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Monday, January 8, 2001



Veterans are
warned of scam
over disability checks


Star-Bulletin staff

Veterans are warned of a financial scam that offers lump-sum payments in exchange for monthly VA disability checks or pensions.

"These schemes seem to target the most desperate of our veterans," said Hershel W. Gober, acting secretary of Veterans Affairs. "Doing this to veterans is reprehensible."

Federal law outlaws the direct sale of VA benefits. The VA also is prohibited from paying pensions and disability compensation to anyone other than a veteran, family member or lawful guardian.

The latest schemes, however, try to avoid the long-standing federal prohibition by representing these transactions as loans. Companies persuade veterans to give up their disability and pension checks for a specific period -- up to eight years -- in exchange for a lump-sum cash payment typically worth 30 to 40 percent over that same period. "No financial expert on this planet would encourage anyone to accept 30 cents today if they could get a dollar tomorrow," said Gober. In some cases, the veteran must also take out life insurance naming the company as beneficiary.

If a veteran has a disability rated at 50 percent, it could mean receiving a one-time payment of about $20,000, then forfeiting a $609 monthly payment that in the course of eight years would bring in nearly $60,000.

"VA lawyers are still studying the fine print in these schemes ," Gober said. "Even if they're legal, they're despicable, because they take money away from people in the direst financial straits."



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