State Claims Firm Rips off Aging Veterans

BAKERSFIELD, Calif. (CN) - Ally Senior Care rips off aging veterans by helping them get healthcare benefits, then takes the money and gives them $400 worth of housekeeping services in return, the state claims in Superior Court.

The Kern County district attorney on Wednesday accused Ally Care Group of elder abuse, deceptive trade and four other counts.

The state also sued its CEO Michael John McWilliams, Ally Senior Care, and Senior Veterans Benefit Advocates, in Kern County Superior Court.

Ally claims in ads that it helps senior veterans and their spouses get Aid and Attendance benefits from the Veterans Administration for free, the state says, quoting five such statements from Ally ads.

Aid and Attendance benefits are needs-based benefits for veterans who have little to no income, are at least 65 years old or disabled, and who meet certain service requirements. They help pay for in-home health care or an assisted living facility.

McWilliams solicits senior veterans and their families to use his company to apply to the V.A. for these benefits, Deputy District Attorney John Mitchell told Courthouse News in an interview.

But Ally makes inaccurate and false claims so they can request the maximum possible benefits, which is often much more money than the senior veterans need or are entitled to receive, Mitchell said.

The maximum benefit for a couple is about $2,000 a month; for a single person it's about $1,600 to 1,700 a month, he said.

To qualify for Aid and Attendance benefits, applicants must show that they need help with at least two activities of daily living, such as bathing, taking medication and getting dressed.

This does not include house cleaning, though companies that provide daily living services can do housework, Mitchell said.

In its V.A. applications, the defendants include fake expense statements purporting to show that they provide the prerequisite services, the complaint states. But they provide no service other than "light housekeeping," according to the lawsuit.

"Ally just does about 4 hours a week of light housekeeping, where they come for a couple hours a day a couple times a week and maybe do laundry or clean, but that's all," Mitchell said.

"In this case, Ally is helping senior veterans get $400 worth of services and charging $1,600."

Ally requires seniors to sign "an unsecured loan agreement and an electronic debit or Automatic Clearing House ('ACH') form" when they sign up for Ally's services, according to the complaint.

This lets Ally automatically deduct the full pension amount from the seniors' bank accounts, "even though those amounts were many thousands of dollars beyond the light housekeeping services that the defendants had actually provided," the complaint states.

"McWilliams claims he's banking that money for the veterans' future needs, but they don't ever get it back," Mitchell told Courthouse News. "He's making $1,600 a month off seniors."

Furthermore, the state claims, Ally forces the veterans to sign up for Ally's service for a full year before it will help them obtain their benefits. If they try to cancel the agreement before that year is up, Ally charges them a termination fee of 25 percent of their remaining benefits.

"So if you get $2,000 a month and have six months left of your benefits and you cancel, Ally would take $3,000," Mitchell said.

"These are people who have no money, who are living benefit check to benefit check, so they can't afford to cancel. They can't escape. They're stuck, and [McWilliams] is taking advantage," Mitchell said.

The state claims that Ally "fails to disclose material facts regarding the defendants' compensation for assisting the senior veteran families. The defendants charge and receive unreasonable fees to prepare, aid, or advise the senior veteran families in the procurement, maintenance, or securing of public social services, in violation of California Civil Code section 770(a)(24)(A)."

Even worse, Mitchell said, the defendants threaten to sue veterans who try to cancel services or report Ally to the V.A. for fraud.

Ally reported at least one such senior to the V.A.: the widow of a military veteran who was told she had to repay $10,502, according to the complaint.

Mitchell said the defendants also send debt collection letters to seniors who want to cancel services, in violation of federal fair debt collection laws.

He said there are 64 known victims in Kern, Fresno, Tulare, Kings, and Madera Counties and one in Alameda County, though the state suspects there are around 200.

Mitchell said his office learned about the alleged scam from people who submitted complaints; from the V.A., which sent referrals when they found improprieties in the paperwork; from attorneys who noticed inconsistencies during estate planning; and from various Kern County agencies, including Aging and Adult Services, that find victims and direct them to the district attorney.

"We are very proud of these agencies being proactive and helping some of the most vulnerable members of our community," Mitchell said. "They have gone out of their way to address people's concerns and are trying very hard to be observant. Working with them has been great and very gratifying."

Ally CEO Michael McWilliams told Courthouse News that he denies all the allegations.

"Ally denies it defrauds veterans. To the contrary, Ally has never withheld information as to its business practices and is accommodating, to the extent possible, all concerns, whether accurate or not, raised by the Kern Count District Attorney's office," McWilliams wrote in an email.

"Ally has not had any meaningful opportunity to detail any formal response to any papers on file and anticipates a resolution to the matter which will be favorable to all concerned," he added.

The state seeks an injunction, civil penalties of at least $150,000 and treble damages for false advertising, unfair business practices, financial elder abuse, civil code violations and breach of fiduciary duty.

It also wants the defendants ordered to make full restitution and pay $5,000 to each of the veterans and their families who were "harmed by their actions."

Mitchell said his office filed the civil action to protect senior military veterans and their spouses from further financial exploitation at the hands of the defendants.

"They're targeting vets from World War II, Korea, Vietnam, and many of these people are in their 80s and 90s," Mitchell said. "Half of them are widows with severe money constraints.

"Taking advantage of them like this, it's hard to imagine how someone could do that."

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