How the U.S. Government Uses Banks to Launder and then Steal Veterans’ Disability Checks

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stealing moneyMost of you who read my posts and articles, or who have read my book “Off Switch,” know that I live in the Philippine Islands. After banging my head against the wall for two years after my deployment to Iraq and my lengthy hospital stay at Madigan Medical Center being treated for injuries I incurred while in Iraq, I finally stopped banging my head and read the writing on said wall. What it said was, to summarize, “You are a 60% disabled combat veteran competing in an already ailing job market against fully fit- both physically and mentally- people, many of whom out qualify you in the private sector anyway.”

During this two year period, I’d been visiting the islands, and that little voice in my head that we all have (I think we call it the voice of reason, you know, the one we’re trained not to listen to?) kept saying, “Dude! You get just over a grand in tax free VA disability money each month. That converts to more than 40,000 pesos in the Philippines and is more than their educated professionals make! You can live like a middle class American there, and focus on your writing, which is where your heart truly lies, or you can keep going back to America, living with your parents at almost forty, get new prescriptions every time you visit the VA (remember, you’re up to seven now), and slowly, but surely, die.”

Needless to say, I finally listened to that little voice, and I’m happier now than I’ve been since before the war. During my time in service, I lost my family, all of my money, and my physical and mental health. In the past couple of years here in the islands, I’ve found a true soul mate who’s given me a beautiful son. I’ve kicked the addictions that all of those wonderful pills handed out to me like candy at Madigan Medical Center and the VA hospital led to. I write at a feverish pitch, and have decided to use my experiences to benefit my fellow veterans in any way that I can though the written word.

And this is one of those attempts.

Yesterday, I logged onto my online bank account to make sure that my VA disability check had been deposited. My heart skipped several beats when I saw red and a negative balance, beside which read the word “hold.”

I called my bank and was informed that the IRS had sent a letter demanding that the bank take all of my available funds out of my account on the first day of the month and wire them to them over night. The bank gave me a telephone number at which to call the IRS. Thus began a three hour game of hold and transfer, hold and transfer, and then talk to someone who could explain, in between placing me on hold, but at least not transferring me anymore.

Long story short; they claim I made $157,000 in 2010 and that I owe them tons of money, and until I pay it, a lien will remain on my personal bank account, and they have put a lien against my account at Amazon, the main distributor of my books.

Now, in their defense, I am not completely innocent. I did not file for 2010 or 2011. I spent the first part of 2010 as a patient at Madigan Medical Center, and when I staggered out of there, addicted to pain pills, the last thing on my drug addicted mind was filing taxes. Gotcha! In 2011; same thing. I was enjoying the multiple highs of multiple medications that the VA had since introduced me to, and again, I wasn’t thinking about taxes, especially since I could not find gainful, full time employment anyway. Oh, but I didn’t make anywhere NEAR $157,000, and I’m still laughing about that claim.

So, I’ve agreed with the IRS to quickly file for 2010 and 2011 and they’ve told me that once I do, they’ll make payment arrangements for me if I should owe anything (yeah right) and they will release the liens.

I kindly reminded the lady at the IRS about the Veterans Disability Act of 2010, a Federal law which exempts VA disability from withholding of any sort. Actually, this was already the law, but it was included in part of this newer legislation because too many civil court judges were legislating from the bench and including veteran’s disability monies as earned income and granting it to ex-spouses (men and women) in divorce proceedings, at times, leaving disabled veterans without any grocery money whatsoever. So, this already existing law was re-iterated with the cousin legislation of 2010.


After informing this lady of this, and asking her to please release the lien on my account so that my family and I could eat this month, and explaining to her that I lived in a third world country, where, because of the color of my skin and my nationality, I am deemed by all who see me, as being rich, and at times when I’ve gotten in a bind like this would certainly place me, there is no help for me. I’ve experienced this before, when my debit cards expired and the people at the address my replacement cards had been sent to had kindly marked them “return to sender” without informing me. My family and I waited three months for my new cards to be re-issued from the banks, and mailed to a real friend who forwarded them to me here in the Philippines. While waiting, we lived off of rice and noodles, purchased on credit at 50% interest from a ‘helpful’ native. I’ve since paid this ‘helpful’ native, and to my knowledge, she is still on vacation.

Anyway, after being placed on hold for a while again, she came back on the line and told me, “We do not take veterans disability money. We wait until the funds are deposited from the VA and then we take all of the funds from your bank account.”

Um. Isn’t this called laundering?

Now, why would our government do such things to disabled veterans in the first place? Let’s take a look at some numbers, what the ‘powers that be’ think of these numbers, and then what they appear to be doing because of these numbers.

Currently, there are nearly 3.5 million disabled veterans receiving veterans’ disability payments in the U.S. For example’s purposes, let’s say the average disability rating for each is 50%. The monthly, tax free (and supposedly exempt) amount of this payment is approximately $1,000 for a veteran with a spouse and a child. Multiply this by 3.5 million and you get a really big number; $3,500,000,000.00. Since I’m a writer, and not a mathematician, I’ll spell it out.

Three and a half Billion dollars a year!

Now, why might the U.S. government want some of that back? Especially at a time when our economy is on life support and we’ve made all of those promises to provide foreign aid to other nations?

Let’s look at a recent investigation at my former medical residence, Madigan Medical Center, where a very high ranking Army official was under investigation for denying approval of P.T.S.D. diagnosis. Since 2007, 40% of veterans who walked through the door at Madigan with a P.T.S.D. diagnoses had their diagnosis reversed by a screening team who have been criticized for being under orders of placing costs before treatment.

The following is taken from the Seattle Times- 6 Feb, 2012 to highlight this point:

***In a lecture to colleagues, a Madigan Army Medical Center psychiatrist said a soldier who retires with a post-traumatic-stress-disorder diagnosis could eventually receive $1.5 million in government payments, according to a memo by an Army Medical Command ombudsman who attended the September presentation.

The psychiatrist went on to claim the rate of such diagnoses eventually could cause the Army and Department of Veterans Affairs to go broke.

“He (the psychiatrist) stated that we have to be good stewards of the tax payers dollars, and we have to ensure that we are just not ‘rubber stamping’ a soldier with the diagnoses of PTSD,” stated the ombudsman’s memo.****** end excerpt*****

So. Are the good people at the IRS simply being ‘good stewards’ of the taxpayer’s dollars? Am I being harsh in calling their actions ‘laundering?’

Let’s look now at the effects such actions have on the disabled veterans who have their VA disability money stolen from them by the IRS or judges who legislate from the bench, rather than follow Federal law. Below is an article excerpt written by Yanira Farray, a junior editor with ‘Veterans Today,’ which was originally published on July 5, 2010.

****  VA disability compensation is awarded tax-free to a veteran injured in combat, or in the line of duty. This compensation is federally protected from attachment of any kind under USC, Title 38, §5301. The majority of civil court judges do not recognize this Federal law, and divorce attorneys refuse to use this federal code to protect a veteran’s disability benefits from attachment. This questionable practice by divorce court judges and attorneys has directly led to veterans becoming homeless, and even suicidal. Most civil court judges are uneducated about the federal laws which protect veteran’s benefits from third party awards. Judges see no difference between military retirement pay and VA disability compensation, and they wrongfully calculate the veteran’s compensation into a divorce settlement. It is this hardship and injustice facing our disabled veterans which inspired the authoring of the VDPA.***** end excerpt****

Did you catch the part about “suicidal?”

How many of our veterans are already hanging on to life by a thread? How many are just a disability check away from being on the street, and joining the already nearly 70,000 homeless veterans in America?

What can we do about this? Well, I’ll share with you what I am doing, for as I know, it is all I can do.

#1- As I mentioned in the opening, I have made arrangements with the IRS to get my part in this matter responsibly taken care of. I am not innocent in having had a lien attached against my money, though I will not excuse their slimy way in which they’ve laundered money that is supposed to be exempt, and represents 85% of my total earnings (yes, believe it or not, I’m not a rich author yet). Oh- and they took the other 15% which is not exempt too, fair and square. I will always be in the corner of the veteran, but I’ll add that we have a part to play as well. We need to do all we can on our part to blend back into society, in a responsible fashion, and I’m actually looking forward to preparing these tax returns, because the action represents, in a big way, being a responsible member or society again, which for my 2 ½ years of Madigan Medical Center and VA hospital induced drug addiction, I was not.

#2- When you see this happen to your bank account, DO NOT GET ANGRY AT THE PEOPLE AT THE BANK. They are simply following legal instructions that they are ordered to follow, and they will work with you in helping get you to the origination of the lien. Collectors of alimony, child support, and consumer debt have also caused this same problem for disabled veterans, and the same Federal statute applies to them as well, but the bank employee cannot direct you to the appropriate place if you are screaming at them over something that is not their fault.

#3- Keep good records. If you can show, usually through three months of back bank statements that the majority of funds in your account did indeed originate from VA disability, the entities placing the lien will generally remove it in time so that your funds are not actually swept away. The state of Virginia did this for me not too long ago, and allowed me to make payment arraignments, which I’ve paid every month since (though I won’t be able to do so this month, as the Feds have taken all of my money, but I feel confident that by being responsible and calling them they’ll once again work with me).

#4- And this one sounds extreme, but I’ve gone to this length; plant a garden. Seriously! Our ancestors did it during WWI and WWII to reduce the pressure on the food supply brought on by the war. They were called ‘victory gardens’ and not only did they help relieve the pressure, but they boosted morale.

I call mine a “survival garden.”

I’ll admit that in the tropical environment in which I live, I have an advantage over most Americans in regard to my gardening. But I’ve learned from the past and from reading far too many disabled veterans’ stories of ‘what the government giveth, the government taketh away.’ I now have my own story, but fortunately, my survival garden is in full bloom. I’ll have all the green beans, eggplant, squash, kamote (similar to spinach) peppers and papaya to go with my rice and noodles that I can eat!


Kevin E Lake is an Iraq War Veteran and author. His book “Off Switch” was written to raise awareness of the veteran suicide epidemic in the U.S. and can be purchased on Amazon at:

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