Thank you Matt for that introduction. I’m pleased to join the Attorney General, Senator Brown, and my colleagues from the Justice Department here at Wright Patterson Air Force Base. And it’s a particular honor to speak with airmen and women like you.
As head of the Civil Division, I am particularly proud of our work to combat financial fraud and other scams — which affect millions of consumers each year. Although it may not always make the headlines, financial fraud can be devastating. So, using all the civil and criminal tools at our disposal, we are working hard to strengthen our role in protecting consumers and punishing those responsible. In that effort, we are making the fight against fraud aimed at servicemembers and veterans a top priority.
For example, we are fighting fraud by for-profit schools.
Colleges and universities compete for federal student aid dollars. And in order to receive them from the Department of Education, schools have to show that they get at least 10% of their revenue from some other source. Well, GI Bill benefits and Tuition Assistance funds -- even though they also come from the federal government – are allowed to count towards this 10% requirement.
As a result, we have seen schools aggressively and deceptively recruiting military students. Making promises like “Your GI Bill benefits will cover everything,” only to find out, after you’ve already enrolled, that they don’t and you have to pay much more. Or telling veterans that a program or school is “military approved” to give prospective students the false assurance that the government stamped this school as great for veterans. Often, by the time military students learn that they’ve been misled, their hard-earned benefits have already been spent, leaving them no choice but to take out hefty student loans to finish the program – or start again at another school.
And that’s unacceptable.
So, our Division’s Consumer Protection Branch is working with the Departments of Defense, Veterans Affairs, and Education, as well as the new Consumer Financial Protection Bureau, to implement the President’s recent Executive Order on Principles of Excellence, which aims to strengthen oversight, enforcement, and accountability in the GI Bill and Tuition Assistance programs – and to make sure that servicemembers, veterans, and their families are not subject to deceptive targeting by schools. As the President noted when he signed that Executive Order in April, his motivation was to stop the bad actors—the folks who “don’t care about you; they care about the cash.” So, the Executive Order keeps aggressive recruiters off bases, like this one, and requires schools to provide clear, simple information about costs, graduation rates, and accreditation before enrolling military students.
Of course, our primary mission at the Justice Department is enforcement. So, in implementing the President’s Principles of Excellence, we will be providing training for the VA and DoD about what this deceptive targeting and fraud looks like, how to spot red flags during annual reviews of schools, and how to report those red flags for further investigation and, where appropriate, prosecution or civil lawsuits under the False Claims Act. And we’re working to establish a robust complaint system where servicemembers and veteran students can report schools that engage in these practices – so that enforcement agencies like DOJ can spot patterns and identify cases.
Beyond the higher education market, the Civil Division is working to fight other fraud schemes targeting servicemembers and your families — and to prevent them from happening in the first place.
Unfortunately, this is a very real problem—one that we hear about from every branch of the military.
These schemes come in all shapes and sizes:
For example, insurance salespeople who market overpriced and inferior life insurance products even though you have access to government-provided insurance benefits. They often do this under the guise of providing a financial education class, and often using the pressure of a pending deployment as a selling point;
Or those who offer veterans so-called “help” in getting their VA benefits — but then charge them a hefty upfront fee;
Or the car dealers who provide yo-yo financing, promising you one interest rate then telling you later, after you’ve taken the car home, that the financing fell through and that you now have to accept a much higher rate.
Servicemembers may be targeted for fraud for multiple reasons. You have a steady income. Many of you move frequently and it can be hard to know which businesses are reputable. You face pressure to get your financial affairs in order before deployments. For many, especially young people, this may be your first job and your first steady paycheck. And you are subject to a higher set of rules than civilian consumers— you can face adverse action under the Uniform Code of Military Justice for failing to pay a debt – which might make some more reluctant to challenge the fraudulent debt, question poor business practices, or even seek assistance from the chain of command.
So, we’re fighting this type of fraud on multiple fronts.
In November 2009, President Obama established the Financial Fraud Enforcement Task Force. That task force is led by the Attorney General, and it includes a working group, which I co-chair, that is devoted exclusively to consumer protection issues. This working group has identified fraud on servicemembers as one of its top priorities. We are collaborating within the Justice Department, with our United States Attorneys, with other agencies, and with St ate AGs, to identify scammers who target and exploit active duty military and veterans and bring more cases against them.
We are working closely with the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, led by Holly Petreaus, which has already made great strides in outreach to military leaders, servicemembers, and veterans.
We continue to raise awareness of common financial threats that active duty servicemembers face in our discussions with military leadership, as well as the JAG Corps, which provides legal counseling on base — so that if they see or hear about consumer frauds, they can refer them to state or federal authorities.
And we have been fortunate in the Civil Division to have an Army Fellow in house each year, a senior officer who facilitates our efforts on behalf of servicemembers and fosters a dialogue with military organizations, like the Pentagon and the Army War College, among others. And, most importantly, helps translate the DoD jargon!
And because we can’t prosecute our way out of this problem, we are engaging in and supporting consumer education where possible to prevent veterans and servicemembers like you from becoming victims of financial fraud in the first place.
That is why visits like this, to bases and installations, where we can listen to your stories about the consumer threats you face, are so important. We encourage victims of fraud to come forward and complain. So often financial fraud goes unreported because victims feel embarrassed or foolish. But only when you complain is it possible for you to get the help you need. And only when we know there is a problem can we work to stop it.
With your help, we can continue to ramp up our fight against those who prey on the financial well-being of you and your families, and leave you free to focus on your invaluable work protecting the Nation.
Thank you for your service.
And it’s now my pleasure to introduce Senator Sherrod Brown.