Veterans are asked to be wary of pension investment schemes Special

Posted Nov 11, 2014 by Jonathan Farrell
As U.S. Veterans gather tomorrow and as families and loved ones honor those who have served, the California Dept. of Business Oversight wanted to urge veterans to be wary of investment schemes being offered to them that can place their finances at risk.
Courtesy of Veterans Benefits Administration
On Friday, Nov. 7, Jan Lynn Owen, Commissioner of the California Department of Business Oversight, issued a Desist and Refrain Order upon Voyager Financial Group, LLC, operating out of Little Rock, Arkansas.
Described as a national distributor, broker, and consulting firm offering a diverse array of products, services, and contracts in the financial services arena. Voyager according to its website (as mentioned in the formal refrain order) and promotional venues, “specializes in the factored income stream market, working to satisfy the needs both of individuals and entities receiving structured payments and those wishing to take advantage of the stability and return on investment that these products can bring."
In the official documents filed by the Dept. of Business Oversight, Owen claims that "beginning in at least 2012, Voyager offered or sold securities, in the form of investment contracts, called 'Veterans Benefits' or 'Veterans Benefits’ Contracts.' Voyager structured and promoted investment transactions between investors and sellers, usually veterans of the armed forces who receive structured payments such as a military pension or disability benefits from the United States government." "Voyager identified potential sellers and persuaded them to sell to investors a portion of their future government payments for a lump sum." "Voyager, as detailed in the official documents filed, prepared and provided to the investor and seller contractual documents such as a 'Sales Assistance Agreement,' 'Purchase Application (for the Purchase of Payments),' 'Contract for Sale of Payments' and 'Offer of Sale of Payments.'"
According to Owen and the Dept. of Business Oversight's findings, Voyager failed to fully disclose to potential investors that the assignment of United States government pensions and disability benefits is prohibited by federal law. This is stated specifically under 37 United States Code, section 701, and 38 United States Code, section 530. And as the official document stated, the investors did not acquire title or ownership of the underlying asset that provided the income stream from the government payment, but merely a potential contractual right to receive the income stream."
It was also pointed out that sellers, who lawfully retained the legal right to receive the government payments, could redirect the income stream away from Voyager’s control at any time. This would leave the investors with only a potential legal claim for recovery of the government payments against the sellers.
“There are unscrupulous operators out there misleading investors and preying on vulnerable veterans who need cash,” said California DBO Commissioner Jan Lynn Owen. “We want veterans to know they cannot sign away their right to their pension or disability benefits.”
Owen made it very clear that In violation of section 25401 of the California Corporate Securities Law of 1968, and pursuant to Corporations Code section 25532, subdivision (c), Voyager Financial Group, LLC and VFG, LLC and those who act on their behalf are hereby ordered to desist and refrain from offering and selling securities in the State of California by means of any written or oral.
Speaking to this reporter on behalf of Dept. of Business Oversight media office, Tom Dresslar said, "Complaints have been made which has promoted extensive monitoring of the situation. This (Voyager) outfit in particular has 38 locations nationwide and 18 locations operating in California."
Part of the struggle in stopping this type of fraud is because the minds behind the scheme and its variations are very shrewd.
Last year the State of New Mexico's Dept. of Regulation and Licensing also ordered Voyager Financial Group to cease and desist in its financial dealings, for the same reason, failure to provide full disclosure and misleading clients.
New Mexico's Securities Division Director Alan R Wilson issued the cease and desist order. In statements released to the press last year in Dec. of 2013, Wilson point out that, "Voyager promoted a scheme where it would illegally purchase veterans’ monthly pension and disability payments for single lump sum payment that was far less than the future value, and then packages them as investments to be sold to gullible investors."
According to Wilson and his staff's investigation, Voyager has sold these illegal investments in several states through consultants such as Equity Advisors/Sidney Evans at least since 2011.
He explained further, "under the scheme, the veteran would agree to give up the dependable future payments, and receive a single payment that amounts to less than the future payment stream. Federal law prohibits the sale or assignment of veterans’ benefits. The investors who purchased the contracts for the future veterans’ pension and disability payment were not told that the scheme was illegal, and therefore, those payments could be diverted back to the veterans at any time."
New Mexico's Securities Division imposed $40,000 in civil penalties against Voyager, Equity Advisors and Sydney Evans. Yet, like the proliferation of Pay-Day Loan outlets, no doubt these shrewd scheme builders operate in ways that find flaws. Finding flaws, inconsistencies or loopholes in complex legal details either in state or local ordinances, allows such schemes to continue, spreading everywhere.
“The victims of this scheme (at least in his State-jurisdiction) are both New Mexico investors and our veterans. But because our veterans often have stressful circumstances or disabilities, we feel particularly strong about protecting them,” said Wilson.
Like Owen and the CA Dept. of Business Oversight, Wilson, his staff and the Governor of New Mexico are asking for the public's help in reporting these types of schemes. The U.S. Securities and Exchange Commission refers to investment schemes aimed at Veterans as "Affinity Fraud." Whether a small operation or one that is scheming on a grand scale, like a firm or entity utilizing the complexity of various systems, "affinity fraud" is an approach that is used. These types scams exploit the trust and friendship that exist in groups of people who have something in common. Military Veterans, especially those who are struggling are most vulnerable to this type of scheme.
"Our goal, (here at the Dept. of Business Oversight) said Dresslar, is to do what we can to put a stop to these schemes and scams before they do irreparable financial damage." Check with the appropriate regulator to verify the registration status of the financial professional or firm offering the product.To help discern proper investment strategies and portfolio investments the California Department of Business Oversight has a list of what to watch out for. To learn more visit the State of California government web site and see DBO's Military Pension Advance Alert page.