Tuesday, December 28, 2004
Exploiting the Troops For a Quick Buck
In exchange for $19,980 after fees and insurance, Mr. Jones (a retired Army veteran) signed over his $1,000-a-month military pension for the next five years, a total of $60,000. That is the equivalent of paying interest at a rate of 56 percent a year.
Federal law prohibits retired military people from signing over their future pension payments to others. The companies offering these deals say they are arranged to avoid that restriction. But two federal bankruptcy judges ruled this year that deals like Mr. Jones's, in which veterans in need of quick cash give up their future pensions for a small fraction of their value, do in fact violate that law.
But the law has not been enforced or consistently interpreted. Indeed, the Defense Department's payroll centers routinely handle the paperwork that diverts the pension payments, even though veterans are warned "to exercise caution in these arrangements," a Pentagon spokeswoman said.
As a result, a small but persistent band of financial companies using military-sounding names continue to offer these so-called pension advances to retired military people over the Internet and in military newspapers.
Source: New York Times (Emphasis added)
Pop quiz: how many of these sleazy financial companies do you think will start handling privatized Social Security Accounts if Mr. Bush gets his way?