than what the market was offering. some of the investors found out about this product through agents with whom they'd had a professional relationship. vfg facilitated everything. for the transactions on both sides. the pensioner and the investor never spoke and never dealt directly with each other. they dealt with vfg and the agents. once a pensioner was loektsed, they would place the pension up for sale and they would help the pensioner establish an escrow account. the pensioner would submit paper work to their pension company and the pension company would be instructed to forward the pension amount to an escrow amount. in turn, it was to be forwarded to the inveser each month. at in time was the actual pension assigned. at no time did the pensioner relen quish control and at no time did the investor have control over that.

the reason why this is important is because the number one complaint that we received was the failure of vfg and its agents to redisclose the redirect risk. because it's illegal to sign away your pension, they could direct the escrow company, the pension company to redirect the funds back to a different account and no longer to that es ko account or if the pensioner got into financial trouble, the pension would get caught up and no longer go to the escrow account. they were no longer getting that monthly return. they were never warned that this was possible. a lot of the investors were senior citizens and that's how this was packaged to them. they were safe. you get a return each month. some were told it was government insured, which was patently

false. another miscommunication and lie from vfg was the failure to disclose the fees involved in these type of products and you've heard some about that. they failed to disclose a fee break down on both sides. a pensioner never knee what their pension sold for ump sum and on the other side of the table, an investor never knew how much of the lump sum we want to the pensioner. they were told vfg would receive a fee, administrative fee is how it was couched. but most of your money's going to go to the pensioner and that ended up not being the case because this was a failure to disclose the fees. what happened is that vfg would receive the lump sum payment from the investor. cut themselves a large commission off the top. hen forward all of the commissions on to the agents. i saw one contract that had six individuals receives commissions off of one sale. then pay out fees such as the

escrow and other various fees and down the ion, finally, the pensioner would receive a much smaller lump sum amount than what it was purchased for and again, no detailed disclosure about that to either side. either the inves tor or the pension ner. unfortunately, with the a ar securities department in its name, we are securities regulator so we were looking at this from the investor's side. fortunately for us, arkansas state law is the risk capital test to be able to analyze it as an investment account and we determined it was under our state test and therefore, it was a security. so, we were able to take enforcement action against vfg. however, the risk capable test not the analysis in every state or federally. so, it does vary state to state whether this would be considered a security. although we were able to shut down vfg, it is unfortunate he

has not learned his lesson because it seems he has continued to flout authority and has developed other companies and looked to be doing the same thing and we currently have an ongoing investigation against him in some additional compa companies. so, i want to conclude by thanking you for having me here to talk about our investigation and i look forward to any questions you have. >> thank you very much. mr. rossman. >> thank you. i preeappreciate being invited testify today regarding pension advances. there's a report on recent cases on pension assignments where i have -- disabled veterans of our armed forces. i'm the director of litigation at the national consumer center for the past 16 year, i've been responsible for coordinating cases. and i testify today on behalf of nclcs low income and elderly clients. in may of 2003, nclc was

researching consumer scams perpetuated on active military personnel and issued a report. the court felt some of the greatest abuses they were seeing concerned the solicitation of retired military personnel to gain access to their pension payments. we discovered companies were targeting benefits by offering those up front cash payments. vetera veterans benefits are highly attractive. and particularly when we're dealing with vulnerable populations relying upon their pensions for their safety net. retirement and disability benefits are regular, dependable

and long term and it's easy to transfer the funds each month. in the military it's done by allotment. also easier to reach through marketing and advertising. of more and more, it's now proliferated through the internet. the companies engage in ha we call lead generators. when dr. kroot was contacted by rmfs, that was a lead generator which then turned him over to strategic investments which was in fact the lender. so they're actually serving the agents as we previously heard. and finally, veterans may have perceived themselves to have the, they usually have heavy debt burdens or poor credit as a result of the financial strains of their deployment and their frequent relocation. i want to talk about a specific case that we had. a man who retired and had

payments of over $1,000 a month. when he went to purchase a home, he found out that the because of the debts he had when he left the service he did not qualify for a prime loan to purchase and in trying to find a better option he found an advertisement for a retired military financial services, same company that reached out to dr. kroot. they then referred him to the same company, and i've included the ad as part of my testimony. and he got a lump sum of payments, which he, as a chief petty officer figured out was 28%, high above the california usury law would permit. i do want to point out on usury laws, only approximately one third of the states in our country have usury laws at this point. in fact, in california he would have been protected under those circumstances, but in many cases that would not be true. he was told since the transaction wasn't a loan, the credit score didn't make a difference. they used it as a way of selling

it to him that he could improve his credit score by paying down his loans. mr. henry got in touch with us, and we ended up bringing suit on behalf of him and other enlisted personnel in a case in california in superior court. we alleged it was a contract that violated the usury statutes and was lass in violation of the truth in lending. we also indicated it was a violation of the federal senate outs, both from the department of defense and veterans administration that prohibit assignments. putting him in a rock and hard place. it wasn't a contract, it wasn't assignment. it was a violation of either of those statutes, it was a violation of the california consumer protection statute. in august 2011, the judge issued

rulings finding it was a violation of dod and veterans administration regulations and the california consumer protection statute and awarded our client $2.9 million worth of damages. unfortunately, in the interim, the california division of corporations had shut down mainly because our litigation had stopped their flow of income and subsequent to our getting the judgment against them and the two principals, they all filed for bankruptcy and received bankruptcy protection. interestingly enough, one of the reasons they don't want them to be contracts because as contracts they would be dischargeable as unsecured debt. but once we got the judgment they sought judgment in bankruptcy court to keep from paying the judgments. our client got nothing out of the deal because he had paid off his loans. a number of individuals who had been in the process of paying

off loans could stop at that point. mr. henry told us that at least he stopped this company from doing these bad transactions. quite honestly, my clients who are the heroes here, the lawsuit mr. lord was referring to, along with the new york department of financial services was against the company called pension funding. and three of their managers were named as defendants in those suits, one of whom was mr. steven kobe who used bankruptcy laws in order to get out of the debt that he owed in my case in 2011. the pension funding group does not do military loans, he apparently learned enough of that lesson, but fortunately, the regulators in that case were able to set forward. the bottom lean is that we need full disclosure. we need to ensure that the usury laws are obeyed. that various state and federal agencies are enforcing the law. individuals have the ability to use consumer advocates in order to protect their rights but ultimately preventing this from the very beginning is the best way to deal with this problem. there are many, many other alternatives that are much

better than these loans. >> thank you very much. ms. walden? >> chairman collins, ranking member mccaskill and other distinguished committee members. my name is marie walden. i'm the director of the public retirement system in missouri. there are over 575,000 missourians that are now protected under the statewide law ban that prevents pension advances in the state of missouri. since 1946, psr's peers have worked to establish stable retirement benefits to 250,000 missouri public education employees, we pay more than $2.5 million annually to retirees. we continue to be a financially stable benefit plan for our members. we have over $37.4 billion in assets. we are the largest public

retirement plan in the state. if you combine all other 85 retirement plans in the state we have more assets and more membership than all other. the quality of our plan designed as senator mccaskill mentioned has been nationally recognized bit public pension coordinating council. we are governed by a seven-member board of trustees. due to the independent nature of our trust fund. staff is limited in the ability to support matters of which the board has not yet taken an official position. the comments that i'm making today are solely for informational purposes and require that the systems remain neutral on this issue. as the chairman indicated pensions are financial instruments where the individual receives a lump sum for contracting away that payment. during the fall of 2013, there were several national media reports of these plans. they started in the boot heel and worked their way up

jefferson city. it can be subject to interest rates of 27% to 126%. in some cases, borrowers are required to take out a life insurance policy. in 2013, the state treasurer went on record as being very concerned about the practice in missouri. in an effort to protect missourians, he established the pension advance portal on his website to allow pensioners to report any problems or concerns they had faced. that same month, the systems held several internal meetings to discuss the impact of those on our own members. anytime we see any firm or organization that may try to take advantage of our members we become concerned and work toward

protecting our individuals. we took a proactive stance and updated our website to educate our members. and we also informed them of the current statutory provisions that were in place that would protect them. in addition, staff notified our members about educational meetings. one of the challenges was educating members and the public on the statutory protections that were already in place. psr's peers members are covered by an anti-alienation and anti- -- it specifies that the beneficial or equitable owner of that property held in that agreement cannot transfer the interest to a third party. those provisions prevent psr's peers from paying benefit payments to anyone other than the retiree or from accepting an assignment of the benefit. therefore, by statute, we are prohibited from paying benefits

directly to a pension advance company. and many of our statewide plans provide similar protections in their statutes. however, a retiree can use his or her benefit in any manner. therefore, a psr peer's retiree would be able to enter into a contract with a pension advance company as long as the contract did not require psr's peers to make that payment to anyone other than our retiree. on january 7th, the request of state treasurer, and representative tony duggar sponsored the house bill 17. it cannot be transferred or assigned at law or in equity. a pension assignee would be prohibited from using any device, scheme, transfer or other artifice to evade this provision. any contract maid in violation would be considered void and all

sums paid and collected by the assignee would be returned. during the legislative process, proponents of house bill 17 testified that the bill served as a good consumer protection for all missouri public pension retirees. proponents testified that the bill prohibited a person's missouri public retirement benefit from being transferred or assigned to a pension advance service and would keep it for what it was meant to be, a retirement benefit. it created a ban on pension lenders and that pensions earned by teachers, firefighters and other public servants would be protected from such a practice. one of the reasons was to protect all of missouri's petitioners, especially those members whose plans might not have an anti-assignment provision. we had five groups testify in

support of the provision. there were no groups that opposed the legislation. it was approved by the governor on july 9, 2014, went into effect that august. since the implementation of this law, we are not aware of any retiree of our retiree, who has been sold an income stream for all or part of his pension. we have also not received a request from a retiree to make a payment in advance to a service or into an escrow request the. i look forward to any questions you may have. >> thank you very much for your testimony. dr. kroot, what we've learned from your experience, from the testimony of mr. lord, mr. rossman is that veterans are frequently targeted, probably because it is known that military retirees have pensions the way other public employees do. and so there's a regular stream

of income. you mentioned that you saw an ad in a military magazine for one of these pension advances. and i want to put up a couple of examples of the typical ads that we're finding as part of our investigation. very patriotic-looking. you also initially dealt with an organization that was called retired military financial services. did that give you a sense of comfort, that this was a legitimate offering? >> yes, it did, senator. >> and how long did you sign away your pension, for how long a period did you agree to sign away your pension? >> senator, it was for eight

years. if we failed to make a payment, then we would automatically go into ten-year repay. >> so eight years is a very long time. can you tell us what portion of your pension that you agreed to give up for those eight years in return for the lump sum? approximately? >> approximately? currently, we're receiving a little over $3,000, like $3,015 in retirement benefits. during the time that we were paying structured, we would get a check from structured every month for about $300. so i would say between $2500 and $2700 was taken each month. >> so instead of getting your military pension check each month of about $3500, you

instead were getting $300? >> yes, ma'am. >> that must have been so difficult for you. >> ms. wolf, i want to commend you for being very aggressive in closing down voyager's operations in your state. in my past, i've spent five years as the chief regulator overseeing the bureau of insurance, consumer credit protection, banking and the security division, so i was very interested in the state of maine, i'm telling you about. i was very interested to hear you talk about not only the

effect on the military retiree or the person giving up the pension, but on the investor, on the other end of the transaction, so you looked at it as if it were a security, whereas the consumer credit protection bureau in my state would look at it as a consumer loan. my point, however, is this. you were able to close down this bad company in arkansas and protect the people of arkansas from this bad actor, but pointed out, he simply set up shop in another state. does that mean that we need to have some sort of federal regulation or legislation in this area? >> well, i certainly, it's very limiting what we can do as a securities regulator, because you are right. we were looking at it from the investor's standpoint. and unfortunately, with the nature of mr. gamber, and it

sounds like from other types of pension companies like this, they do shut down in one state, and although we believe mr. gamber's still in arkansas, he's formed companies in texas and that seems to be quite common. i can't state to texas security laws. but strictly from a securities standpoint, it varies from state to state. if there's not some overreaching protection otherwise in mace then we're limited to the action we can take. >> obviously, missouri has taken care of this. the only state in the nation, by banning this kind of practice when it comes to public pensioners. but there are a lot of private sector people as well, although defined benefit plans have greatly declined. there's still some. in missouri, ms. walden, is there any protection for those receiving private pensions? >> not that i'm aware of.

the state law only addressed public pensioners. >> and mr. lord and mr. rossman, i want to give you the opportunity to give us your recommendations on whether or not given the ease with which people can move from state to state, the bubble chart that mr. lord put together showing the interlocking companies, we'll start with mr. lord. what do you think congress could do to help protect people in this area? >> well, there heirs a couple things. it's been a long, unsettled question on whether these constitute consumer loans or not and therefore should be subject to the truth in lending act disclosure requirements. there's some way to clarify that, number one. also, just in terms of transparency, you could require in some respects more reporting about who these entities are or just have some sort of a minimum

reporting requirements to help enhance the transparency of this area. it's a very murky area. i know they're doing this, they structure these products deliberately by design so they fall outside some of the existing statute. but from a consumer perspective, it's simply, they don't have a lot of visibility. also i think there's a role in consumer education, literacy, i think they could take additional steps to educate the consumer, obviously consumers ultimately are responsible for their own financial decisions, but i think they need to better understand the risk of these transactions going into them. >> it's clear that the companies are taking advantage of this murkiness and the fact that in one state it's going to be treated as a security in order to get at them. and in another as a consumer loan shows you some of the

problems. my time has expired. so mr. rossman, i'll get you on the second round. >> fair enough. >> senator mccaskill. >> thank you. ms. walden, one of the more disturbing parts of these schemes, i know this was applicable to your members, is the idea that your pension members don't have social security. >> correct. >> and so even those that do are subject to the complicated rules under the wind fall elimination provision. so, for these people, selling offer future income is even more dangerous, they don't even have social security to fall back on. how does this, how does that work with your plan? if someone signed up for a pension advance, assuming they were still legal in missouri, would they typically, your members, any of them have social security income they could rely on? >> some of them do. it depends on what they did prior to teaching. it also depends on what they do in the summer months.

most teachers work year round. >> are there any options that your pensioners have if they needed a substance sum of money? can they take a lump sum at any time from the system? is that allowed in missouri? >> the only allowing that we have is if a member, before they retired, we have an option called a partial lump sum that allows a member to take a portion, it's either a 12, a 24, a 36-month portion, and what it does is give them that pension for those years that they take and reduces the pension that they receive. but they do get a lump sum. so if you have an individual who wants to pay off their house before they retire, they will work an additional three years and get that 36 partial lump sum

so they can pay off their house. so it's a dime for dime transaction. there's no enhanced benefit for the system at all. >> but if something occurred unexpected after they had made their decisions about retirement, there's no options for them, perhaps, except something like these scam artists. >> they could potentially, in missouri, it's not allowed at all for our teachers, due to the law that was passed. prior to that, most of our teachers will call in. we have an unbelievable member education system and we touch teachers every day. the call volume is unbelievable. they call us when they have any kind of question. and what's great about it is we have that type of relationship with the teachers. our teachers give 14.5% contribution rate. they love the retirement plan. they want to make sure what they're doing is protected. so that's part of our education process, to educate our staff,

to let them know if they received any calls regarding this, to one, inform them of the problems that could result from it such as we've seen earlier today. >> right, with dr. kroot. mr. rossman, these remind me of life settlements or payday loans in a sense who allow a consumer who is desperate and feels pressure and needs cash in exchange for promises of something that would happen in the future. these industries are regulated in some capacity, although there's a certain, certainly a concern with both products. but there's a market out there for people who need a large sum of money. do you think pension advances should be regulated like those products for people who really need the money? some sort of interest rate cap? i mean, are we making a mistake by outlawing these as opposed to just making them behave like moral human beings?

>> that would be a good start. i think that the, first of all, you have to distinguish between the payday lenders and the other products, prid tory products out there. what is unique about these pension advance companies, and it was a great surprise to us was that they are much smaller in size. many of the other predatory lenders are now, you know, publicly-held companies, and it these were pretty much dimly capitalized corporations that had no skin in the game. what we found out with each of these entities was that they only loaned out what they were able to get in from investors. so the individuals who were running the show. >> it was like a bookie, just take being the big. >> just taking the big. >> i don't know how i knew that word. i just want to say for the

record. i want to put that on the record. i don't know where that came from. >> but i come from boston, so i know exactly what you mean. >> and i don't. i come from maine. >> and i think that the other thing that is significant is that most predatory loans we see out there are in the $5,000 to $10,000 range. as i think mr. lord said and we found in our reports, we were seeing averages of $45,000 to $50,000 and upwards over $100,000, which is a much bigger sum. look, we understand that individuals run into difficult times financially, like the doctor was testifying. there are certainly each, in my case, in the military, each of the branches of the military have relief funds to help people in cases of emergency. there's also the possibility to use the guaranteed stream of income in order to secure a loan from a more responsible and regulated source. so you could go to a credit organization or a savings and loan to be able to take up a loan and then secure it. the key here, though, is that you are controlling your funding. and that is not the cation with these companies. you literally lose control over

your pension, over that time. and i thought the doctor was absolutely correct. we have the same situation, that if in fact you tried any way to get yourself out of the transaction, you were penalized with a two-year addition. that is two years, in their case, of almost $3,000. so you're looking at a $25,000 penalty. it's outrageous, unconscionable. it is a shark practice that really cannot be tolerated. so i don't know that regulating that makes a great deal of sense. i think that providing other alternative products are important. last thing i wanted to add on this, senator is the fact that we're dealing here with an internet product now. >> right. >> it's very different than when we started this in 2003. and you saying that they are going from arkansas to texas, half the time you have no idea where this company is located. >> just an ip address. >> exactly. >> thank you very much. >> senator tillis. >> thank you, madam chair. i made a personal note to go on the internet and look up what a "big", is.

>> oh, come on. >> i don't believe you. >> dr. kroot, am i pronouncing that properly? >> yes, you are, senator. >> first of all, thank you for your service in the navy, and thank you for your continued service for our veterans. i wanted to get to the -- you were required to take out a life insurance policy, i think for $180,000. this is after you've agreed to pay about $230,000 back for $91,000 loan. what is the nature of the requirement that you have now in terms of keeping that life insurance policy current? i mean, are they paying it at this point? and you have to keep it? i need to understand a little bit about that ongoing obligation. >> we paid for this, and it was paid up. and when we -- >> it was a term life insurance in the term ends in october. we were unable to stop paying it until the end of the term, because we needed permission

from structured to stop paying it. >> thank you. and i'm sorry for what you went through. ms. wolf, i have a question for you. the operation in arkansas, it sounds like this, i think it's fair to call him a thief. he would originate some of these loans and sell them? i'm trying to get a sense of his business operation. it sounds like i would do a loan for dr. kroot, identify people who would buy the product that he has sold, did he continue to service these loans? did he have a business operation? or did he wash his hands of it after he transferred it or distributed it? >> originally, well, pretty much he washed his hands of it. what would happen is the company would, through an agent say, in florida would find someone who wanted to sell their pension for a lump sum. so this person in florida, usually a military veteran put

the amount that they were looking to sell it for and the amount of money they were looking and the amount of money they got each month for their pension. voyager would package these and put a purchase price on them, unbeknownst to the pensioner, and through another network of agents would find a buyer who was willing to pay that amount of money for, say, $1,000 a month for six years coming in. but voyager would facilitate all the paperwork between the parties and kind of stay out of it. they would facilitate everything. >> but who, i was trying to get a sense of who's doing the servicing of the loan? because there's still that process of, i guess, processing the pension paints, providing some disbursement back to the person who provided the loan. so i was trying to get a better understanding of the business

enterprise that existing for the life of the loan. >> voyager would set up an escrow account for the lump-sum payment and the pensioner set up an escrow account for a certain a time to direct the pension. so there was never actually a loan. they would have the pensioner direct that money into the escrow account for a certain amount of time. and that's where the issue came from, because the pensioners would then turn around and redirect the money back to themselves or have to file for bankruptcy or it get caught up in the bankruptcy. so there was never, the loan to the pensioner would be distributed at the very beginning. >> okay. >> mr. rossman or mr. lord, or anyone else who may want to contribute, the law that was passed by vermont, is that a best practice law? is that something that all states should consider?

or is there a best practice baseline out there that as we discuss what we may do at the federal level that we should be encouraging our respective states to take up? >> unfortunately, i don't now enough about the vermont, the specifics to comment on other than they do have a law that pertains to this issue. >> the problem, the vermont law is a good law. there's no doubt about that. the problem is that because of the situation of the internet, there, it stops at the state line. states can only do so much to protect their citizens from people coming from outside of the jurisdiction. and i think that the proposal of having a federal system that would guarantee uniformity across the country would be a good one because there's always going to be a jurisdiction to hide out, so to speak, in order to market their bad wares. >> thank you for the work you're doing, and dr. kroot, thank you for your service to our country. >> thank you. senator warren? >> thank you, chair collins. i want to thank you for holding

this hearing today and thank you to all the witnesses for coming. we really appreciate you coming and telling the story. i know it's hard to do that. but it's very important that we understand what's happening here. i just want to see if i can pull this together so we all kind of get it in one place. so define benefit pensions, the steady guaranteed income stream throughout retirement, we know these pensions are disappearing, and the americans who still have them know they are lucky to have these pensions, but now there's this interconnected industry that's targeted to getting their hands on the pensions. so these pension scam companies turn a profit by offering retirees cash in exchange for a fixed amount of the buyer's future pension, as you testified to, plus, of course, interest and fees. and according to a 2014 report from the nonpartisan government

accountability office, and also from senator collins, these loans can have pretty shocking fine print, for example effective interest rates over 100%. and, to make sure that they get paid no matter what, these companies require the retirees, often, to buy a separate life insurance policy to cover the loan if the retiree dies and the pension stops. so it is a great deal fort conditions running the pension scam. no risk and 100% plus interest rates on this. so i just want to pull a couple of the pieces apart. mr. rossman, you've seen the damage that these predatory pension scams do first hand. and i want to ask about some of the details. who's the typical victim of this kind of scam? >> the typical victim of the scam, you're going to have someone who has a guaranteed stream of income. >> and who does that tend to be? >> you're including in here, you're going to have retired military personnel, disabled

military personnel, state, municipal and federal government employees who are covered. and then in our case, we are, those individuals covered by erisa does have protections. >> military, teachers, firefighters. >> exactly. >> all right. now lots of states have consumer protection laws prohibiting loans with the high interest rates, usury laws. so how can this be legal? >> in our case, every single page of the contract was stamped at the bottom of the page that says "this is not a loan." after having done this for 20 years, if it quacks like a loan and waddles like a loan, it's probably a loan. but they went to great lengths in order to avoid having typical contract loan language and discounting that it was a loan. one thing that was interesting and we caught them on was there

were a number of cases early on where people tried to discharge in bankruptcy, and we were able to get the bankruptcy records with the same company coming in saying, no, no, no, it's not a loan. it's an assignment. so then we go to california and they say it's not a loan, it's not assignment, now we've got them. >> they say it's not a loan. >> you want to avoid the usury statutes. truth and lending. and they want to avoid having it discharged in bankruptcy. >> so they don't want to make the disclosures. they don't want to comply with the laws around loans. so they go to the other side and they say they're not loans, they're assignments. so let me ask that question

then. if these are assignments, are they then legal? >> in some cases they are not. that's where the cloudiness comes. if it is military pay for a retired benefit, for enlisted personnel, you are protected by the military pay act. but if you're unfortunately like the doctor, a commissioned officer, you are not protected. all disabled veterans are covered under the v.a. by anti-assignability. virtually every state and federal employee statute includes provisions for anti-assignment and erisa in many cases prohibit it. >> so, for some people, it is the case that it doesn't matter whether it's a loan or an assignment, it's not legal either way. >> that's right. you've got them in the horns of a dilemma. >> for some, assignment is still legal, and this is just a place where the law has not given full protection. okay.

so it sounds like we're starting to get some action on this. five years ago, congress passed dodd frank to try to prevent companies from cheating consumers, and as someone mentioned in their testimony, the cfpb has now partnered with the new york department of financial services to file two suits against two of the largest pension scam companies for using these deceptive marketing practices to dupe retirees into borrowing from their pensions, obviously a good first step, but we need to do more. there is no excuse for this. it's time to put a stop to these scams. thank you, madam chair. >> thank you, senator kaine? >> this is sadly eye opening and especially the spectre of ads targeting veterans with flag waving and patriotic themes and pictures makes you sick to your stomach. i'm really discouraged at this. a couple of questions i was going to ask. maybe i'll start with ms. wolf.

so enter gamber. he had a previous history before getting into this pension advance area. he had permanently lost his license as assurance broker for grossly misleading his customers, according to a committee briefing for this. so i guess he was in a field where there was a regulated environment, and he had engaged in activities that caused him to have his license pulled. but i guess it's an indication that this kind of falls in the cracks, these pension advance, because he could go from a regulated area losing his license to setting something like this up without a license. >> right. >> and is that just the quirks of all the different state laws and how this kind of financial product is treated or maybe more often not treated under state law? >> i would think so, but also mr. gamber seems to not really have a conscience and not really care what the laws are. his license was revoked in 2009 from the arkansas insurance

department. he was not licensed under our act. but that's not to say that he wasn't selling securities. and so because it was a security under arkansas law, we were able to take action. but i do want to point out, his license was revoked in 2009. he formed bfg in 2010. we took action against him in 2013 and 2014, and now he's formed a new company. so he's definitely finding ways to skirt the law and finding those gray areas to exploit. >> the gao report is interesting, because i think your study indicated with this bubble chart that the pension transaction are concentrated in these two large groups. one was mr. gamber, and we talked about him. and future payments group is run by steven kohn, which led to him being convicted of federal criminal counterfeiting. so you have the two main groups, one run by someone who's lost his license because of

misrepresentations to insurance client, and the other is being run by someone who had been convicted of federal criminal counterfeiting, and those are the two main groups doing this in the country right now. >> unfortunately, you have several unsavory characters operating in these business lines. from a consumer perspective, again, it's very difficult to know who you're dealing with, because that's not revealed on the company website. so, from a disclosure perspective, that's why we raise that as an issue in our report. >> but, again, from a regulatory problem, if you've got folks who've been in different sort of financial capacities, and one has been, you know, are suspended, his license because of insurance challenges. and the other's been convicted of federal criminal counterfeiting, but nonetheless, three can do this kind of a business, this suggests that there's sort of like a gap in which they're trying to put their work in a less-regulated

area. >> yeah. >> it's amazing that we would have less regulation for these kinds of pension transactions than we would for insurance. i mean, insurance is really important. pensions are really important, too. that would be a gap and something that is notable. i want to take the kroots' testimony, and i really appreciate you coming and sharing the experience, and i often find these hearings are really valuable, because people are willing, thank god, to come share what's been a painful experience, and we can learn from it. thank you for being willing to do that. but they talked about, and i'm going to ask the other witnesses to help me with this question. they talked about the challenge think were dealing with. medical bills with a daughter, housing expenses. these are the kinds of things that people run into every day. there are many alternatives better than these kinds of loans. so these generic advisers to seniors or veterans that are confronted with financial needs that they described. got some real legitimate concerns. you see these kind of ads in the

paper about maybe, you know, take advantage of this 800 number or get on this website to get help. what are the better alternatives. we're having hearings like this. what other alternatives that folks should explore. we're not talking about a particular circumstance. and mrs. kroot, you want to jump in first. so please. >> yes. one of the things that happened with us and structured, we took and at the end, when we, the loan was concluded, we were given a list of who we could pay and who we couldn't. the irs was not on it. so we paid those other ones, and we had to finally call the irs, which worked with us on a payment plan for the $100,000. >> mm-hm.

>> and i would wish to put on the record, the irs was extremely cooperative in coming up with a payment plan that was not a burden to us. >> senator, one of the things that's important, and we were talking before about why they were treated as loans or assignments. one of the pitches that these companies will make is that because it's not a loan, you don't have to worry about your credit score. many of the people in dire financial straits are because their credit scores have deteriorated to the point that they can't have access to other prime sources of lending. and they say since this is not a loan you don't have to worry about your credit score. you have the united states government paying you off and insurance as well. so you're dealing with a community that has difficulties because of their credit scores and are looking for options. if you're dealing with credit cards, for example, work being with the credit card companies or dealing with a non-profit. >> credit counseling. >> to help you work out a plan

to be able to pay off is certainly better. you do have this guaranteed stream of income, although you don't want to lose control of it, you still can use it as collateral as part of a good plan to pay off your debts to secure funding but maintaining control and not turning it over to someone else. and, the final area, at least in the military is that the jag corps is upset because there are systems in the military, air force relief, army relief to help with these problems. in the military area, these thieves are stealing essentially tax dollars, stealing them from veterans who have served their countries and expect us to take care of the veterans, of course we're not going to abandon them when they don't have the ability to take care of their own needs. there's just no justice in there whatsoever. everyone is being victimized. and these thieves are ripping us all off at the same time.

>> and ms. wolf was going to answer for me, too, and i know i'm over time. but is that okay? were you going to weigh in? >> i'll keep this very brief, not necessarily an alternative, but i do want to thank dr. and mrs. kroot for coming forward. weigh? >> i'll keep this very brief. as a securities regulator, a lot of times we don't hear about these scams until someone is brave enough to pick up the phone and call us because we're not on the front lines every day, so one of the most important things is that if you are in doubt or you hear about a new company, especially that these companies that are very god at tricking you in making you thinking they're one entity, but they're really another, call your local agency. they're very good about working together and referring cases. if ever you have a question, call your state regulator and ask and see if they're regulated or if they have complaints on this company. at least you can know going forward hopefully what you're

getting into. >> thank you. >> thank you. i want to give you a chance to answer the question that i posed about what we should do about this. obviously, states can take action, litigation can be filed, regulation can be implemented at the state level or new laws, lawsuits filed, et cetera, but i'm so outraged by what has happened to this couple and so many others, particularly those who have served our country or served our states and cities are now being taken advantage of. it is evident that these transactions fall in a very gray area, as mr. lord said. so do we try to get federal legislation passed? do we amend the truth in lending

act to have better disclosure at at least? what's your suggestion for us? >> the civil practical response is that there are many laws already that are not being enforced. i would love to be able to see them being enforced. i would love to have the department of defense, for example, monitor these allotments if they're being sent to separate escrow accounts, there should be a red flare sent up. in the case with rmfk, which was the lead generator. they were the agent that was out there trying to solicit strategic investments. they're honored by the same people. it was the same guy who had been convicted for federal law and then turned and avoided liability. i'm a form eer prosecutor.

i would like to see some rico claims brought against these folks and maybe some jail time. they are the worst of the worst since they have literally nothing invested in these cases. they're taking investors money. they're taking money from the taxpayers. they're taking their cut for providing no service whatsoever and then they're returning into the dark where they can get away with this time and time again. beyond that, clearly disclosure so people understand the product that they're getting so you have the schumer box equivalent for pension loans that clearly identifies the interest that is being charged. i think that certainly having anti-assignment provisions that extend beyond public officials but would apply to all pensioners would be very helpful as well. >> thank you. that's very helpful. i want to remind everyone rmfs,

which is retired military financial services, if you saw that thing, you would think it was a perfectly legitimate organization, particularly if the ad appeared in a military magazine. that's why the department of defense needs to be more proactive in warning its military retirees that these schemes are out there. and i hope that the hearing that we've had today will help to heighten public awareness. that's why i'm so particularly grateful to this couple coming forward, but for all of you sharing your personal experiences in this area. i want to ask my colleagues if anyone has a final question that they would like -- yes, senator tillis. >> thanks again for all of you being here today. the one thing that just strikes me about -- i really do think there is a criminal enterprise there.

we've got some of the bad actors that we've named here, but there are a lot of people in this process or chain that need to be smoked out as well, but it doesn't seem to me -- is there any possible way that after you get these agreements in place you can actually have any kind of defaults? >> it's certainly not in the ones we were looking at, no. >> i think this is extraordinary. we can have our discussions about some other lending practices and what's a fair rate, but at least some of their rates are driven by loss ratios that they have to manage to be able to provide a service, but this is completely independent of that discussion, whether it's payday or residential lending or whatever else. this is just purely criminal activity where they're getting a guaranteed rate of return, charging an exorbitant interest

rate. if you miss a payment, greater upside. zero downside. it's a criminal practice that we need to work to eliminate. >> you're absolutely right. >> thank you. >> thank you. >> i just have one question. mr. lord, i have found time and time again in doing oversight that one of the biggest enemies of oversight is a whole lot of cooks in the kitchen that have a piece of it. because then when there's something bad going on, everybody does like this. mr. rossman's point things aren't being enforced, but we've got ftc, we've got sec. we've got treasurtreasury. you've got dod. you've got va. if we were to work on a legislative action around these scams, where should we place

primary responsibility for oversight for these products? >> i think cfpb, their authority is well established and clear. to me, it is just a matter of exercising it. they took enforcement action on 2 1/3 companies we referred to them. my question to them is what about the remaining 36. >> these two guys should go to jail, like immediately. do not pass go. one of them has already been in jail i believe. yeah. i'm just shocked. just shocked. >> i'm not sure if they need more authority -- >> do you believe the primary authority now is at cfpb? >> they have an enforcement role in this area, but those are the two key agencies. in terms of consumer education, treasury chairs the financial literature education committee.

cfpb, they're the vice chair. >> maybe we need to direct an inquiry to the fdc and talk to them about what is their plan in going after these guys. >> they'll talk a lot about consumer education, but clarify the enforcement side. >> no, we need some deterrent here. people need to go to jail. thank you. >> i want to thank our excellent panel of witnesses for appearing today. you've really increased our understanding of what truly is an unconscionable scam so frequently directed against patriots that have served our country or those on the front lines in municipal and state governments. and we're going to continue this investigation. this is a first of a series of hearings as we begin to delve even deeper into these schemes.

and i want to thank each and every one of you for being here today. again, particularly my thanks to the kruds for coming and sharing your personal story. i can assure you that because of your willingness to share a very painful episode in your life that you will, in fact, prevent others from making the same mistake, so thank you for coming forward and my thanks and gratitude to all of our witnesses. the committee members will have until friday, october 9th, to submit additional questions for the record, which we'll send your way if there are some, or any additional statements. again, our thanks to our expert panel, to my ranking member senator mccaskill, and senator

mccain for participating in today's investigation and hearing. this concludes the hearing. next, a house judiciary hearing on planned parenthood. then a senate homeland security security hearing on threats to the u.s. then discussions from the seven annual washington ideas forum. >> next, the house judiciary committee hears testimony about the practices after planned parenthood and considers whether the organization should be federally funded. this hearing is just over three

hours. good afternoon. the judiciary committee will come to order. we welcome everyone to this morning's hearing on planned parenthood exposed, examining abortion procedures and medical ethics at the nation's largest abortion provider. i'll recognize myself for an opening statement. before i go to the statement on that, i would like to take a moment to remember the life of former congressman william don edwards, who passed away this month at the age of 100. don edwards was first elected to congress in 1963 where he had a distinguished career working on the voting rights act and served on the senate judiciary committee during the watergate

scandal. he served with caldwell butler, whom i worked for at the time. when don edwards left office in 1995, he was succeeded by our very own -- in california's 16th district. i had the opportunity to serve with congressman edwards myself and appreciated his service. it's now my pleasure to recognize the ranking member to share a few words about our former colleague. >> thank you, mr. chairman. members of the committee and our witnesses and all of our friends that are here in the hearing room, i knew congressman don edwards and worked with him. and he has left a lasting legacy. he was a progressive principled man who never stopped believing

that the coercive power of the government should be subject to the highest levels of scrutiny, and i think we still carry on that tradition in judiciary even now. and he also wanted us never to forget that our government exists through the consent of the governed with the purpose of preserving and not eroding our rights. i'm grateful to have a friend and a colleague of him -- of his during his service and career in congress. and we will miss him and remember him. and i thank the chair. >> mr. chairman? >> the gentlewoman from california is recognized. >> thank you, senator. i would like to briefly join in the eulogy from congress don

edwards. in 1970, i graduated from stanford university and came out to washington without a job and don edwards hired me. and i worked for him for nine years both here in washington and also in the california office. we went through incredible -- the impeachment of richard nixon along with your prior boss and many other issues. he was a marvelous man, a mentor to me, and someone who was widely admired not only in the congress but in the district that he served. i was honored to be able to the house of representatives and kept in frequent touch with him. he watched all of us in his retirement, and he lived to the ripe old age of 100 years, so he had great satisfaction in his life. he made his mark. i would just like members to know we will be having a special order about congressman don edwards on the 21st of october

and members are invited to participate. i never got to serve with him in the congress, but as his staff i certainly was a huge admirer. i thank the chairman for allowing me these few words. >> the gentleman from new york. >> thank you, mr. chairman. i'd like to add a few words about the late don edwards. i had the honor of serving with him for two years. i was elected in 1992, and i knew of him well before i came to congress. i knew of him as one of the leading defenders of civil liberties in the united states, and i greatly admired him from afar. when i came to congress, when i was asked what committees i'd like to serve on, well, i'd like to serve on the judiciary committee. i was told if i wanted to serve on the judiciary committee, i had to get mr. edward's approval

as to my attitudes on civil liberties. i had an interview with him. i must have satisfied his interest in his attitude towards civil liberties because he approved it. in such his esteem he was held by the membership that he was given that prerogative by new members. he was a leading voice for civil liberties for many, many years, and he served this country well. we should thank his memory for that. i yield back. >> now i'll begin my opening statement. we have votes on the floor, but perhaps i and the ranking member can get in our statements before we go to vote. a child's heart begins to form after three weeks of conception. her arm and leg buds begin to

grow. her brain begins to develop. her eyes and ears begin to form. by the sixth week her hands and feet begin to form. the following week her toes can be seen. during this time, she kicks and will jump if startled. by eight weeks, the baby's facial features become more distinct. in weeks nine through 12, the baby may begin sucking her thumb. by ten weeks, she can yawn. by 12 weeks, which marks the end of the first trimester, she's capable of making a fist. but on any given day her developing parts, including her heart and brain, may be harvested at many planned parenthood clinics that participate in this practice across this country. if her organs are harvested, she will not carry a name. at most she'll be referred to as

a product of conception. despite the horrific nature of these practices, planned parenthood's outrage has not been directed at harvesting baby parts, but at the people who caught them doing it talking on video. it is noteworthy to point out that the group hired by planned parenthood to review the videos found they're, quote, analysis did not reveal widespread evidence of substantive video manipulation, end quote. a second analysis commissioned by alliance defending freedom reached a similar conclusion. according to that report, the recorded media files indicate that the video recordings are authentic and show no evidence of manipulation or edits, quote/unquote. today's hearing is about the

content contained within the videos, including admissions made by planned parenthood officials that raise serious questions about the treatment of our nation's treatment who may be born alive following a failed abortion. for example, the vice president of planned parenthood of the rocky mountains stated that in some cases babies are being born in tact. she further stated sometimes we get, if somebody delivers before we get to see them for a procedure, then they are intact, but that's not we go for. to ensure babies born alive in such instances are given necessary medical care, the house passed hr-3504, the born alive abortion survivors protection act, which requires baby's surviving an abortion given the same treatment and care that would be given to any child naturally born premature at the same age and imposes criminal penalties at the

federal level to prevent the killing of innocent human babies born alive. moreover, these videos indicate they may have adopted new abortion procedures. quote, the federal abortion ban is a law and laws are up to interpretation, end quote. today's hearing is in part intended to explore what interpretations by abortion practitioners have arisen since the law's passage. i look forward to hearing from our witnesses here today. it is my pleasure to recognize the ranking member of the committee, the gentleman from michigan, mr. connors for his opening statement. >> thank you, mr. chairman and members of the committee.

want to take a moment to walk through the events that have led up to this hearing. we know from reports that the gentleman from arizona, mr. franks, and others in the majority have viewed at least some of the videos about a month before they were released. on july 15th of this year the first video was released to the public. others were posted online over the august break. three different house committees then launched simultaneous congressional investigations. on september 9th, this committee held its first hearing on the topic at which the witnesses for the majority refused to discuss the videos at the heart of the

matter. they're been since two other hearings on this topic, making this the fourth in the house in less than a month. and finally, the majority's announced it will create a new taxpayer fund to select committee to extend this so-called investigation indefinitely. as i reflect on these events, i think we're able to draw some conclusions. the first being that there's no evidence in the record whatsoever of illegal activity at planned parenthood. on behalf of its 59 affiliates, the planned parenthood federation of america has provided this committee with hundreds of pages of documents. the organization is cooperating

fully with three investigations in the house. the documents we've reviewed so far allow us to go point by point to correct the false impressions created by the highly edited, highly misleading videos that nominally inspired these investigations. chairman who sits on this committee and who runs his own investigations into these matters in the oversight committee next door has agreed with this conclusion. last week, wolf blitzer asked the gentleman from utah, is there any evidence that planned parenthood has broken any law? no. i'm not suggesting that they

broke the law. i'm led to conclude that this hearing, much like the broader attack on planned parenthood, may be a political theater, may be designed to rally the conservative base and roll back the constitutional right to choose whenever possible. in practice, these investigations have had little to do with the videos, which some went to great lengths not to discuss at our last hearing. they have everything to do with appeasing the most conservative elements of one of the parties during an inter-party leadership primaries.

now, we may have a legitimate difference of opinion on roe v. wade, but it remains the law of the land. many women enter the health care system through a family planning provider. in fact, 6 in 10 women who receive services at a publicly funded family planning center consider it their primary source of medical care. planned parenthood alone serves 2.7 million americans every year. abortion procedures make up an incredibly small amount of the services it provides. only 3%. for example, in 2013 planned parenthood provided 900,000

88,000 of those tests detected cancer early or identified abnormalities that might signal a greater risk of cancer. in short in this way and so many others planned parenthood saves lives. so the attempt to defund planned parenthood places each of those lives at risk. we should be grateful that the effort has been almost entirely unsuccessful, at least so far, on the federal level. finally, it's important to observe all of the good work this committee could be doing instead of meeting for the second time on this subject in 30 days. and as we head into our second election season since shelby county versus holder, this

committee has done very little, could do a lot more, to restore enforcement mechanisms of the voting rights act. we've done little to advance comprehensive immigration reform. and even though proposals remain overwhelmingly popular and would probably easily pass the house, we've got to start acting. so 11 million men and women are waiting to come out of the shadows and contribute to our economy and communities. and at this pace, i fear they will to wait even longer. although the scourge of gun violence has touched every one of our districts, including yours, mr. chairman, we have all but ignored calls to strengthen background checks and close the

gun show loophole. all of these solutions would save lives. all of them are consistent with our constitutional rights. and the list of missed opportunities is long and our time is short. we should not spend one more minute or one more taxpayer dollar vilifying planned parenthood without a speck of evidence to back these claims. this committee has too much important work to do, and i urge my colleagues to help us put this kind of theater behind us. we can do better. i thank the chairman and appreciate the opportunity to express my views. >> thanks, gentleman. there is one minute remaining in this vote. happily we're amongst 121

members that have not voted. we will stand in recess. >> the committee will reconvene. and it's now my pleasure to recognize the chairman of the subcommittee on the constitution and civil justice the gentleman from arizona, mr. franks, for his opening statement. >> well, thank you, mr. chairman. mr. chairman, the tiny diaper that i hold in my hand is one made to fit premature, born alive babies. micropreemies or ultrapreemies they're called. when i first saw one of these little diapers, it moved my heart very deeply, because i think i saw it in the context of

the numerous video recordings that have been released in recent months that tragically demonstrate that the kermit gosnells of this world have no monopoly on the abortion industry's unspeakable and murderous cruelty to pain-capable unborn children and to little babies who actually survive the trauma of going through an abortion. it is the little babies of exactly this age and stage of development that these little diapers were made to fit. and, mr. chairman, it's easy for me to understand why the abortion industry's shrill response to these videos has been to try to discredit them in every way possible. they really have no choice. because if they fail to discredit these videos or to dissuade people from seeing them, they know that anyone with a conscience who does watch

these videos will finally see planned parenthood and the abortion industry for who they truly are. and this murderous industry will be rejected in the hearts of the american people. however, mr. chairman, a forensic digital analysis by coalfire systems incorporated of these video recordings conclusively indicate that the  videos are indeed authentic and show no evidence of manipulation or deceptive editing. now, this conclusion is supported by the consistency of the video file dates, time stamps, the video time codes, as well as the folder and file naming scheme. the uniformity between the footage from the cameras, from the two different investigators, also confirms the evidence that these video recordings are completely authentic. mr. chairman, our response as a

people and a nation to these atrocities incontrovertibly documented by these videos is vital to everything those lying out in arlington national cemetery died to save. the house of representatives very recently passed hr-3504 the born alive abortion survivor's protection act. and i'm told the democrats in the senate intend to filibuster even this bill that protects not unborn children but rather little children who have been born alive. now, no one can obscure the humanity and personhood of these little born alive babies or claim conflict with the now completely separate interests of the mother and the child. nor can they take refuge within this schizophrenic paradox roe

versus wade has subjected this country to for now more than 40 years. mr. chairman, the abortion industry has labored for all of these decades to convince the world that born children and unborn children should be completely separated in our minds. in the past they've said while born children are persons worthy of protection, unborn children are not persons and are not worthy of protection. but those same people who now oppose this bill to protect born alive children suddenly have the impossible task of trying to rejoin these born children and these unborn children back together again and then trying to convince us all to condemn them both, born and unborn, as now collectively inhuman, and neither of them are worthy of protection after all. to anyone who is not invincibly hardened their heart and soul, an honest consideration of this absurd inconsistency is profoundly enlightening, because

you see, mr. chairman, this country has faced such paradox before. we have faced such self-imposed blindness before. because there was a time in our own parliamentary rules in this house that we banned discussion or debate about the effort to end human slavery in america. but that debate did come, mr. chairman, and with it came a time when the humanity of the victims and the inhumanity of what was being done to them finally became so glaring even to the hardest of hearts that it moved an entire generation of the american people to find the compassion and the courage in their souls to change their position. and now to this generation, mr. chairman, that moment has come again. and i would implore every member of this committee to ask two questions in the stillness of his or her own heart.

first, is deliberately turning a blind eye to the suffering and murder of the most helpless of all of our children born alive in the united states of america who we have truly become as a nation? and second, is voting against or filibustering against a bill to protect born alive human babies from agonizing dismemberment and death who i have become and want to be remembered for as a member of the united states congress? and with that, mr. chairman, i will yield back. >> chair thanks the gentleman and now recognizes the gentleman from tennessee, mr. cohen, for his opening statement. >> thank you, mr. chairman. appreciate the time, although i don't necessarily appreciate the subject matter. second time in 30 days we're holding a full committee hearing ostensibly on whether planned parenthood has violated any laws. as ranking member conyers and

many others including mr. jason chaffetz have made clear there's no credible evidence showing that planned parenthood has broken any law. ironic we do this on a day that we honor don edwards who did so much with the constitution and civil justice committee, who passed so many laws to protect people's civil rights and to move this country forward and to this date when the committee does very little. knowing that there's no ground to stand on regarding the legality of planned parenthood's actions, it's obvious the majority has instead chosen to move the goalposts. i'm sure this will devolve into roe v. wade which has guaranteed a woman's constitution right to choose. it is the law of the land. there's no such thing as murder. murder is unlawful. this is lawful. a woman's choice. and within a certain period of time. we're not likely to hear anything and learn anything new but we'll hear the same arguments.

but one thing we will see is we will get a little bit something new. most of my democratic colleagues and i strongly believe in a woman's right to choose and it's a fundamental right. it's a pillar of women's equality and the court got it right in roe v. wade. and i suspect most of my colleagues on the other side of the aisle believe the opposite. different values. different backgrounds they have than i have. the court agrees with me. i also suspect they disagree with me and most of my democratic colleagues who strongly believe in planned parenthood and the 97% of its work that is not abortion. critical health care services including health screenings, birth control counseling, particularly cancer, women's cancer. these services are especially important for women of low income and minority women who receive medicaid reimbursements that constitute most of its federal funding. medicaid reimbursement for treating, observing, testing women for cancers and giving

them birth control and advice. in fact, it's against the law to use federal funding, it's the heid amendment. so none of that exists. we're likely to have a pointless discussion over the constitutional right of women to make decisions about their body is a good or a bad thing, a question the supreme court clearly answered in 1973 but here we are today. we could clearly be talking about voting rights. something that don edwards voted for and greatly supported and my friend julian bond memorialized on tuesday, championed, but have taken a big step back. we could be talking about gun violence. people dying in oregon and all around this country but we're not doing that. we could be talking about pardons and commutations for nonviolent offenders and thankfully the white house is taking action and this committee will do some more action on that with a comprehensive bill. and i thank the chairman for his working with our ranking member on that. but we're not. let us not forget this entire exercise is based on heavily edited videos doctored to make planned parenthood to be engaged

in unlawful conduct which it isn't, including the for-profit sale of fetal organs and tissues. at this point i ask unanimous consent to play a compilation of a portion of the unedited video of dr. debra necatelo portions we do not see in the edited video in which she makes clear planned parenthood does not sell parts for profit. >> without objection it will be shown and be made a part of the record. >> if we could start at 30 seconds and end at 1:55. >> i guess we're going to start at the beginning.

>> so them, this is not a service they should be making money for. we're not looking to make money from this. our goal is to keep access available. >> right. [ video playing ]

>> thank you. i think that's very telling testimony. all edited out and wouldn't be seen in those videos that they're talking about. where she makes clear it's not about making money. it's not planned parenthood's policy, and planned parenthood's policy is different. some might donate it for free and give it for free and it's a woman's decision and it's not our deal. but he kept going right, right, right, like stop saying this. this isn't what i want to hear.

last night the cubs beat the pirates 4-0. they would have edited the game, take out the four runs and we'd still be playing. and that would be as fair a presentation of the game as it has been of this video. this investigation of planned parenthood is based on false premises one after another after another. it's time to stop wasting time, get on with meaningful work, and stop picking on women and trying to take their choice away. i yield back the balance of my time. >> the time of the gentleman has expired. we welcome our distinguished witnesses today. and if you'd all please rise, i'll begin by severing you in. do you and each of you swear that the testimony that you are about to give shall be the truth, the whole truth, and nothing but the truth so help you god? thank you. the witnesses may be seated and let the record reflect that they

all responded in the affirmative. and i'll now begin by introducing today the witnesses. the first witness is dr. anthony levatino, he's a board certified obstetrician. he's an associate of professor of obgyn at the albany medical college. our next witness is ms. susan thayer. ms. thayer worked for nearly 18 years as the center manager of the planned parenthood clinic in storm lake, iowa. she was fired in december, 2008, when she expressed concerns about webcam abortions. she has since become a strong voice for life and educates the public about abortion and specifically webcam abortions. our next witness is ms. caroline

frederickson. ms. frederickson is president of the american constitution society. she has been widely published on a range of legal and constitutional issues and is a frequent guest on television and radio shows. before joining american constitution society, caroline served as the director of the aclu's washington legislative office and as general counsel and legal director of naral pro-choice america. our final witness is ms. luana stoltenburg who is public speaker for operation outcry a ministry that seeks to educate the public about the devastating consequences of abortion. she's a resident of davenport, iowa. welcome to you all. your written statements will be entered into the record in their entirety. and i ask that you each summarize your testimony in five minutes or less. to help you stay within that time, there's a timing light on your table. when the light switches from green to yellow, you have one minute to conclude your testimony. when the light turns red, it signals that your five minutes have expired. and, doctor, we'll begin with you. welcome.

[ inaudible ]. >> need to turn on your microphone. >> apologize. >> there you go. >> good. i got my time back. thank you, chairman, and members of the committee. i only have five minutes so i'm going to get right to it. second trimester d and e abortions performed between 4 and 24 weeks of gestation. she's 22 weeks pregnant. her baby is the length of your hand, plus a couple of inches. and she's been feeling her baby kick for the last several weeks. but she's asleep on an operating room table. you walk into that operating room scrubbed and gowned and after removing tissue you introduce a suction catheter into the uterus. if she were 12 weeks pregnant or less basically the width of your hand or smaller you could basically do the entire procedure with this but babies this big don't fit through catheters this size. after suctioning the fluid out from around the baby, you

introduce an instrument called a sofer clamp about 13 inches long and made of stainless steel. the business end of this clamp is about 2 1/2 inches long and a half inch wide. there are rows of sharp teeth. this is a grasping instrument and when it gets ahold of something it does not let go. the procedure is a blind abortion so picture yourself introducing this and grabbing anything you can blindly and pull, and i do mean hard, and out pops a leg about that big which you put down on the table next to you. reach in again. pull again. pull out an arm about the same length which you put down on the table next to you. and use this instrument again and again to tear out the spine, the intestines and the heart and lungs. the head on the baby of that size about the size of a large plumb. you can't see it, but you've got a pretty good idea if you've got the instrument around something and your fingers are spread as far as they go. you know if you did it right if you crush down on the instrument and the white material runs down the instrument. sometimes a little face comes

back and stares back at you. congratulations. you just successfully performed a second trimester abortion and you just affirmed her right to choose. when we talk about abortions, even later, 23 weeks and up, and we're talking up to 35 weeks and essentially all the way to term, the most commonly used procedure at this point is called a mold technique and rather than -- i have not done any of these myself, but i can have the abortionists themselves in the clinic describe what we're talking about. will you please run my video. >> the video will be run. >> body southwestern women doctors. how can i help you? >> i was hoping to schedule an abortion. >> all right. what was the day of your last period? >> it was, like, the middle of may, like, may 15th probably. >> all right. so it looks like we can do this

for you, but it is going to be a week long procedure. so, if you're able to come next week and we start this on the 12th, i'm going to be looking at a fee of $8,000. >> oh. >> yeah. >> uh-huh. are you still in your chair? >> just barely. >> just barely. but what you also need to keep in mind that every week that goes by the fee goes up by another $1,000. >> what we do is up to 27 weeks. >> oh, really? >> yep. >> so you're about a month -- yeah, actually you're about a month off. >> oh, wow. >> to insert the injection it's going straight into the -- into the sack and to the pregnancy, okay? it's bottom down. it will insert through the baby's bottom. okay? it is the head down, and it will be inserted through the head, the cranium. if we can't catch it early enough, which it has happened, if you're feeling pressure it's moving down or something coming out, the pregnancy coming out.

then you'll want to unlock the door to the hotel room. get your cell phone and just sit on the toilet. you don't have to look at anything. you don't have to clean anything up or nothing. just be on the phone with us and we'll kind of -- you can stay on the phone with us until the doctor and nurse get there. >> god, go in the toilet if i'm having labor? >> yeah. >> what if it does come out when i'm on the toilet? >> just -- you don't got to look down. you don't got to do anything. the doctor and nurse will come take care of you. if you feel like it's too much to see any of it, then do not let yourself look at it. >> okay. okay. >> if you want to cover yourself even with, like, a towel or something -- >> okay. >> -- go ahead. >> if you're one of those lucky people that has no pain with contractions and all of a sudden, wow, something's coming out, you sit on the toilet. >> okay. >> and you call us and we come in and we take care of you. >> if i'm on the toilet and it pops out and it's in the toilet, what do i do? >> you sit there and you would

stay there. >> okay. >> and you would not move until we come and get you. >> i don't have to worry about taking it out or anything? >> you don't have to do anything. >> you will do it. >> we'll take care of everything. >> so for $10,000 a woman 27 weeks pregnant gets to labor alone, unattended in a hotel room with no one there to watch her vital signs or otherwise attend her. and if her baby delivers into a toilet, her own dead son or daughter, so be it. thank you. >> thank you, doctor. ms. thayer, welcome. >> thank you, mr. chairman and members of the committee. from april 1991 to december 2008, i was employed by planned parenthood of the heartland as center manager of its storm lake and lamars, iowa, clinics. i spent 17 years learning from the inside out just how planned parenthood works.

i concluded that no business, certainly no health care business, should view a woman's body as a profit center but that is what planned parenthood is all about. they're more concerned with profits than about the health of women. when i first began working for planned parenthood, i was convinced that i was serving my community and the health needs of women. as a parent of five children, including three adopted kids and a foster mom to 130 kids over the past 28 years, i didn't fit well into planned parenthood's corporate culture. though during my initial interview i expressed concerns about abortion, i was hired and promoted by planned parenthood. i believe that i could help reduce abortion and serve women. over time i learned that i was wrong to trust planned parenthood. i'm here today because all people need to know the truth about planned parenthood. in 2002 the remains of a newborn, a full-term child, were discovered in a trash dump in my

small iowa down. after determining that the child had been born alive, the sheriff investigating the murder of this child came to my clinic to seek medical records of potential suspects. i assumed that planned parenthood would want to cooperate with this criminal investigation. instead, planned parenthood turned the murder into a fundraising opportunity and falsely claimed that all women's health records would be compromised and a woman's right to abortion was under attack. as it often seems to do, planned parenthood raised thousands of dollars from this sordid event. like most of iowa's planned parenthood clinics birth control pills were dispension -- dispensed to patients without ever having been seen by a medical professional. once a week a nurse practitioner would come to the planned parenthood clinics to sign off on birth control prescriptions that had been dispensed the prior week. in 2007 i learned more about the truth of planned parenthood when it implemented webcam abortion. here's how this was to work. a woman with a positive

pregnancy test would be offered a webcam abortion on the spot so she couldn't change her mind. next, a nonmedical clinic assistant with minimal training would perform a transvaginal ultrasound and scan the image to a doctor in another location. the doctor would briefly talk to the woman via skype television connection. then the doctor could push a button on her computer which opened the drawer which were the abortion pills. the woman was told to take one set at the clinic and to complete it take the second set at home 48 hours later. planned parenthood instructed its clinic workers to tell women who experienced complications at home to report to their local er. the women were told to say they were experiencing a miscarriage, not that they had undergone a chemical abortion. planned parenthood cut its costs to the bone by performing webcam abortions with virtually no overhead. no on-site doctors, no real medical staff, very little equipment, and no expense for travel to a remote clinic.

and yet it charged women the same fee for a chemical abortion as it did for a surgical abortion. webcam abortion is obviously a big moneymaker for planned parenthood. i expressed my concerns to planned parenthood management that webcam abortions were unsafe and possibly illegal. today, planned parenthood's webcam abortion scheme is so financially successful it's been implemented in both iowa and minnesota. they touted it as the first in the nation and had plans to expand webcam abortion to every state. after i left planned parenthood, i realized that it had been fraudulently billing iowa medicaid's program. it had filed false medicaid claims totaling about $28 million. first through its c-mail program it dispensed without a prescription medically unnecessary oral contraceptive pills to medicaid patients.

and it coerced donations from patients in violation of medicaid regulations. each of these initiatives was implemented to benefit planned parenthood's bottom line. none benefitted women's health. planned parenthood is organized as a tax exempt nonprofit, nevertheless these are some of the reasons it has reported $765 million in excess revenue over the last ten years. when i first began working at planned parenthood, i trusted them and thought its leaders knew what was right, but i learned that it could not be trusted. in fact it does not deserve to be trusted by any american, woman or man. planned parenthood is more concerned about its bottom line than it is about the health and safety of women. thank you. >> thank you, ms. thayer. ms. fredrickson, welcome. >> good afternoon, chairman goodlatte and members of the committee.

my name is caroline frederickson and i'm the president of the american constitution society for law and policy. i am testifying today in my personal capacity and do not purport to represent any institutional views of the american constitution society. thank you for providing me the opportunity to testify here today in response to this most recent attack on planned parenthood. planned parenthood is a nearly century old health care provider that plays a critical role in securing the right to health care for millions of americans. each year planned parenthood health centers provide services such as family planning counseling and contraception, breast exams and testing and treatment for sexually transmitted infections to 2.7 million patients and no less than one in five women in the united states has visited a planned parenthood health center at least once in her lifetime. these services help women prevent an estimated 516,000 unintended pregnancies and 217,000 abortions every year.

these are services that women, men and young people in this country desperately need and that many would go without should they lose access to planned parenthood's health centers. planned parenthood provides services at approximately 700 health centers located in every state in the nation and 54% of these health centers are in rural or medically underserved areas or areas with shortages in health professionals. as many experts have opined, there are simply insufficient numbers of alternative health care providers to absorb the patients who need care should they lose access to planned parenthood. planned parenthood health centers are particularly crucial for poor women in this country. more than half of planned parenthood patients rely on medicaid to cover their costs and 78% of planned parenthood

patients live with incomes of 150% of the federal poverty level or less. indeed in 68% of the counties with a planned parenthood health center, planned parenthood serves at least half of all safety net family patients. planned parenthood is an integral part of the health care system in this country. it provides critical health care services to many women, particularly poor women, who might otherwise go without these services. this most recent round of attacks on planned parenthood was instigated by an anti-choice organization, the center for medical progress, whose members deceptively infiltrated planned parenthood clinics and conferences claiming they worked for a tissue procurement company. the cmp representatives recorded meetings with planned parenthood

staff and released numerous videos of these encounters. at the outset regardless of the content of the videos which arguably show no wrongdoing at all, those videos are unreliable and unusable as evidence because they've been so heavily edited and cmp has not released to anyone the full, unedited versions. in fact, planned parenthood hired experts to review the videos and assess their authenticity and those experts, including grant fredericks who is a contract instructor of video science at the fbi and one of the most experienced video experts in north america found many deceptive edits in those videos. in many cases cmp edited dialogue out of context which altered the meaning of the dialogue, in other cases large segments of dialogue were simply omitted altogether. there is no question that both the shorter videos and the so-called full footage videos are selectively and intentionally edited and incomplete. as such in the words of the

expert analysis, the manipulation of the videos does mean they have no evidentiary value in a legal context and cannot be relied upon for any official inquiries. moreover, every jurisdiction i. moreover, every jurisdiction that has conducted an investigation into planned parenthood's activities have found no wrongdoing. as of this date, six states have completed investigations into whether planned parenthood violated any laws in its fetal tissue donation program. all six unanimously concluded that planned parenthood did not. and, in fact, representative jason chaffetz, chairman of the house committee on oversight and government reform, whose committee questioned planned parenthood ceo cecile richards at length admitted to cnn's wolf blitzer "no, i'm not suggesting that they broke the law." in sum, there's no evidence that planned parenthood has violated any laws. as we all know, this is one in a long length of videos that have

been used to try and undermine women's access to the full reproductive health care that they are entitled to under the law in america and have need of to ensure they can live full lives. so i respect the committee and thank you for inviting me here to talk about this important issue. >> thank you. welcome ms. stalltonberg. >> thank you. my life was devastated by abortion. i was a teenager when i had my first abortion. i was too afraid to tell my parents that i was pregnant and my boyfriend didn't want a baby so i made my appointment with planned parenthood. i was so scared when i arrived. i paid my money and sat in the waiting room. i was taken back to a room with a nurse and asked how i felt about this. i told her this had to be wrong, it had to be a baby. she told me it was just a blob of tissue. that this abortion would be easier and safer than if i carried it to term. i was the scared teenage we are

no medical knowledge or experience they were the trusted medical professionals and adults so i thought. so i trusted and i believed them and i went through with the procedure. the type of abortion that i had was a vacuum aspirator method. this is the most common abortion done in the first trimester. i laid on the table and i waited for the doctor that i had never met before which is most times the case to come in. this doctor was cold and he was unfriendly. he told me to lie still, that it wouldn't take long. i had no anesthetic for the pain. he said that i would just feel tugging and a slight sensation and cramping. that was not true. it was the most extremely painful procedure i've ever had done. i could hear the increased labor and every time the suction machine would pull apart or a limb of my baby from my body. each time i kept trying to sit up to see what was going into

that jar. was it my baby? they kept pushing me back down and telling me to lie still. as soon as the procedure was over, they quickly wheeled the jar out of the room with my baby's remains. they knew it was my baby, they saw the head, they saw the feet, they saw the arms. i wasn't told about fetal development when i was at planned parenthood. they didn't tell me that my unborn baby that they were ripping out of my body would have arms, had leg, had a heart beat, fingerprints, and she could feel pain. why didn't they want to tell me that? were they afraid that i would change my mind? it must have been a wrong choice if after knowing all the facts i chose life for my child. on the way home i was in severe pain. i laid in the backseat crying and bleeding profusely and when i got home i called planned parenthood and i told them about the pain and the bleeding.

they told me that this was no longer their problem, that i would need to call my own physician. there was no way i was going to call my own physician, i was too scared, i was too ashamed and i didn't want my parents to find out what i had done so i painfully laid there that day and wondered if i would die. the happy fun loving luana did die with my baby. i became depressed, angry, i started drinking heavily, i started doing drugs and i became very promiscuous. i hated myself. my life was spinning out of control. i became pregnant two more times and chose abortion both times. each experience was similar to the first, except for the second abortion they showed me blobs of tissue on slides and told me that that's all that they would be removing, not a baby. by the third abortion i was so ashamed and embarrassed i didn't even give them my real name. i gave them a friend of mine's

name. i cringe to think what would have happened if there would have been complications or i died on the table that day. who would they have called? would my parents have ever found out? having an abortion didn't solve any of my problems, it only created new ones and larger ones. the way i dealt with them was more alcohol, more drugs, anything to numb the pain. and i even tried to kill myself. but god had a plan for my life. i found hope and forgiveness in jesus and i accepted him as my lord and my life began to change. i met a wonderful man and we were married and we wanted to start a family but we were having no success. i went for endless tests and one of the tests i had done was a dye test to determine if there was blockages in my fallopian tubes. during the test, my doctor asked if i had ever had abortions and i admitted that i had three. she showed me on the screen where my tubes were damaged and mangled from the abortion

procedure. she said i would never have children because of the abortion and she wanted me to have a hysterectomy so that i would not have an ectopic pregnancy. she left the program and i lied there paralyzed and let it soak in that the only children i would ever bear i had killed. i had to tell my husband that he was never going to be able to have his own children because of the choices i had made. i wondered if he would want a divorce. we had a hard road of tears and schlepless nights and counseling sessions. i learned to forgive myself and the abortion workers for not telling me the risks and possibilities of infertility. i was angry that i was lied to. and that i didn't get the facts so that i could make the choice for myself. i thought they were pro-choice and cared for women. i don't feel cared for. i felt used and i felt abused.

i live with the consequences and the pain and the regret of abortion everyday along with many other women. in front of me are pages of sworn testimonies of women who have been hurt and abused physically emotionally, psychologically by planned parenthood and other abortion industry in general. i'm here representing them as well as myself and it's a heavy load. i'm asking you to please consider these stories and mine when you make legislation and when you make decisions about defunding planned parenthood and about abortion. all of us who have been hurt by abortion are being made to pay planned parenthood with our tax dollars. you know, that's like being forced to pay your abuser over and over again. abortion is not health care.

it is the taking of an innocent life. thank you. >> thank you. we'll now proceed under the five minute rule with questions for witnesses and i'll begin by recognizing myself. before i'll begin my questioning i'd like to show a quick video that puts a human face on the issues presented here today. >> what was that? done on >> that's the start. >> i think so, right? >> yeah. >> there's the heart. >> my fingers will smush if it i try to -- >> the heart is right there.

>> what would you call that intact? >> these are intact kidneys, yes. >> because if i looked at that i'd be liked that that's good to go: oh, yeah. yeah. >> five stars. and we are -- i think the -- i think per item things works a little bitter because you can see how much we can get out of that. a lot of times especially we won't even put water, you can just put your hand in there and pick it up. so i don't think there would be as war torn. war torn? oh, dear. >> the other bans are all atashed. there's the stomach. >> there's the heart, that's the stomach, and the kidney and adrenal. >> there you go. >> we got all that right there. >> another boy. another boy.

>> ms. stoltenberg thank you for sharing with us your feelings about the three abortions you went. on planned parenthood's web site there are freakily asked questions regarding abortion. one considers whether there are long-term risks saying "safe uncomplicated abortion does not cause problems for future pregnancies" and "ultimately most women feel relief after an abortion." based on your experience, do you think these characterizations provide with all the information they need about the risks associated with the abortion procedure they're about to undergo? >> no, i do not. i didn't hear any of those risks from them and i don't believe that's a true statement at all. my story proves that, that this was not safe for me. i could haven't children and these stories prove