A person named as an agent in a power of attorney has the legal duty to act in "the best interests" of the principal -- that is, the person who
made the document. While that's a little fuzzy as a legal standard, the greater practical truth is that you know fraud when you see it: for example, money being siphoned from a bank account instead of being used to provide for the principal's health and safety.
An outsider trying to detect such fraud, however, is pinned in a difficult spot, since it may be tough to find out exactly what the agent is doing. In most states, the agent will not automatically be required to account or report to a court or to family members or other concerned individuals.
Your first step will be to get specific about your concerns about exactly what makes you suspect fraud is occurring. Then try to have an honest talk with the agent. Don't be accusatory; simply emphasize that you're interested in knowing what's going on. Also let him or her know you're available to help or that you support the idea of hiring someone else to lend some assistance -- perhaps a bookkeeper to do some basic accounting -- if that will relieve the burden of acting as agent. In a surprising number of cases, that show of care and concern clears up the matter.
If that step isn't possible or successful, you might ask a court to review the agent's acts to make sure they're on the up-and-up, and possibly to require an accounting so that the finances can be more directly monitored. To start this procedure, check the requirements of the nearest probate court. You should be able to find it by searching for probate court and the name of the city or county.
Defrauding an older person may be a form of financial abuse, which is strictly prohibited by the elder abuse laws in effect in every state. If you're fairly certain that some financial abuse is occurring and have good evidence to prove it, such as past-due bills that should have been paid for the principal, or receipts showing the agent used the principal's money for his or her own gain, consider consulting the office of adult protective services nearest to where the older person lives. You can find contact information by doing an Internet search of adult protective services along with the name of the state. Most of these agencies operate confidential hotlines to help callers define and direct their complaints, can provide referrals to local sources for more help, and sometimes undertake investigations on their own.
Finally -- again, if you're fairly certain that financial abuse has occurred and have some solid evidence to prove it -- consider hiring an elder law attorney for help in filing a claim against the agent. Before making any decision to hire, make sure the lawyer is experienced in seeking compensation from people who have abused and misused powers of attorney by intentionally stealing property or negligently handling someone else's property.