Veterans investment schemes are complicated and confusing. Here’s how they typically work


In one way, the appeal was the same everywhere and for everyone: These businesses would make their lives better. 

Across the country, veterans thought quick cash would equal long-term financial stability. Investors thought they would accrue more money for retirement. 

But in the end, the architects of the schemes were the only ones who consistently made a lot of money — at least for a few years. Lawsuits alleged they made money through high commissions, hidden fees and interest rates as high as 240%.

In the last decade, two unrelated enterprises convinced at least 3,000 people that military benefits were a valuable commodity.

The veterans and the investors trusted the process, which varied based on the brokers and agents with whom they were working.

Court documents and interviews revealed how these complex scams worked. 

Allegations in federal lawsuits in Greenville, South Carolina, describe how an enterprise involving Arkansas businessman Andrew Gamber and Easley, South Carolina, attorney Candy Kern-Fuller dealt with veterans: 

Financially struggling veterans seeking cash advances often found this operation through online searches and websites. 
Brokers and salespeople followed up on online leads, sending forms for veterans to fill out. The forms required the veterans to provide details about their physical health, military benefits and financial circumstances. The veterans had to disclose and agree to pay any existing debts with their cash advances.
Many veterans were required to buy life insurance policies or make other arrangements in case they died before repaying their cash advances.  
Investors were found to buy the veterans’ benefits. Both parties then signed contracts. 
The investors wired a lump sum to the business. Agents deducted a commission as high as 50%, lawsuits say. After debts were paid and other costs were deducted, the veterans received the remaining amount.  
The veterans were required to use a portion of their monthly military benefit checks to repay the cash advances. If they stopped paying, collection efforts included phone calls and in some cases lawsuits. 

Although there are several ways the benefit-assignment schemes attracted investors, allegations in a series of lawsuits against Black Harbor Wealth Management outlines how that company paired investors with veterans and Future Income Payments, the largest of the benefits-buying companies: 

Black Harbor brokers hosted seminars at restaurants. They promised potential clients that this financial opportunity was a low-risk way to grow retirement savings and other funds. 
They encouraged clients to buy a specific type of life insurance policy plan. In addition to the death benefit, it would provide a source of retirement income, the brokers said. 
Many of the clients said they didn’t know that some of their investments went to Future Income Payments. Their money was used for the cash advances to the veterans.
The veterans repaid these lump sums through a portion of their military benefits on a monthly basis. These repayments went back to investors, who used the money for the annual premiums on their life insurance policies.
If veterans stopped repaying their cash advances, many investors could not afford the life insurance policies, and they stopped making money.

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