By Dale Gribow

The recent Rancho Mirage lawsuit arises from a widespread nationwide scheme whereby insurance “veteran advocate agents” fraudulently induce elderly residents of retirement homes and assisted living facilities to reposition their assets. This change ultimately causes the elderly direct financial harm. Typically, these “veteran advocate agents” will set up a free lunch/dinner educational presentation at retirement homes and assisted living facilities that are ostensibly to educate senior veterans on benefits available to them. However, these “veteran advocate agents” do not disclose, as mandated by California Insurance Code 785, that they are insurance agents.

These “veteran advocate agents” convince unwitting senior veterans that if they reposition their assets to make it appear that they are poor, then they will qualify for an Aid and Attendance pension. In order to do this, the “veteran advocate agents” induce seniors to transfer their assets into an annuity and irrevocable trust. However, the “veteran advocate agents” do not disclose that these annuities may only earn 0.6%, while their assets previously earned between 7-10%. Moreover, these “veteran advocate agents” also fail to advise in writing (as required by Insurance Code Section 789) that the use of a mutual fund or other asset to fund the annuity may have tax consequences in addition to early withdrawal penalties etc.

The “veteran advocate agents” tend to target wealthy seniors in expensive retirement facilities since people who truly qualify for Aid and Attendance don’t have assets. By buying into the deceitful tactics of these “veteran advocate agents”, senior veterans may not only jeopardize their chances to qualify for Medicaid, but also may be accused of conspiring to defraud the government. This nationwide scheme ultimately generates handsome commissions and profits for the “veteran advocate agents” and their respective insurance companies.


In 2007, the SEC and Financial Industry Regulatory authority inspected 110 securities firms that utilized the “free lunch” program as described above. The report found that 100 percent were sales presentations, despite the fact they were advertised as educational programs.

AARP has also been aware of the prevalence of “veteran advocate agents” and has previously warned senior veterans about these crooked investment advisors. The AARP Bulletin has explained that these advisors are not accredited with the U.S. Department of Veteran Affairs, though these advisors will likely insinuate that they are part of the government and are a nonprofit 501c3. Additionally, these “veteran advocate agents” may wear a picture badge (with a patriotic looking logo) that directly identifies them as a “Volunteer Veteran Advocate” with a senior veterans group.

The irrevocable trusts that the “veteran advocate agents” set up tend to utilize annuities which are long term investments. These are often inappropriate for older retirees, particularly since some annuities must be held for a certain period of time. In the Rancho Mirage lawsuit at hand, the case involves a 90 year old veteran. A 90 year old that purchases a 10 year annuity will likely not be around when it concludes. When they pass away, their heirs will be stuck with the same investment for the balance of the 10 year period.

According to Prescott Cole, a senior attorney for the California Advocates for Nursing Home Reform in San Francisco, victims of elder abuse rarely pursue litigation against suspected scammers. Cole explains that Elder Abuse litigation requires a senior to go to court. Seniors don’t like to go to court as they would rather not be involved. Furthermore, Cole has stated that nationwide schemes are prevalent. They induce war veterans to sign away possible Aid and Attendance money by transferring assets and then not qualifying for the Aid and Attendance free pension.

Grant Gautsche, a director of the Riverside County Department of Veteran Affairs, agrees with Cole and has stated that he has a folder of groups presently under investigation. The case that was most recently filed explains that the senior did not know what an annuity was, and further that the word annuity was never used in the sale. In this case, the salesperson identified himself as a volunteer for a group for Senior Veterans-alluding to an affiliation with Veterans Affairs or the Government.

It is promising to note that one insurance company has agreed to stop selling this product in California after litigation was initiated. A special Veteran Hotline

(760 837-7555) has been set up for elder abuse victim’s complaints and assistance. Remember that elder abuse can be financial, like the case herein, or may involve a hospital or nursing home mistreating the senior. The law allows for a recovery of three times the amount of the punitive damages.

The lawsuit mentioned in The Desert Sun is arguably a huge step towards protecting seniors from potential nationwide financial scams. Hopefully it will stop those that refer to themselves as “veteran advocate agents” from preying upon seniors. We are also hopeful that the lawsuit will ultimately punish these “veteran advocate agents” and others who have engaged in egregious fraudulent conduct against senior veterans.

The VETERAN FRAUD HOTLINE number is 760 837-7555.

If you have any questions regarding this column or ideas for future columns please contact Dale Gribow, Attorney at Law at 760 837-7500 or

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