Digging into Personal Finance’s “Does the Government Owe You An Extra $1,003 a Month in Benefits” pitch

Jim Pearce says a "little-known loophole allowed a handful of regular Americans to legally collect over $122,366,000 in bonus government cash" -- what's the story, and is there really "one simple step" to take by September 15 December 15, 2017 to qualify?

By Travis Johnson, Stock Gumshoe, December 14, 2017

This article originally appeared on September 14, when the teaser pitch was circulating with a September 15 “deadline” to get your “extra $1,003 a month in benefits.” We’re getting a lot of questions about it again, so we’re republishing this article… other than the move to a December 15 “deadline,” the ad appears unchanged (and the stock being teased is still priced right around where it was back in September).

Originally published 9/14/17

These newsletter ads that promise “government payouts” or “extra Social Security” or other “free” money probably generate more questions (and complaints) than even the “get rich quick” spiels about the next hot gold miner or biotech breakthrough.

And you can see why — the target audience for investment newsletters is “folks in their 60s and 70s”, for the most part, and the complexity of Social Security often makes people feel like they might be doing something wrong… and, of course, the tendency for all of us is to feel like we deserve more than we’re getting, so the notion that the government owes us money can ring true on a subconscious level, even if we know it’s probably claptrap.

So let’s dig into this latest spiel, shall we? It’s from Personal Finance, a venerable investment newsletter that has gone through almost as many editors in the past few decades as Zsa Zsa Gabor had husbands (if you don’t get that reference, you’re not in the prime target demographic for newsletter promoters), currently being helmed by Jim Pearce (whose signature also rests at the bottom of the ad).

Pearce starts us off with the promise of “income” …

“This income-boosting loophole is so obscure, less than 1/10 of 1% of Americans are taking advantage of it.

“And that’s a shame. Because it allows you to boost your income by up to $12,040.

“Every year. For the rest of your life….

“Plus, it doesn’t matter how much money you currently make.

“Or even how old you are.

“This income boost is available to EVERYONE.

“Whether you’re 25… 40… 65… or even 80!

“In fact, my research shows 100% of the people who put their name on this plan’s list were approved.”

Gosh, a “plan” that offers income to everyone? And all you have to do is “put your name on the list?” I knew those “coastal elites” were getting something cool and free that I didn’t have! How do I get it?

They make us sit through more of the spiel first… he throws out a few examples of folks who are collecting this money….

“Brian W. from Augusta, Georgia….

“Even though he’s 48—and decades from retirement—he was still able to tap this opportunity for more than $1,720.

“Kathy N. a 57-year-old from Pennsylvania collected $6,020.

“And Tom S. who’s 69, raked in $12,040 last year thanks to this loophole.

“That’s just over $1,003 a month.

“Which amounts to a 73% income boost this former California avocado farmer can count on each and every year.”

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I don’t know who these folks are, of course, they’re presumably subscribers to Personal Finance who sent in comments to the publisher, or perhaps folks who were interviewed about this in some publication and have had their names changed. I’m sure they really exist and do (or did) have income at those levels… but there’s nothing very specific said about how they got that income other than those nebulous references to “loopholes.”

What else do we learn?

More about how easy it is to “collect payments”…

“… the form which allows you to collect payments that average up to $1,003 a month is so simple to understand…

“You can complete it in 90 seconds. Maybe less.

“There’s nothing confusing about it.

“There’s no way you can mess it up.

“And there’s no way you can be turned down.

“Remember, this plan has nothing to do with the actual Social Security fund.

“When you submit the postcard-sized membership form it goes directly to a private sector company that has one of the most unique financial relationships ever formed with the U.S. Government.”

Aha then, there’s a “private sector company” involved. I bet you know where this is going, and it’s going away from “get payouts” and toward “buy payouts”. Lots of meaning in that little change of phrase.

What else do we learn about this company? More from Pearce…

“Unlike outfits who provide overlooked “everyday” services like internet access, electric, or even garbage collection…

“The company behind the plan I’m sharing with you today provides a resource so immense, expensive, and time-consuming to control…

“The folks in Washington paid them more than $227 million last year to oversee it.

“And allowed the company to escape paying corporate taxes at the same time.”

And, apparently, thanks to President Eisenhower, this company is “legally obligated to pay you a share of its profits.”

So here we are… now it’s not a “plan” or a “list” that you join, but a company whose shares you buy, and which is then obligated to pay you some of the profits.

Well that sounds awfully like a regular old tax pass-through company like a Real Estate Investment Trust (REIT), don’t it? REITs were created by a law Eisenhower signed in 1960, and they allow these real estate companies to avoid corporate taxation as long as they pass 90% of their profits through to shareholders (who then get the tax obligation along with the cash).

So we’re probably dealing with a REIT here, one that works with the government — a few of those have been teased over the years, so which one is it that Personal Finance is pitching today?

“… it locked up nearly a quarter of a billion dollars’ worth of contracts last year with 54 state and federal agencies including the two who siphon at least 31.2% from most Americans paychecks:

“The Internal Revenue Service (IRS) and the Social Security Administration (SSA).

“As soon as you’re accepted into this plan, you’ll immediately become eligible to recoup MORE of the tax money the government takes from you.

“Better still, since the payouts you get come from a private company…

“They won’t impact your current (or future) Social Security payments either.”

OK, so it’s a REIT that contracts with the gummint. Which means they are probably a landlord for government agencies. What else do we learn?

“… the minute you join, you’re entitled to payouts which are:

“Essentially the same as collecting extra Social Security benefits and getting a tax refund… at the same time.

“100% legal and above board. (Even though it may feel like you’re getting away with something!)

“I’m not talking about a little bit of money here, either.

“Since the end of 2009 when this company started accepting members…

“The payouts have increased from $10,741,000 to $122,366,000.

“That’s a staggering 11x increase.

“Plus, since there’s little chance of government spending ever shrinking…

“I fully expect these payouts will continue to grow.

“Imagine how the money you collect from this plan could change your life.

“You could finally forget about working just to pay the bills…

“And finally start getting ahead.

“Even if it’s just a little bit.

“This opportunity is so simple to become a part of… you don’t even need internet access.

“In fact, all you really need to join is a pen…

“And about $20 in your bank account to cover the membership fee.”

Man, that’s a finely crafted temptation — the payouts go from $10 million to $122 million and will keep growing, and you get to forget about financial stress… and all you need is $20 in your bank account to cover a “membership fee?” Man, what’s the catch?

Well, the catch is that your “payouts” are entirely dependent on the amount you invest — that “membership fee” that is so obliquely referred to (that’s the first point in the ad where there’s any reference made to you having to pay anything for this).

To be fair, Pearce does later go on to note, though not in that big highlighted headline text, that this is a plan where you have to put money in…

“No matter where you start this plan…

“The more money you put into it—the more you stand to get out.

“You don’t need a lot of money to get started, though.

“In fact, all it takes i