Larry and Barbara Cook thought they were helping government agents. In the end, they found themselves victims of tax and Medicare gotchas, as well as the scamsters.
It took Larry Cook and his wife a lifetime of work to save over a million dollars. It took just six months for them to lose it all in a scam, leaving them with an empty bank account, a shocking tax bill, and a baffling increase in their Medicare premiums.
Larry remembers with perfect clarity the day that his life changed. It was September 21, 2023. The retired minister and his wife, Barbara, both now 82, were shopping at the Walmart near their home in China Lake, Maine, when Barb got a call on her cell phone purporting to be from Amazon. Normally, this might raise red flags, but the couple wasn’t initially suspicious. Earlier that month, Barb had trouble shopping on Amazon—a site that she had used for years—and had been trying to resolve an issue with the company. So when the caller said that he was with Amazon and was calling about fraudulent purchases attached to Larry’s name and Social Security number, Barb paid attention.
When the caller started asking more questions, Barb signaled for Larry to come over. He picked up the phone, and the caller ran down a list of five purchases made in Larry’s name from different states and countries. Recognizing none of them, Larry responded that it must be a mistake. “Can we talk further?” the caller asked.
Larry told him that they were in Walmart. The caller didn’t relent. He asked if Larry and Barb could go to their car to talk—he said he would call them back. He did, on Larry’s phone, and this time he was joined by someone he identified as the security manager for TD Bank, which made sense, since that was Larry and Barb’s bank.
Back home, Larry got another call. This time, the callers said they were calling from the Federal Trade Commission—the federal agency tasked with protecting consumers—to investigate fraud and potential money laundering, and that he was a target in the case.
Alarm bells went off. Larry told them that if that were true, he needed to contact an attorney. The callers told him that he could do that, but it would probably result in a court case, which would cost a lot of money. Or, they told him, he could help the government catch whoever was behind all of this.
They described it almost like a witness protection program. Larry and his wife would need to get new Social Security numbers and then move their money over into new funds set up as decoys. It was, the callers said, an effort to root out the bad guys.
Larry told them he didn’t understand, and he wanted more proof. The callers said they’d get him some—via email. Within an hour, an official-looking document on Treasury letterhead arrived, advising him that if he cooperated with the government and kept the matter completely confidential, he would be off the hook. Larry remained skeptical, but then the caller (who reached out to confirm he had received the email) warned that if he didn’t cooperate, his children could also be at risk of audit and investigation. The caller said he knew that money had changed hands between Larry and his son earlier that year—that gave Larry pause, since his son had indeed given him a private swing loan when the Cooks were between houses. The institution they’d used to transfer funds back and forth? TD Bank.
Larry and Barbara Cook met at a church and have been married for 61 years. The FBI now believes that the scammers compromised Larry’s cell phone, allowing them to monitor his transactions and direct him to various Bitcoin ATMs. He thought he was helping with a government investigation.
Courtesy the Cooks
Larry reluctantly agreed to participate. The caller told him he would be dealing with a government agent (he referred to him as “Ryan” and provided a supposed badge number) who would reach out from a special encrypted WhatsApp number.
The next day, Ryan contacted Larry and asked how much he had in his TD Bank accounts. When Larry told him, Ryan instructed him to go to the bank and withdraw $10,000, while keeping the line open. Larry did as told and Ryan asked him to take a photo of the withdrawal slip and the money. Larry did that, too. Finally, Ryan instructed Larry to go to a specific location in Augusta, Maine (about a half hour’s drive away) and open an account at a Bitcoin ATM machine. He was nervous, but did that, too. He took pictures of the machine, the wallet confirmation, and the deposit, and sent them to Ryan, who thanked him and said it was exactly what they needed. Ryan also assured him that the money would be returned, plus interest, along with any related expenses for his trouble.
That would be the first of many withdrawals and deposits—not only in Maine, but also in Florida, where Larry and Barb vacationed. Ryan always seemed to know exactly where they were, down to the street. Sometimes, Ryan would offer directions, even telling Larry where to park. When Larry asked how he knew where they were, Ryan replied, “I told you, Mr. Cook, we were watching you.”
Over the next few months, Larry visited more than 30 Bitcoin ATMs. Once, he even flew from Florida to Maine to withdraw $50,000 in a snowstorm.
It didn’t take him long to exhaust his checking and savings. That’s when he dipped into his retirement accounts.
As the withdrawals increased, Tellers at the bank and his financial advisors questioned Larry. Not sure who might be in on the scheme (the callers had suggested to Larry that he was helping them investigate an inside job at TD Bank), he told his advisors, “I’m sorry, you’ll have to trust me.” When the bank began to push back, one manager threatened to report the withdrawals as suspicious. Larry pleaded with him, “Please report it, please report it.”
But, Larry says, “I think he didn’t.”
(A spokesperson for TD Bank did not offer any comment on this specific instance, but emailed a statement saying in part, “We advise our clients that if any unsolicited outreach seems at all unusual, immediately disconnect the call and contact us via established channels, such as the phone number on the back of your card, the phone number listed on the official TD website, or through the secure TD Banking App.”)
As the days ticked by and the withdrawals mounted, Larry grew more and more concerned. But Ryan assured him that it would be wrapped up by the end of the year—and that they would send an accountant to his home to go through the paperwork. But then Christmas 2023 passed, and January 2024 turned into February, and February into March.
Finally, Larry was told he would be done in April. But first? He had to buy some gold. He was directed to buy $100,000 in gold coins, which were delivered to his home. Later, he would order gold bullion. Each time, an “agent” would pick up the gold in a parking lot, with the location varying. (The FBI would eventually determine the pickups were made by paid drivers who were not aware of the specific fraud.)
In April, Larry told the callers that he was done. He was off on a mission trip to Kenya, and when he returned, he had been promised that the matter would be resolved. As soon as Larry got off the plane back in the U.S., he switched on his phone. The app Larry had been told was a special encrypted government version of WhatsApp had disappeared from his phone. (Later, the FBI would conclude that his phone was likely tapped—the compromise of his cell phone explained how the scammers knew where he was and who he had been talking to. They had used the information they intercepted to convince Larry that they were working for the government.)
Larry scrambled to call the FTC, the agency he’d been led to believe Ryan worked for. He asked for Ryan. Instead, the agency directed him to a line to report scams. At first, Larry resisted. But eventually, when the representative told him, “Mr. Cook, I don’t want to tell you this, but there is no Ryan,” he relented. He had suspected as much.
The Fallout
Larry’s next phone call was to the FBI. Agents went to his house and sorted through records. They took his phone and his computer.
The timing couldn’t have been worse. Around this time, Barb found out that she had lung cancer—she strained her back during the mission trip to Kenya, and the tumor was discovered on an X-ray (she’s currently receiving treatment, and the cancer is under control). Meanwhile, Larry was diagnosed with macular degeneration, an eye condition that damages the retina, making it difficult to read.
They carried on, relying on their faith to get them through. It was what they have always done. The couple met at Burlhome Baptist Church in Northeast Philadelphia when they were both teenagers and started dating at age 15. (Married for 61 years, they have two sons, six grandchildren, and four great-grandchildren.) Both remain active volunteers at their local church–Larry as a pastor and Barb as a pianist.
Ironically, during their phone calls, Ryan would ask about Barb and gush over their marriage. “When this is all over,” he would tell Larry, “I would like to meet you.”
After the scam was revealed, Larry thought it was finally all over—but his struggles with tax and Medicare rules were just beginning.
The Tax Bills Arrive
The money that Larry and Barb had withdrawn from their retirement accounts—about $1.3 million over 2023 and 2024—was considered ordinary income and was taxable, triggering a huge tax bill. Some of the tax had already been paid to the IRS, since whenever Larry withdrew money, the broker withheld 25% as prepayment for federal taxes.
After finding out that the Cooks were the victims of a scam, Larry’s accountant tried to mitigate the damage. The IRS wasn’t sympathetic. The representative who was assigned to the case told Larry flatly, “This didn’t happen to you.’’ He refused to allow a deduction for the scam.
The reason? The tax code.
The Tax Cuts and Jobs Act (TCJA) President Donald Trump signed in 2017 changed the rules for personal casualty and theft losses, initially making them deductible only to the extent they are attributable to a federally declared disaster. A financial loss due to a scam didn’t appear to qualify. In 2025, the IRS Office of Chief Counsel released a memo (Memorandum Number 202511015) clarifying the deductibility of theft losses for scam victims.
The IRS’s position comes down to this: being scammed doesn’t necessarily create a tax deduction. It matters why you sent the money, what you were trying to achieve, and whether the law considers what happened to you a theft. That memorandum stressed that the theft loss deduction remains available to businesses and individuals who incur losses on transactions that turn out to be scams but were entered with a profit motive. That wasn’t the case for the Cooks—they were duped because they were trying to do the right thing and “help” the government resolve a case, not make a quick buck.
However, the IRS says that in some instances, relief applies when a scammer misled taxpayers into transferring money under the false belief that they were protecting their own money (which the IRS considers a profit motive). For example, taxpayers who believe their bank accounts have been compromised may be tricked into transferring all their funds into new investment accounts controlled by the scammer. That behavior, the IRS clarified in that 2025 memo, implies a profit motive, which can make the loss deductible.
The IRS originally found that the Cooks didn’t qualify for relief. The couple eventually reached out to the Taxpayer Advocate, who worked the case on their behalf. Eventually, the IRS granted them an abatement of $238,000 and refunded $176,000 of withholding. They’re still waiting to find out about the remainder.
Maine did not offer the same relief. The state initially agreed to follow the IRS, which was great news for the Cooks. But eventually, they were told that while the state wanted to help, there wasn’t a mechanism to provide them relief. That means that the Cooks are still on the hook for state taxes, plus interest and penalties.
The Cooks reached out to the office of Sen. Susan Collins (R-Maine). That office intervened with the IRS but could not offer any help with the state. Since that time, the Cooks have contacted their state representatives, and are appealing the tax due. (Collins’ office and the state did not return requests for comment.)
The Medicare Penalty
As the Cooks were waiting for a resolution to their tax problems, another shoe dropped. At the end of 2024, they received a letter stating that their Medicare costs would skyrocket in 2025 because of the amount of income reported on their return.
Here’s why that happened. Medicare premiums depend on the part (A, B, or D) and your income. Most people don’t pay anything for Part A—that’s hospital insurance. Typically, if you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters), Part A is premium-free.
The premiums for Medicare Part B (covering doctor visits and other outpatient services) and Part D (covering prescription drugs) are income-dependent. Most people are paying a $185.00 per person premium for Part B in 2025, which will rise to $202.90 in 2026. (The premium for Part D is set by your plan and your insurer).
But if your income is above a certain threshold, an extra amount is added to your premium—that’s referred to as the Income-Related Monthly Adjustment Amount, or IRMAA. IRMAA is based on your modified adjusted gross income (MAGI) from two years ago (meaning for 2025 premiums, they look at your 2023 income). The higher your income, the higher the IRMAA surcharge. Because of their income related to the retirement account withdrawals, the Cooks have been paying around $1,000 per month in premiums, and could be socked with even higher premiums next year.
If you get hit with IRMAA, you can make a request for reconsideration. This is common for recently retired individuals, for example, because your income in the year after you leave your job is typically lower than the previous year’s income when you were working. You can also argue that there’s been a mistake–that’s what the Cooks did. They went to the Social Security Administration office and showed a representative the amended Form 1040 reflecting the income tax deduction for the fraud loss.
The response? SSA uses MAGI to determine IRMAA. MAGI doesn’t take the deduction for fraud losses into consideration. And, there’s no way to change that.
The Cooks appealed—more than once. They were denied each time. This month, they appeared before an administrative judge who, while sympathetic, said he could not rule in their favor under the law as written. The matter has now moved on to the U.S. Department of Health and Human Services Review Board. “I don’t know what they’re gonna do,” Larry says.
Helping Others Recognize A Scam
While it would be easy to sit back and feel sorry for themselves, Larry and Barb aren’t willing to do that. Larry feels that he can make a difference. After sharing his story at a church event, he was amazed by how many others told him they, too, had been victims of a scam. It’s an all-too-common experience among older adults, as FTC data shows. In 2024, losses exceeding $10,000 from business imposter and government imposter scams were more than twice as likely to be reported by older adults, while losses over $100,000 were three times as likely to be reported by older adults.
And what happened to Larry is typical. In 2024, 41% of older adults who reported losing $10,000 or more to a business or government imposter scam indicated that a phone call was the initial contact method (15% said it started with an online ad or pop-up, and 13% said it started with an email). Of those victims, 33% indicated that cryptocurrency was the payment method, followed by bank transfer (20%) and cash (16%). Those who identified cryptocurrency as the payment method flagged Bitcoin ATMs. And while gold was not a payment method consumers could select in a complaint, in about 5% of reports with losses of $10,00o or more (and about 21% of reports with losses over $100,000), gold was written in as the payment method or mentioned in the complaint narrative.
So how can you protect yourself? The FTC suggests taking a few steps, including:
- Don’t give your personal or financial information in response to a request that you didn’t expect. Honest organizations won’t call, email, or text to ask for your personal information, such as your Social Security number, bank account numbers, or PIN. If you get an email or text message from a company you do business with and you think it’s real, don’t click. Instead, navigate to their official website (remember that government websites end in .gov, like
- IRS.gov) or call their official number. Don’t call the number they gave you or the number you see on your caller ID.
- Don’t cave to the pressure to act immediately. Honest businesses will give you time to make a decision. Anyone who pressures you to pay or give them your personal information is a scammer.
- Don’t trust callers or services who tell you exactly how to pay. Never pay someone who insists that you can only pay with cryptocurrency, a wire transfer service like Western Union or MoneyGram, a payment app, or a gift card. And never deposit a check and send money back to the person who gave you the check.
- Stop and talk to someone you trust. Before you do anything else, tell someone like a friend, a family member, or a neighbor what happened. Talking about it could help you realize it’s a scam.
Finally, if you were scammed or think you saw a scam, report it to the FTC here.
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Source: https://www.forbes.com/sites/kellyphillipserb/2025/12/13/how-one-couple-lost-their-life-savings-to-a-fake-federal-investigation/
