused Jones and expressed “sincere regret that such a situation arose”.

The letter said: “It seems to me that there may well have been an excessive reliance by our people on information supplied by (and the opinions of) staff at your place of residence.”

Aveo didn’t apologise. It rejected “any liability to pay compensation”.

Aveo says it has continued to listen and attempt to address the concerns of Jones, while “also managing serious counter allegations from other residents” who, it adds, feel threatened by her.

It acknowledged that the police had been called by Ms Jones to the village but added the “police are happy with Aveo’s management of the situation”.

Aveo says, “The resident is a freehold owner of their unit, and there is no intention from Aveo to have them evicted.” It adds that its main concern was “and remains, whether the village can properly care for its residents”.

It said it “sought the assistance of Kingston Centre” and was requested to provide evidence at the VCAT proceeding as a “witness”.

But Jones, who gets around on a walking frame, had a victory of sorts when she caught a trusted staff member stealing from her, after installing a surveillance camera in her apartment. Mara Budimkic would plead guilty in 2011 to 20 separate thefts over 15 months and Magistrate Rosemary Carlin said “instead of taking the opportunity to explain how sorry she felt, she took the opportunity to make disparaging remarks about the victim”.

This is the cruel reality of life for Gwyneth Jones.

Despite everything she has gone through, she can’t leave. “Where would I go? What would I go to with so little money after they have extracted the management deferment fees [exit fees] and forced me to pay for refurbishment fees, even if my unit did not need refurbishing,” she says.

There are other fees along the way. “I was charged $10 for a Band-Aid to be put on my wrist by a manager, $5 for a cup of Milo. If you ask the handyman to come and put in a light bulb, it costs you $10. If he stays more than 15 minutes, it goes up to $20,” she says.

There are other charges. “If, for example, you need assistance because you break something and you can't bend over and pick it up, and ring for help, I got charged $10. I got charged $10 because I locked my key in the room on a couple of occasions, and I had to ask a staff member, ‘Would you please unlock my door, I've accidentally left my key in my room.’ That'll cost you $10.”

One bill shows that in one month Jones was charged $140 for delivery of 28 cups of Milo. It cost $20 to wash, dry and fold a load of laundry and $10 for pressing the non-emergency call bell.

Aveo says it charges for additional services on a “cost-recovery basis” and does not make a profit from these fees or charges.

Other residents around the country express similar complaints. They say they were fooled by the advertisements that promise “great friendships and wonderful care”. They believed that if anything went wrong, such as a fall or a heart attack, they wouldn't be left to rot. Emergency pendants are supplied to residents to ensure help is just a buzz away. But sometimes things go wrong.

Former Aveo resident John Lander, 72, recalls one elderly gentleman who had a fall and pressed his emergency button. “The person on duty rang his son, who lives 30 minutes away. He finally got there, found that his father had an acute attack of cellulitis. He then had to ring the ambulance. He took his father off to hospital. His father never returned to the village. He was treated and he eventually died,” he says.

Fairfax-Four Corners spoke to the man’s son, who confirmed the story.

Another resident, Jan Reilly, 73, says at Aveo’s Veronica Gardens retirement village in Melbourne you have to get sick between 9am and 5pm on weekdays to get a modicum of attention at all. “Between 5pm in the evening and 8am the next morning there’s only one person on duty and they aren’t allowed to leave the desk,” she says.

Others, including Rosalind Smallwood, 78, also from Veronica Gardens, say the emergency button doesn’t always work.

Aveo says emergency call systems are monitored either on-site by village staff or off-site through an external provider and are monitored 24/7. It says if a button is pushed, reception will ring the resident. If there is no answer, the staff member will attend the unit with an emergency first-aid kit, the resident's file, the key to the unit and a mobile phone and, if action is required, an ambulance will be called.

Angela Moore, a former resident of Aveo Mountain View in NSW’s Murwillumbah, says when she moved in, the literature provided by Aveo stated there was a 24-hour nurse or medical assistance. When she needed help, she rang the telephone number provided and the person who answered told her she would ring Triple-0. “I said, ‘But I can ring Triple-0’. She said, ‘Well, that's all we can do. We just ring Triple-0’.”

For John Hayto, a resident of Veronica Gardens, the emergency issue is something else again.

His is a story of neglect.

At 5am on November 13, 2016, Hayto had a fall. “And when I went down, I stayed down,” he says.

With his foot pinned beneath him and a previous knee injury that had led to him relying on a walker, Hayto was stuck.

“Monday passed, Tuesday passed, Wednesday passed,” he says.

He lay on the floor for five days, drifting in and out of consciousness, banging on the ground, screaming to the neighbours – without food, water or the 16 tablets he is required to take daily for health problems including diabetes.

Nobody came.

“Part of me being there was partly my fault because I didn't have the pendant around my neck and I didn't have my mobile phone,” he says.

What he didn’t know was that his friend, Bob Becker, had called the reception desk at Veronica Gardens on the second day, asking someone to check on him.

“We speak three or four times a week and I was having trouble contacting him,” says Becker. “I asked them if someone could check to see if he was all right and the girl went away and came back after two or three minutes and said, ‘Can I have your name and number and I’ll get back to you?’ And that’s the last I heard from them,” Becker says.

Hayto was found because his cleaner, who comes once a fortnight, couldn’t get into the apartment.

He has spent the past seven months at a rehabilitation centre in Melbourne’s Kew. “Since I’ve had the fall, my health has deteriorated quite considerably,” he says.

Using his shoulders to crawl on his back for five days has caused damage to his back. There are other health complications, which mean he will never be able to go back to his unit at the retirement village.

Aveo promotes itself in its brochures and TV advertisements as being a caring company but it has never called to check on John Hayto.

Aveo says it has no record of the incident. It says it encourages residents to wear emergency pendants. Aveo says it is continuing to improve and invest in emergency monitoring upgrades.

Monica Johnson is another resident who wonders if Aveo has a heart.

Her doctor says damp and black mould in and around her unit in Aveo’s Mountain View village in Murwillumbah is worsening her health. “It’s rough, it’s really rough,” she says.

Black mould has been spreading through her property for years, first in the guttering then in the eaves around the building.

After a series of medical tests, her doctor said she had long-standing chronic lung disease and her respiratory symptoms had worsened since she moved into the village. He said her health improved “substantially” when she spends time away from the unit, but this was not a satisfactory solution for the future.

“You should be able to live in your own unit home without detriment to your health.” In another letter, her doctor, Robert Lodge, said, “I remain deeply concerned about the effects of the environment in your unit at Mountain View Retirement Village on your respiratory status and general health, including the detrimental effect on your mental health.”

It would take four years before the village did something about the mould. But in recent months it has returned and her doctor is now recommending she find more suitable accommodation.

Johnson asked Aveo to buy the freehold unit. They offered her and her husband, Ron, $159,000 – a $10,000 increase on the purchase price 12 years ago – but out of that the company would subtract exit fees and $60,000 for the refurbishment and reinstatement of the couple’s unit, leaving them with $52,000 – not enough to move elsewhere.

“I mean, you can’t go out on the street and busk and raise the money that way, and we’re not from a rich family,” she says.

The couple are trapped financially. “We call it Stalag 13, and that's what it’s like.”

Aveo said in response to a series of questions it had been advised that Johnson had a pre-existing lung condition that had worsened in recent years. It said that, after investigation, an arborist had determined the substance was not mould. Aveo said it was unaware that the “black substance” had returned but would investigate the matter further.

It said the buy-back offer was not a formal offer. It said the exit fee was charged in accordance with the contract, which also requires the resident to refurbish the unit. “Regrettably this case is complicated by the particular resident contract, which by our standards today is confusing.” It said its new contracts are simpler.

Retirement village operators such as Aveo make the vast majority of their profit from the exit fees they charge when a resident leaves or dies.

Last year Aveo doubled its profits to $116 million.

At the same time its market cap sits at $1.6 billion at the time of writing, generating a massive windfall for the family that holds a cornerstone stake in the group. As Aveo gets richer, so does the Lee family, which owns a 22.6 per cent stake in the company.

Aveo’s chairman is Seng Huang Lee, the youngest son of Malaysian-Hong Kong tycoon Lee Ming Tee, who made a splash in Australia in the 1980s as one of the great corporate entrepreneurs in the Australian sharemarket, earning the moniker Gleaming Teeth for his sharp manoeuvres.

But Lee Ming Tee faded from public life after spending a year in a Hong Kong jail in 2004 for his involvement in the deception to inflate the true value of a company he was associated with in the 1990s. After Lee stepped back, his children, including Seng Huang, continued to build the family empire.

The Lee family’s investments spread around the world through a series of property and finance companies. They have also grown deep roots in Australia, including the purchase of two Sydney residences such as a $38-million waterfront mansion in Double Bay with a private jetty.

From hotels in Paris and London to the ski resorts of NSW and downtown Sydney hotels such as the Intercontinental on Macquarie Street, the Lees own a cabinet of trophy properties through Mulpha International Bhd – a Malaysian company in which they own a 40 per cent stake. The family, through Mulpha, also owns tropical island retreats including a hotel on Hayman Island and Sanctuary Cove with its opulent Hyatt Regency hotel.

The family also owns a $1 billion-plus stake in Hong Kong’s largest investment bank, Sun Hung Kai & Co, and has interests in the mining game through APAC Resources, the major shareholder in iron-ore producer Mount Gibson.

Seng Huang Lee declined an interview request for this story.

But as the coffers of the Lee family fill, the pockets of its residents at Aveo empty.

Gary Landells is all the poorer after his 97-year-old mother Ruth Shepherd’s four-and-a-half-year stay in an Aveo serviced apartment, which she purchased in April 2011 for $135,000. He became aware of the high fees and complicated contracts after he was given power of attorney in 2015 when Shepherd was diagnosed with dementia and had to move out.

“Mum virtually signed her life away,” Landells says. “But when she lost the power to do it and we saw what she had signed, I thought it was wrong that these people could sign an elderly person up.”

As the unit stood empty, waiting to be sold, Landells’ mother was charged $2000 a month in so-called “maintenance fees”. “How can they charge you a $2000 a month maintenance fee for doing nothing? I want to get on board. I want to get in there. I want a job where I can get $2000 a month for doing nothing,” he says.

In 2015, after the property had sat vacant for a year, Aveo made an offer to buy back the unit for $105,000 – 14 per cent below the purchase price despite a booming property market. Once exit fees, ongoing fees and other costs were deducted, Landells says his mother was left with around $48,000.

All up, if exit fees, capital loss and years of maintenance fees are tallied up, it has cost Landells’ mother $190,000 for her purchase, stay and exit from the retirement village.

“We just wanted out. It went on for 10 months and I was paying $2000 dollars a month maintenance, so I said to my wife ... ‘Let's get what we can, put it towards Mum’s money, and do it in a nursing establishment she’s in now’,” he says. “If you want to take them to court, it’s gonna cost you an arm and a leg and we’re not in a position to do that, we’re just average people.”

Aveo says units may not sell “for a period of time” due to the condition of the unit, price expectations and market conditions. It says it charges ongoing fees after departure like any other strata complex where the property is vacant.

Aveo says its new Aveo Way contracts are simpler and do not charge for refurbishment and reinstatement costs. It says it is standardising contracts through the Aveo Way to improve give residents to give certainty. About 2000 of the 11,014 units operate under the new contract.

Aveo is expanding into home care after buying Freedom Aged Care. Its advertisements say, “We don’t just provide care – we genuinely care for you.” But residents aren’t convinced. They want the regulators and governments to step up.

Former resident John Lander says “organisations like the ACCC need to be involved because nothing is going to change if there’s no action at a political level, at a government level, to rein in this whole process. Because the companies that are operating retirement housing seem to see it as an absolute milk cow, that here’s an opportunity to really suck enormous profits out of people who have retired. Basically, you lose all your retirement savings through this process.”

For Gwyneth Jones, the motto of Aveo and other retirement village industries “is to bleed ’em dry till they die”.