- Wall Street and other financial scammers do it from the
living, Prudential and many insurers from the dead, ripping off families
of killed war vets. On July 28, Bloomberg.com's David Evans discussed how
it works in an article titled, "Fallen Soldiers' Families Denied Cash
as Insurers Profit," a polite way of explaining grand theft. From
the living, it's bad enough, from the dead, it gives chutzpah new meaning,
affecting countless thousands of bereaved families.
-
- Evans wrote about one, Cindy Lohman. Two weeks after
her son Ryan was killed, she received a Prudential Financial, Inc. "9-inch-by-12-inch
envelope," the company managing life insurance for the Department
of Veterans Affairs (VA).
-
- A letter explained. As his beneficiary, she was entitled
to $400,000 in death benefits along with something looking like a checkbook.
The funds "would be placed in a convenient interest-bearing account,
allowing her time to decide how to use" them, the letter saying:
-
- "You can hold the money in the account for safekeeping
for as long as you like," plus a disclaimer in easily overlooked fine
print, explaining "what it called its Alliance Account," a non-FDIC
insured scheme, a ripoff to defraud beneficiaries like Lohman.
-
- After leaving the funds untouched for months, she tried
- unsuccessfully using one of the "checks," then
failed a second time. She was "shocked," saying she thought the
money was FDIC insured, in a bank, to be used freely.
-
- Not so. The "checks" were drafts or IOUs. "That
money - like $28 billion in 1 million death-benefit accounts managed by
(130 insurers like Prudential) wasn't actually sitting in a bank."
It was in Prudential's general corporate account earning income - around
4.8% for insurers, 1% or less for survivors. This summer it was 0.5%, less
than half what some banks pay on jumbo CDs, and way less than insurers
yield on their investments.
-
- "It's a betrayal," said Lohman. "It saddens
me as an American that a company would stoop so low as to make a profit
on the death of a soldier. Is there anything lower than that?"
-
- For sure - waging an illegal war of aggression, sending
young men and women to die for a lie, Ryan Lohman one of thousands affected
(plus others maimed and disabled for life), their deaths compounded by
insurance fraud ripping of their survivors, and VA officials doing nothing
to stop it, claiming ignorance when they damn well knew or easily could
have found out. For every branch of government, the business of America
is business, the public their patsies to be scammed of their money, health
and welfare.
-
- So-Called "Retained-Asset" Accounts
-
- They've become standard practice "in an industry
that touches virtually every American: There are more than 300 million
active life insurance policies in the US, and the industry holds $4.6 trillion
in assets, according to the American Council of Life Insurers."
-
- Insurers tell survivors their money is safe, guaranteed
by them not the government, making them woefully unsafe when investments
are ripped off, and the principal depends on the company's health.
-
- According to Jeffrey Stempel, Law Professor at the University
of Nevada, Las Vegas William S. Boyd School of Law, the "checkbook"
system cheats survivors.
-
- "It's institutionalized bad faith. In my view, this
is a scheme to defraud by inducing the policyholder's beneficiary to let
the life insurance company retain assets they're not entitled to. It's
turning death claims into a profit center," and Washington lets them
get away with it.
-
- Three firms, including Prudential and Metropolitan Life,
handle retained-asset accounts for about 130 life insurers. No public records
show how much, but at least $28 billion is involved.
-
- Besides scamming beneficiaries, insurance companies may
be violating federal bank law - a 1933 statute making it "a felony
for any company to accept deposits without state or federal authorization."
Only chartered banks and credit unions can do it. Insurers aren't chartered
or regulated, so funds they hold for beneficiaries will disappear if they
go under.
-
- Further, the bogus Obama administration "financial
reform" doesn't address retained-asset accounts, only a new federal
insurance office with no teeth. The same holds for the entire bill, a gift
to Wall Street and big insurers, small investors left unprotected, or as
one analyst explained - "austerity" for the public, high times
for the big boys, and why not. They wrote the bill and got what they want
as they did for "healthcare reform" and everything else Congress
enacts, corporate occupied territory like the White House and all federal
agencies. How else could Wall Street and insurers like Prudential commit
fraud and get away with it.
-
- Pru and Met Life alone rip off hundreds of millions of
dollars annually, stealing one of their main profit centers with no accountability.
Since 1999, the VA let Prudential send survivors "checkbooks"
for its Alliance Account. "In 2009 alone, (recipient) families....were
supposed to be paid" $1 billion in death benefits "immediately,
according to their insurance policies. They weren't."
-
- Pru VA policies offer either a lump sum payment or 36
monthly installments. About 90% choose the former and get a "checkbook,"
not a cashable check. Yet under a 2008 law, recipients have one year to
put their funds into a tax-free Roth IRA. Lohman said Pru never told her.
Unless Congress corrects the fraud, she and other recipients "will
remain a secret profit center for the life insurance industry," their
officials robbing the graves of dead soldiers.
-
- Parents Sue for Lost Benefits
-
- On August 30, AP reported that the parents of six dead
soldiers "are suing Prudential Financial, saying it paid paltry interest
on military life insurance benefits while keeping more generous" payouts
for itself.
-
- Filed in Springfield, MA US District Court, it accuses
Pru of using "bookkeeping maneuvers," misrepresenting how benefits
are handled. "Their attorneys are seeking class-action status"
for potentially tens of thousands of others.
-
- One of four attorneys involved, Cristobal Bonifaz, said
lost interest varies, "depending on how quickly beneficiaries withdrew
the money," those leaving it untouched (the great majority) owed the
most, as much as $30,000 per recipient.
-
- "What we're saying to Prudential is, 'You kept investing
the money, but that money did not belong to you as of the day that person
died, and whatever you made off it, you should give to those persons it
was meant for."
-
- Hundreds of millions of dollars are at stake. Plaintiffs
in the current suit are parents of soldiers who died in Iraq, Afghanistan,
El Salvador, and those dying after returning home.
-
- Lead plaintiffs, Kevin and Joyce Lucey, spoke for many
saying: "It's totally unacceptable for any company to think they can
treat any family that has gone through this kind of trauma, especially
military families. (We) think it becomes part of our responsibility to
make sure no one has to go through anything similar to this."
-
- Given Washington's complicity with banksterism, insurance
fraud, and numerous other corporate scams, imagine how many others haven't
come to light. Imagine also the challenges ordinary people face for restitution,
even by class-action, deep-pocketed bigness and business-friendly courts
huge hurdles to overcome, plus interminable litigation years, especially
when high stakes are involved.
-
- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com
and listen to cutting-edge discussions with distinguished guests on the
Progressive Radio News Hour on the Progressive Radio Network Thursdays
at 10AM US Central time and Saturdays and Sundays at noon. All programs
are archived for easy listening.
-
- http://www.progressiveradionetwork.com/the-progressive-news-hour/.
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