From: "\"Doc\" Bruce K. Melson" <docmelson@docmelson.com>

X-RCPT-TO: <Will@willpete.com>

 


VA benefits sales under fire


By Jenni Bergal
Business Writer
Posted August 23 2001

A South Florida congressman said he is outraged that companies are paying
lump sums to buy veterans' disability benefits for as little as 30 cents on
the dollar and he wants to propose legislation that would stop them.

"These are the people who are the most vulnerable. They're the ones getting
it between the eyes," said U.S. Rep. E. Clay Shaw, R-Fort Lauderdale. "And
we're going to go to war against these companies."

Shaw said he was prompted to act after reading a Sun-Sentinel story last week
that said the U.S. Department of Veterans Affairs was warning veterans about
companies that paid cash for disability and pension benefits and calling the
practice a "financial scam."

While the VA acknowledges that these companies apparently are doing nothing
illegal, it believes they are taking advantage of desperate people who might
need quick cash.

Several dozen companies now offer to pay veterans a cash lump sum to purchase
their disability benefits or military pensions. Some are Internet-based;
others advertise in military publications or community newspapers.

The companies insist they are not scamming anyone and say they are performing
a vital service by assisting veterans who may need cash to consolidate debts,
buy a home or set up a business.

In the typical arrangement, veterans agree to sign away their benefits for a
certain period, often eight to 10 years. In exchange, the company gives them
a lump sum cash payment, frequently worth 30 or 40 cents on the dollar,
according to federal officials.

Often, the veterans will have to open a joint bank account with the company,
which will then deposit the government checks.

The company then can withdraw the money.

Some companies require veterans in certain cases to put up a form of
collateral, such as their house, to secure the contract in case they default.
Many companies require veterans to take out a life insurance policy that will
be made payable to the company, in case they die before the contract period
is complete.

Shaw, a member of the House Ways and Means Committee, said he wants to stop
the practice of companies paying cash for veterans' disability benefits.

"So many of the people getting disability benefits aren't competent to make
decisions themselves. Some are in desperate straits and feel like this is
winning the lottery," Shaw said. "But these benefits are meant to take care
of them for the rest of their lives. It's not a windfall. These are some
really bad actors who are really taking away the future of some of these v
eterans."

Shaw said he has instructed his staff to look into amending a bill he already
has filed, which would impose a hefty 40 percent federal excise tax against
companies that pay cash lump sums to buy "structured settlements" without
court approval. These settlements are long-term payments made to severely
injured or disabled people who have settled personal injury lawsuits.

Shaw said he believes the proposed tax would force many of these companies
that pay lump sums out of the business because it would no longer be
financially worthwhile for them. He said he would like to add companies that
buy veterans' disability benefits into his bill.

The nation's largest veterans' organization wholeheartedly endorses Shaw's
proposal, according to an official.

"If this bill passes and helps lower the number of veterans who are taken
advantage of, that would be great," said Brian Naranjo, a spokesman for the
American Legion. "I wish we could get the word out to more veterans who are
falling for these
schemes.

 

 

 

 

"When the way comes to an end, then change - having changed, you pass through."

      I. Ching

 

 Bruce "Doc". Melson

http://www.docmelson.com/

http://www.docmelson.com/MedicsPlace/index.htm