Illinois AG: Veterans defrauded in VA pension scam
Lured by “free” seminars on pension benefits, hundreds of financially disadvantaged veterans in Illinois were allegedly defrauded into buying annuities and other insurance products, according to a lawsuit filed by the Illinois attorney general’s office.
The seminars took place at assisted living facilities and other venues across Illinois and were presented as community outreach to help veterans and their families navigate certain pension benefits available from the Department of Veterans Affairs. Applicants were then steered into purchasing unnecessary annuities to qualify for the benefits, the lawsuit alleges.
Hosted by the American Association for Wartime Veterans, the seminars were actually a platform for insurance pitches by Atlantis Marketing Solutions, an annuity sales firm located at the same address in Shelby Township, Mich., the attorney general’s office alleges. Both organizations were named in the lawsuit, filed last week in Cook County Circuit Court.
“Unfortunately, too many veterans and their widows are the targets of scammers who make false promises but big profits promising to provide financial security to veterans’ families,” Attorney General Lisa Madigan said in a news release. “I will continue to stop these despicable scammers from taking advantage of people who have sacrificed to serve our country.”
Mary Lou Schneider, president of the American Association for Wartime Veterans and Atlantis, also was named as a defendant in the lawsuit, along with Schaumburg-based financial adviser James Cauthorn, regional director of the association.
Schneider and Cauthorn did not respond Monday to requests for comment.
At the seminars, presenters told consumers they needed to schedule a subsequent private meeting, where they were instructed to fill out a financial form, the lawsuit alleges. At the private meeting, consumers were then informed they needed to “reposition” their financial assets to “ensure financial eligibility” for VA pension benefits, the suit says.
The VA pension is not a retirement benefit available to all veterans but a need-based program intended to help eligible recipients with low assets.
Between January 2010 and November 2012, for example, the association held 143 free seminars and had 2,114 individual meetings with Illinois consumers, the lawsuit says.
The firm sold over 270 annuities to veterans and their families between 2007 and 2012, the lawsuit says.
The lawsuit alleges that the association and Atlantis violated the Illinois consumer fraud law by failing to disclose that the presenters were in fact insurance agents, falsely claiming that the association could expedite the VA pension process, and misrepresenting that some consumers had to purchase annuities to qualify for the pension benefits.
The association and Atlantis are not recognized as veterans service organizations and are prohibited from representing applicants for VA benefits, the lawsuit says.
In addition to banning the defendants from engaging in unfair and deceptive practices and voiding all contracts entered into with Illinois consumers, the lawsuit is seeking a civil penalty of $50,000 for each act committed with intent to defraud, with an additional $10,000 per act against those over 65.