Lawmakers call veteran scams 'appalling'

Key members of Congress - including Texas' U.S. senators - have called for an end to the plague of fraud and theft detailed in a Houston Chronicle/Hearst Newspapers investigation of a government program that controls the finances of more than 130,000 disabled American veterans and $3.3 billion in assets.

The newspapers' report revealed that inveterate gamblers, convicted criminals, the bankrupt and the mentally ill were among those approved by the U.S. Department of Veterans Affairs - and often paid commissions - to manage money or oversee entire estates for disabled veterans. The investigation, published Sunday, was based on a review of more than 100 prosecutions and decades of audits,

Chronicle probe

Texas Republican Sen. John Cornyn and Sen. Richard Blumenthal, a Connecticut Democrat, both members of the U.S. Senate Armed Services Committee, described the newspaper findings as "appalling" in separate interviews.

U.S. Sen. Kay Bailey Hutchison, Texas' senior senator, said she too was "very concerned" about the "investigation of how personal funds have been managed for disabled veterans, by people with questionable backgrounds."

"It should go without saying that our veterans deserve the best care available. To think that in some cases their finances may have been the target of theft or fraud is deeply troubling," Hutchison said. "I intend to follow up on the (Houston) Chronicle's reporting with questions of my own."

"It is time for the VA to produce a comprehensive plan to stop this fraud in its tracks and provide our nation's veterans with the best support available," Cornyn said.

Members of the House veterans affairs committee will hold a hearing Wednesday on the Veterans Fiduciary Reform Act of 2012 -a bill that contains a long list of proposed fixes.

Ohio Republican Rep. Bill Johnson, an Air Force veteran and sponsor of the bill, said the newspapers stories "absolutely" create support for the proposed reforms: "It's criminal the way some of these folks are treated under the fiduciary program," he said.

The newspaper investigation revealed some of the largest scams - conspiracies to steal $900,000 to $2 million in assets from disabled vets in Texas, Minnesota and Tennessee - went on for more than a decade, and some veterans first learned of the swindles from reporters.

Johnson said his subcommittee already is investigating some allegations raised in the stories, including the VA's failure to notify veterans who'd been fleeced. His bill would mandate notifications within 14 days of conviction.

U.S. Sen. Patty Murray, D-Wash., chairman of the Senate Veterans Affairs' committee, said the VA should clearly be more accountable to veterans.

Blumenthal said he was "particularly troubled" by the newspaper's finding that the thieves' total take exceeded $14.7 million since 1998, or nearly twice the amounts previously reported to Congress.

"These veterans deserve at the very least honest, competent people in positions of trust when they are unable to manage their own funds ...The (newspaper's) stories are heartbreaking and absolutely shocking."

Agency assailed

Cornyn said he has yet to receive a response to his previous request for information from the VA after an earlier Houston Chronicle report revealed that Texas had twice as many prosecutions for fraud and theft among VA-approved fiduciaries as in any other state.

"It's just obscene how irresponsible the VA is," said Rep. Bill Flores, a Republican member of the House Veterans Affairs Committee.

Added Johnson, sponsor of the fiduciary bill: "For too long, VA fiduciaries have abused the system and subverted the rights of the veterans they were entrusted to protect, in some cases for personal gain."

lise.olsen@chron.com

lindsay.wise@chron.com

ericnalder@hearst.com