Lawmakers, advocates and government officials say unscrupulous financial advisers - "pension poachers" - are taking advantage of veterans, selling unneeded services, making promises they can't keep and helping hide assets for veterans who may then be unable to access their own funds if they need them.
The "slick as snake oil" pitches, often framed as free seminars at elder-care facilities, could be diverting benefits to veterans the program was never intended to help and could create a backlog of claims applications, critics say.
"It's a big scam," said Ingrid Evans, a California lawyer who gets calls frequently from people in Arizona who say they are victims of these aggressive practices.
But it's perfectly legal.
Known simply as "pension," the Department of Veterans Affairs program has been around since 1979. It pays a financial benefit to war-time veterans with low-incomes who are elderly or totally and permanently disabled from injuries not related to military service. Vets and their spouses can get an additional aid and attendance, or A&A, allowance to pay for help with daily life tasks, like bathing, feeding, dressing and more.
The program was little-known and little-advertised as recently as a few years ago. When Debbie Burak began looking for help to pay for her parents' elder care in 1996, she said VA representatives did not even acknowledge its existence when she asked.
But Burak, a Virginia resident who now runs a website providing free information on the pension program, said that in recent years financial advisers have started approaching veterans with pitches "as slick as snake oil" on the program.
That has led to a boom in the program, which paid 522,000 recipients nearly $5 billion in 2012. While payouts grew only 1 percent from 1999 to 2007, they jumped 70 percent from 2007 to 2012. Claims for A&A benefits nearly doubled from 2007 to 2011.
Some financial advisers use "aggressive sales tactics" to pressure elderly veterans into buying financial products and services they may not need, a Federal Trade Commission official said.
"They use a lot of fear tactics, play on a sense that they (the veterans) served and should be taken care of," said Monica Vacca, assistant director for the FTC's Division of Marketing Practices.
One of those tactics is to convince veterans with income and net worth too high for the program that they can qualify by hiding assets, to look poorer.
A Government Accountability Office investigation in 2012 found that some advisers told undercover GAO investigators that they could hide as much as $500,000 or $1 million to bring a veteran's apparent worth below the pension-benefit threshold of about $80,000.
In a statement to the Senate Special Committee on Aging, the VA's Office of the Inspector General said it is not illegal for veterans to hide assets before they apply for the benefit. The pension application does not even ask the veteran to divulge information about transferred assets. The office said it investigated fewer than 20 cases about pension and A&A benefits from 2000 to 2012, and not one resulted in criminal prosecution.
The strategy may be legal, but it's not risk-free. It creates what one advocate calls "the Medicaid time bomb."
While the VA does not care if someone shelters assets, Medicaid does, requiring a five-year "look-back" at the time of application to look for asset transfers. A veteran who used the tactic to get the pension might be disqualified for Medicaid benefits, which "could be really ruinous," Vacca said.
The strategy can also leave assets tied up where a veteran cannot get them when they're needed.
"You start seeing things where they try selling a 90-year-old man a $25,000 irrevocable trust or an annuity," said Thom Stoddert, a Seattle-based veterans' advocate and former VA ratings specialist who focuses on A&A claims abuses.
Stoddert said advisers often fail to tell veterans at informational meetings that they may qualify for other state or federal benefits and programs without having to hide assets or invest in other financial products.
"They focus on just one benefit that the VA has, of many, and there is a financial reward for them," Stoddert said of financial advisers. "When you see people trying to make veterans eligible for a program that was not intended for them, that's the first red flag."
Amy O'Rourke is president of the Cameron Group, a Florida-based geriatric-care management company. She has attended some of the free seminars, but notes that "nothing comes for free" where pension poachers are involved.
"I went to some of the meetings, and what I observed was they were in the business to sell annuities, manage assets," O'Rourke said.
With assets tied up by a poacher, and the potential for Medicaid delays as a result, veterans or their widows might be left without the "float" to pay for unforeseen expenses or increases in the cost of care, she said.
And even though many are VA-accredited, O'Rourke said the financial advisers are often unqualified or inexperienced in filing claims and can cause delays or denial of benefits by completing the forms improperly.
While VA accreditation is often touted by financial advisers, government watchdogs say it means little, allowing unscrupulous advisers to get certified to gain veterans' trust.
A GAO report in August said accreditation applications jumped 85 percent after a mid-2008 rule change, and have stayed at the higher level since. The accreditation process itself is "not sufficient to ensure representatives have good character," said the report, which said VA reviews rely too heavily on the applicant's self-reported background information, such as criminal history.
And the VA is not consistent about following up on references, the report found, while a backlog in processing annual re-certifications means the agency is unable to ensure that those already accredited "retain good character."
Advocates say some advisers have told veterans they are guaranteed the pension benefit - even though only the VA can make that determination, said John Roseberry, who has helped veterans with claims as an American Legion representative in Tucson.
"I'm not going to promise you anything," Roseberry said of his dealings with veterans' applications. "The decision's not mine to make."
Tony Tyczynski, a Sauk County, Wis., veterans service officer, said VA benefit programs require "not only a great deal of knowledge and understanding on the front end, but even more so on the maintenance side of it."
"To put it very, very conservatively, it's a very complex benefit," he said.
Like Roseberry, Tyczynski and other county veterans service officers in Wisconsin help veterans with their benefits for free. Many states offer similar help and veterans' organizations like the American Legion and Veterans of Foreign Wars also provide help with claims at no cost to the veteran.
But Paul Williams, senior director of government relations for the Assisted Living Federation of America, said that while there is a problem with pension poachers, not all financial advisers are bad. And those who specialize in financial planning for long-term care may be able to offer a take on the pension benefit that the veterans' organizations cannot always match. He said it can be "very difficult" finding a veterans' organization with the expertise to do A&A claims.
"It's not like Wherever-you-are, USA, that you just call up the American Legion or some other such support organization and they just have somebody that's readily available to walk you through the application and do it," said Williams.
He said that in addition to curbing unscrupulous pension poaching, there needs to be an emphasis on ensuring that veterans' advocates are knowledgeable on pension benefits.
Despite the challenges, it can be worth the fight. Burak said the pension benefits can provide real help to those who need it.
She only found out about the program after her father, a World War II veteran, died in 2003. But it could have provided $144,000 of aid in the final seven years of his life, she said.
She struggled for two more years to get a survivor pension for her mother, whose finances were so strained she had no way to pay for her own funeral.
"My mom knew that the only choice we had at her passing was cremation, and she begged and begged and begged me to get this money from the VA" for a casket, Burak said, "so that she did not have to lay there and anticipate going in an oven."
After her mother died in 2005 - just three weeks shy of completing the VA pension claims process - Burak started the nonprofit website VeteranAid.org to provide free information on the pension so no other family would go through what hers had.
"She (her mother) died Aug. 25 and the website was built and launched Nov. 20," Burak said. "It was a way for me to channel all the pain and the anger and the frustration, and it was also a way for me to rewrite the ending because it was so painful."