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January 6, 2005
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By Robert G. Williscroft
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.' "
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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 a DefenseWatch
Senior Editor. He can be reached at defensewatch@argee.net.
Read his blogs at The
Dead Hand. Send Feedback responses to dwfeedback@yahoo.com.
©2005 DefenseWatch. All opinions expressed in this article are the
author's and do not necessarily reflect those of Military.com.
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