Lining Up to Steal Your Pension
American men and women are fighting and dying in Iraq and Afghanistan. Although Americans do not always agree on the reasons and the methods, we are all united behind our troops, and wish for them the best in every respect.
Well, not exactly.
One group of Americans is preying on some of our veterans – the ones lucky enough to have survived their wars, the ones who are now settled back in the states with their families and friends.
In 2003, nearly 1.7 million veterans received approximately $33 billion in retirement pensions from the federal government. These are the good people being targeted by these creeps.
Take retired Sgt. Kevin D. Jones, for example. The New York Times reported on Dec. 29, 2004, that Jones had been tricked into assigning his $1,000 monthly pension to C & A Financial Programs of Stuart, Fla. , through the brokering services of Advanced Funding Inc., out of Maryland. Jones assigned his pension for five years in exchange for $19,980, which he desperately needed to get his Filipina wife to the United States.
Do the math: The total cost to Jones was $60,000 – the equivalent of an annual percentage rate of 56 percent.
When Jones had paid $26,000 to C & A by allotment, he instructed the Pentagon to cease making these payments. C & A promptly sued him, as they did for every other veteran who followed Jones’ example.
Make no mistake about it: These loans are illegal, since it is against the law for veterans to assign their pension benefits. These companies get around the law by characterizing their loans as “pension advances,” for which they purchase a “stream of payments,” according to Leif J. Grazi, a lawyer for C & A.
Last October in Boston , a group of attorneys, including former Georgia Gov. Roy Barns, organized the National Consumer Law Center to file a class action suit on behalf of Jones and two other veterans that seeks to confirm the fundamental illegality of the “loans” made by C & A and others. Between the three victims, they were paying between 45 and 76 percent annual interest.
The National Consumer Law Center is first trying to have the loans found illegal because the lending companies failed to disclose the actual terms of the loan and failed to state the actual interest they were charging. If this effort fails, they will fall back on the obvious fact that – no matter how you characterize these loans – in actuality they are loans secured by assigning pension benefits, which is illegal.
C & A claims it no longer is making these loans, because they have not been especially profitable. Since the company has not yet been audited, there is no way to reconcile this statement with the fact that the loans in question earn the company a whopping 50 percent or more on their outstanding money.
The Pentagon has not come down on either side of the argument, apparently preferring to let things sort themselves out in the courts. This means that right now, when a veteran submits an allotment request for payment of his or her pension directly to a financial firm, the Pentagon complies without question.
The Bankruptcy Courts have been helpful in solving some of these matters. According to the Times, Bankruptcy Judge Brandt wrote in a recent decision, “in the words of Gabby Hayes, ‘Sayin’ it don’t make it so.’ ”
Other parasites still prey on the unsuspecting veteran, such as Carl Bachmann’s Battery Park, Va. , company, Veterans First Financial Services. Bachmann remains unconcerned that the C & A class action suit will affect his profits, because he believes he is disclosing sufficient information to his prospective borrowers so that they can make an informed decision.
But his interest rates are just as outrageous as are C & A’s, and his clients still assign their pension payments to his company by allotments.
According to Steven P. Covey, a managing member of Structured Investments Company, their operation through Retired Military Financial Services is different, because they offer much lower rates.
After a careful examination of the Retired Military Financial Services website, I could find no mention of interest rates, but it appears to be between 30 and 45 percent – which, I guess, is lower than C & A’s rate. On the other hand, their website is set up to make the deal appear as attractive as possible, and appeals especially to the veteran who is not so well educated.
All of these firms advertise in “trusted” publications like Army Times or Navy Times. They use names that engender trust, and try to push every patriotic button they can to entice the unwary veteran to get his or her retirement money early, right now, immediately.
By walking the fine line between the legal and illegal, these firms manage to survive and grow fat with profits wrenched from the lives of unwitting veterans, who perhaps should know better, but are duped by a venue of “trust and compassion,” and then are taken for everything these maggots can get.
Robert G. Williscroft is DefenseWatch Navy Editor