Ripping Off Dead War Vets' Beneficiaries - by Stephen Lendman
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.