Certain low-income veterans are entitled to pensions, and more than 200 agencies across the United States are "marketing financial products and services" to help veterans qualify for the benefits, according to a Wednesday report by the Government Accountability Office (GAO).
The yearlong investigation found that veterans who do not meet pension requirements are qualifying for and receiving the funding, often because they were encouraged to do so by private companies.
One veteran transferred $1 million just months before applying, and was approved to receive the monthly payments, the GAO found.
While transferring funds prior to applying for a pension is legal, taking any fee for enrolling a veteran for the benefits is illegal.
Many firms who market these services claim they charge a "counseling fee" ranging from hundreds of dollars to $10,000, according to testimony at Wednesday's hearing.
Some Utah companies use names such as "Veterans Benefits Foundation," leading veterans and their families to mistake the companies for affiliates of the VA, Schow said.
Utah victims who met with Schow lost between $250 and $16,500 to such scams.
"The sad thing is that we all do this [enrollment work] for free," Schow said. "The price these people paid serving our country is all the price they need to pay."
Sen. Ron Wyden, D-Oregon, is spearheading efforts to end to such practices. "This program has become a magnet for sleazy con men and rip-off artists," he said Wednesday.
Sen. Claire McCaskill, D-Missouri, suggested making such "pension poaching" equivalent to criminal fraud.
"I think there's a special place in hell for companies who take advantage of veterans in this way," she said.
Wyden and Richard M. Burr, R-North Carolina, are proposing a bill to give the VA "look-back" authority, which would allow it to re-examine whether veterans granted pensions actually qualified.
David McLenachen, director of the VA's Pension and Fiduciary Service, and Wyden also advocated making veterans who transfer assets ineligible for the pensions.
To qualify now, veterans must be over 65 or severely disabled, have served during wartime, and meet income guidelines. For example, a veteran with no dependents must have an income of less than $20,447 to qualify.
See the hearing
Kris Schaffer, a small business owner from Billings, Mont., shared the story of how a lawyer scammed her parents out of their life savings. Watch her testimony in a video of the Senate's Special Committee on Aging meeting on Wednesday.