Veterans warned of benefits scam

Thursday, Jan. 11, 2001 | 9:26 a.m.

Veterans officials are warning Nevada's ex-military members about a scheme that offers lump-sum payments for monthly disability checks or pensions -- a proposal that eventually cheats the recipients out of thousands of dollars.

However, officials admit it is a tough practice to stop because veterans who are taken in by the offer initially feel they are getting a good deal.

In the scheme, veterans are offered a lump sum up front in exchange for the monthly VA checks.

"Veterans who are especially vulnerable are those in immediate need -- a loved one needs an operation or they've had other financial setbacks -- and they see the quick cash as a means of resolving their problems," said Jerry Yocom, spokesman for the Department of Veterans Affairs regional office in Reno.

But veterans who accept the offer often end up on the short end because the monthly payments over time generally total quite a bit more than the lump sum.

For example, a veteran who receives a $600 monthly VA check may be offered a one-time payment up front of $20,000 to forfeit the payments. In eight years the monthly payments are worth about $60,000 -- triple the investment.

In some cases veterans are required to take out a life insurance policy naming the consultant or the company as the beneficiary, the VA says.

"This is a new one on us," Yocom said. "We know of no incidents in Nevada so far. All we can do now is warn veterans to be careful."

The VA admits that while federal law outlaws the direct sale of VA benefits and prohibits the VA from paying pensions or disability compensation to anyone but the veteran, a family member or a legal guardian, the agency's legal counsel is still in the process of determining whether the lump sum offer as it is practiced is illegal.