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Scammers Target Veterans


Veterans Day is tomorrow, a moment where many pause to honor America's past and present soldiers. Over the past week, South Carolina's Greenville News newspaper has been reporting on a practice that appears to target and victimize thousands of veterans, leaving them indebted or in bankruptcy. Criminal charges and civil lawsuits have been filed in an attempt to rein in those responsible. One defendant has already agreed to plead guilty.

Kirk Brown and Carol Motsinger are the reporters behind this year-long investigation, and Carol Motsinger joins us now. Welcome.

CAROL MOTSINGER: Thank you so much for having me.

GARCIA-NAVARRO: So this involves the purchase of streams of veterans' benefits. So our company gives you, the veteran, a quick lump sum of cash. You give us all or part of your monthly benefits check for a set period. That's - OK. What's wrong with that?

MOTSINGER: So actually, seven judges in six states have ruled that this practice violates what's called anti-assignment laws. And these federal laws were developed to really protect the men and women in our service so that as they are, for instance, you know, fighting abroad, there aren't concerns that the money that they are earning is not going directly back to their families. Judges have also found that these qualify as illegal loans at the state level, as well.

GARCIA-NAVARRO: Let's listen to one of the veterans that you spoke to. He is U.S. Army veteran Michael Haring. He's featured on your website. And here's some of what he had to say.


MICHAEL HARING: It's safe to say that I would not have entered into that contract had I not been in extreme financial stress. I believe that what they're doing and what they have done is nothing short of predatory.

GARCIA-NAVARRO: So he's saying it's predatory. What happens on the other side of this? So they get this lump sum, and then what happens?

MOTSINGER: Yes. So what they agree to is the cash advance from around $5,000 to nearly $98,000, our reporting showed. And they agree to pay back this money, like you said, over a period of time - usually four to 10 years. And what was not disclosed in the allegations - the lawsuit's outline is that there were really high commissions in some of these enterprises, sometimes up to 50%, as well as hidden fees and other exorbitant interest rates, sometimes as high as 240%.

GARCIA-NAVARRO: Interest rates as high as 240%. Wow.


GARCIA-NAVARRO: And so they kind of get lured into this and then find, I guess, in some cases, that they can't pay back the money.


GARCIA-NAVARRO: What makes military veterans vulnerable to these scams in particular?

MOTSINGER: Veterans have a guaranteed stream of income. And one of the sources we talked to said that's sort of, like, waving a piece of bacon in front of a scammer, right? Then also, you know, they did target veterans who were receiving disability. We know that mounting medical costs around trying to cope and treat some physical and mental disabilities - you know, that does put veterans in some financial binds. And also, that some veterans, you know, who have been spending most of their career abroad, for instance, or on bases - you know, we talked to one such man who said, you know, I came out of the service in retirement not having the financial experience of running, you know, a household, so to speak.

GARCIA-NAVARRO: According to your reporting, judges in six states have found these business practices illegal, as you mentioned. Why hasn't that slowed them down?

MOTSINGER: Well, we found that enterprises like this really often need nothing more than a phone, computer, Internet connection to connect with veterans. So it makes it a very mobile operation. So what they're able to do is, you know, operate in one state. And then maybe a regulatory agency or other, you know, commission would ban the practice, but then they would, so to speak, open up shop using a website in another state. They often changed the names of their businesses, as well. They're sort of able to stay kind of one step ahead of authorities.

GARCIA-NAVARRO: I'd like to understand - since, you know, your community has been hard-hit by that - what's been the impact?

MOTSINGER: I've been, on a personal level, moved by what these individual victims say, what this meant for their daily lives. You know, we found, ultimately, the impacts - if you total up, for instance, the amount of money that the FBI alleges has been lost, you know, we're talking hundreds of millions of dollars.

What it's really meant is that individuals who were seeking, for instance, just to help get a down payment for a car - we found such person in Minnesota - that they just wanted $2,700 for reliable transportation. In this man's case, he ended up owing $27,000 on that cash advance - that these just sort of simple senses of security - what I think so many of us can relate to of being just a few thousand dollars away from feeling secure month to month - that it's really set back these folks in a big way.

So I think what I try to remember and what feedback we have been receiving from our readers is that, you know, they want to help. We've had legal aid organizations reach out and say if they could help veterans in any way advocate for what can be done at this point. And we're also reaching out to other representatives 'cause Congress has - in the past, there's been three such bills that have come up in recent years that would add some protections against this type of alleged scam. And so I know that we're, in the coming week, going to be pursuing sort of what can be done at that federal level.

GARCIA-NAVARRO: Carol Motsinger is a reporter for The Greenville News. Her investigative series with fellow reporter Kirk Brown is called "Indebted." Thank you very much.

MOTSINGER: Thank you. Transcript provided by NPR, Copyright NPR.

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