[Congressional Record Volume 148, Number 25 (Friday, March 8, 2002)]
[Senate]
[Pages S1707-S1708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON of Florida (for himself, Mr. McCain, Ms. Landrieu, 
        Mr. Conrad, Mr. Bingaman, Mr. Breaux, and Mr. Johnson):
  S. 2003. A bill to amend title 38, United States Code, to clarify the 
applicability of the prohibition on assignment of veterans benefits to 
agreements regarding future receipt of compensation, pension, or 
dependency and indemnity compensation, and for other purposes; to the 
Committee on Veterans' Affairs.
  Mr. NELSON. Mr. President, I rise today to introduce legislation, on 
behalf of Senators John McCain, Ms. Landrieu, Mr. Conrad, Mr. Bingaman, 
Mr. Breaux, and Mr. Johnson, to protect our veterans from financial 
predators who offer ``instant cash'' in exchange for future pensions or 
disability pay.
  Current law prohibits the direct sale of a veteran's pension or 
disability benefits. These payments are a tax-free, monthly check from 
the government, meant to provide important financial support to 
veterans who were disabled or wounded in service to our country. In the 
State of Florida alone, 245,000 veterans or their survivors received 
such compensation last year; and the Department of Veterans Affairs 
paid out nearly $21.3 billion nationwide.
  To get this pot of money, some companies have used a loophole that 
enables them to enter into contract with veterans and offer them 
``instant cash'' in exchange for future benefits.
  These contracts require veterans to sign away their disability 
benefits or pensions for a certain period, often 8 years. In exchange, 
companies give them a lump-sum cash payment, typically valued at only 
30 cents per dollar and in certain cases, companies require veterans to 
put up collateral, such as taking out a life insurance policy, 
potentially leaving a veteran's family out in the cold.
  The VA has called this practice a ``financial scam.'' The VA 
Inspector General says: ``These schemes seem to target the most 
financially desperate veterans who are the most vulnerable. For many 
unsuspecting veterans, these benefit buyouts could be financially 
devastating.'' In one case, a veteran received a lump total of $73,000 
in return for his monthly benefit checks of $2,700 over 10 years. An 
annual interest rate of 28.5 percent.
  I find this practice reprehensible. The intent of the law that 
prohibits the assignment of a veteran's benefits is being skirted. My 
bill expands the definition of assignment of benefits and makes a 
violation punishable by a stiff fine, and up to 1 year in jail.
  The second part of my bill creates a 5-year education and outreach 
campaign, through the VA, to provide information to veterans about what 
legitimate financial services are available to them.
  The Disabled American Veterans, Paralyzed Veterans of America, 
Vietnam Veterans of America, and AMVETS have endorsed this bill. I look 
forward to having the support of this body as we move to better protect 
our veterans from ``instant cash'' and other financial schemes.
  I would like to conclude with a comment from one of our country's 
veterans. ``. . . My pension isn't a lottery winning. It's an award 
from the American people for serving my country, and it's appalling to 
think there are those out there that would rob you of this honor and 
steal your future.''
  I ask unanimous consent that the text of the bill be printed in the 
Record.

[[Page S1708]]

  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2003

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans Benefits and 
     Pensions Protection Act of 2002''.

     SEC. 2. APPLICABILITY OF PROHIBITION ON ASSIGNMENT OF 
                   VETERANS BENEFITS TO AGREEMENTS ON FUTURE 
                   RECEIPT OF CERTAIN BENEFITS.

       (a) In General.--Section 5301(a) of title 38, United States 
     Code, is amended--
       (1) by inserting ``(1)'' after ``(a)'';
       (2) by designating the last sentence as paragraph (2) and 
     indenting such paragraph, as so designated, two ems from the 
     left margin; and
       (3) by adding at the end the following new paragraph:
       ``(3)(A) For purposes of this subsection, in any case where 
     a beneficiary entitled to compensation, pension, or 
     dependency and indemnity compensation enters into an 
     agreement with another person under which agreement such 
     other person acquires for consideration the right to receive 
     payment of such compensation, pension, or dependency and 
     indemnity compensation, as the case may be, whether by 
     payment from the beneficiary to such other person, deposit 
     into an account from which such other person may make 
     withdrawals, or otherwise, such agreement shall be deemed to 
     be an assignment and is prohibited.
       ``(B) Any agreement or arrangement for collateral for 
     security for an agreement that is prohibited under 
     subparagraph (A) is also prohibited.
       ``(C)(i) Any person who enters into an agreement that is 
     prohibited under subparagraph (A), or an agreement or 
     arrangement that is prohibited under subparagraph (B), shall 
     be fined under title 18, imprisoned for not more than one 
     year, or both.
       ``(ii) This subparagraph does not apply to a beneficiary 
     with respect to compensation, pension, or disability and 
     indemnity compensation to which the beneficiary is entitled 
     under a law administered by the Secretary.''.
       (b) Effective Dates.--(1) Subparagraphs (A) and (B) of 
     paragraph (3) of section 5301(a) of title 38, United States 
     Code (as added by subsection (a) of this section), shall 
     apply with respect to any agreement or arrangement described 
     in such subparagraphs, whether entered into before, on, or 
     after the date of the enactment of this Act, and any such 
     agreement or arrangement entered into before the date of the 
     enactment of this Act is void and unenforceable as of such 
     date.
       (2) Subparagraph (C) of such paragraph shall apply with 
     respect to any agreement or arrangement covered by such 
     subparagraph that is entered into on or after the date of the 
     enactment of this Act.
       (c) Outreach.--The Secretary of Veterans Affairs shall, 
     during the five-year period beginning on the date of the 
     enactment of this Act, carry out a program of outreach to 
     inform veterans and other recipients or potential recipients 
     of compensation, pension, or disability and indemnity 
     compensation benefits under the laws administered by the 
     Secretary of the prohibition on the assignability of such 
     benefits under law. The program shall include information on 
     various schemes to evade the prohibition, and means of 
     avoiding such schemes.
       (d) Authorization of Appropriations.--There is hereby 
     authorized to be appropriated for the Department of Veterans 
     Affairs for each of fiscal years 2003 through 2007, 
     $3,000,000 for purposes of carrying out the program of 
     outreach required by subsection (c).

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