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Updated Feb 27, 2023

In This Section
This section contains the following topics:

1.  General Information on Forfeiture of Benefits

Introduction

 This topic contains general information on forfeiture of benefits, including information on

Change Date

 February 27, 2023

X.iv.3.B.1.a.  38 U.S.C. Forfeiture Provisions

38 U.S.C. 6105 provides for forfeiture of gratuitous Department of Veterans Affairs (VA) benefits upon conviction of “subversive activities” – offenses defined by specific statutory sections in the Uniform Code of Military Justice (UCMJ) in 10 U.S.C., as well as specific offenses in 18 U.S.C., 42 U.S.C., and 50 U.S.C. When there is forfeiture under 38 U.S.C. 6105, the person has no right (“on and after the date of commission of [the] offense”) to gratuitous benefits based on service commencing before the date of commission of the offense. 38 U.S.C. 6103 provides for forfeiture for fraud.  An individual who commits fraud in connection with any claim for benefits, subject to the applicability provisions in 38 U.S.C. 6103(d)(1), forfeits “all rights, claims and benefits” under laws administered by VA other than those relating to insurance. 38 U.S.C. 6104 provides for forfeiture for mutiny, treason, sabotage or rendering assistance to an enemy of the United States or its allies, subject to the applicability provisions in 38 U.S.C. 6103(d)(1).  When any of those offenses is shown by satisfactory evidence, the individual forfeits “all accrued or future gratuitous benefits.” Reference:  For more information on statutory offenses constituting subversive activities, see M21-1, Part X, Subpart iv, 3.B.3.a.

X.iv.3.B.1.b.  38 CFR Forfeiture Provisions

Forfeiture is addressed in 38 CFR 3.669 and 38 CFR 3.900 – 3.905. 38 CFR 3.669 provides for suspension of benefits, resumption of benefits where forfeiture is not declared, effective dates of forfeiture, and the effect of a presidential pardon. 38 CFR 3.900 contains general principles on forfeiture, including applicability of the other forfeiture regulations. 38 CFR 3.901 defines fraud, discusses forfeiture for fraud – before, and as of, September 2, 1959, and provides for remission of certain forfeitures imposed prior to September 2, 1959. 38 CFR 3.902 defines treasonable acts as the offenses specified in 38 U.S.C. 6104 (mutiny, treason, sabotage or rendering assistance to an enemy of the United States or its allies) and discusses forfeiture by reason of treasonable acts before, and as of, September 2, 1959. 38 CFR 3.903 defines subversive activities as any offense for which punishment is prescribe in specified statutory provisions.  It discusses forfeiture based on conviction of subversive activities, the effective date of the regulation, how VA is notified of a qualifying indictment or conviction, and restoration of rights to benefits with a presidential pardon. 38 CFR 3.904 addresses forfeiture based on fraud, treasonable acts or subversive activities after the Veteran’s death. 38 CFR 3.905 covers jurisdiction, roles, procedures, finality, due process, and offset of any remission of forfeiture.

X.iv.3.B.1.c.  Forfeiture for Subversive Activities Compared to Forfeiture for Treasonable Acts

Comparing forfeiture under 38 U.S.C. 6104 and 38 U.S.C. 6105, the grounds for forfeiture overlap but, as discussed in M21-1, Part X, Subpart iv, 3.B.2 and 3, the evidentiary standard, and procedure, for forfeiture under each standard is different. This is because when 38 U.S.C. 6105 (then 38 U.S.C. 3505) became law, effective September 2, 1959, it redefined the standard for forfeiture.  Congress retained 38 U.S.C. 6104 (then 38 U.S.C. 3504) but limited its applicability. Most cases of forfeiture today will fall under 38 U.S.C. 6105. Forfeiture of benefits under 38 U.S.C. 6104 (for what 38 CFR 3.902 calls treasonable acts) can only be declared after September 1, 1959, when
  • the individual
    • was not residing or domiciled in a State when the prohibited act or acts occurred, or
    • ceased to be a resident of or domiciled in a State before the expiration of the period during which criminal prosecution could be instituted, or
  • the act was committed in the Republic of the Philippines.
Notes:
  • 38 CFR 3.1(i) defines “State” for VA purposes.
  • The applicability of 38 U.S.C. 6103 to find forfeiture based on fraud was similarly limited for fraudulent acts as of September 2, 1959.
References:  For more information on the regulatory applicability of forfeiture based on

X.iv.3.B.1.d.  Corporate Flash for Forfeiture Cases

Always apply the corporate flash Forfeiture Case as soon as VA receives
  • notice that a Veteran has been indicted for, or convicted of, an offense constituting a subversive activity, or
  • information or evidence is received indicating that a Veteran is guilty of a
    • a treasonable act, or
    • fraud.
Important:  This flash is not for use in all cases of fraud.  It will only be applied when fraud is grounds for forfeiture as provided in 38 U.S.C. 6103(d) and 38 CFR 3.901(d). The corporate flash will stay in place indefinitely, unless VA subsequently receives evidence that
  • an indictment for a subversive activity is dropped
  • the Veteran is acquitted of the charges for the subversive activity
  • a non-forfeiture determination is made regarding
    • treasonable acts, or
    • fraud, or
  • the offense has been pardoned by the President of the United States.
Note:  VA should receive notice of indictment before notice of conviction of a subversive activity.  However, apply the flash at the earliest point that forfeiture becomes an issue.  If the first notice VA receives is of conviction then apply the flash at that time.

X.iv.3.B.1.e.  Jurisdiction Over Forfeiture Determinations

The St. Paul Restricted Access Claim Center (RACC) has exclusive jurisdiction over forfeiture processing. Important:  The Manila Regional Office has exclusive jurisdiction over certain claims based on service in the Republic of the Philippines as stated in M21-1, Part X, Subpart i, 4.A.1.a, and M21-1, Part II, Subpart ii, 3, and 38 U.S.C. 6103(d)(2), 38 U.S.C. 6104(d)(2), 38 CFR 3.901(d)(3), and 38 CFR 3.902(d)(3) provide for forfeiture for fraud or treasonable acts committed in the Republic of the Philippines.  However, all forfeiture referrals – even those involving foreign residency or domicile, and fraudulent or treasonable acts in the Republic of the Philippines should be worked by the St. Paul RACC.

2.  Handling Forfeiture of Benefits for Fraud or Treasonable Acts

Introduction

 This topic contains information on handling forfeiture of benefits for fraud or treasonable acts, including

Change Date

 February 27, 2023

X.iv.3.B.2.a.  Evidence of Fraud or Treasonable Acts Precipitating the Forfeiture Process

 Cases implicating forfeiture for fraud or treasonable acts could, but will not necessarily, involve a criminal indictment, or VA’s Office of General Counsel or District Counsel referral making clear that forfeiture must be considered.  Claims processors must recognize fact patterns necessitating forfeiture under this topic. Examples:
  • A new claim and the evidence offered in connection with it from a person living abroad shows apparent forgery or other indications of fraud.
  • VA receives evidence that a Veteran subject to arrest for treason left the United States and is living in Thailand.
Important:  When evidence is received that shows forfeiture is at issue, make sure that the corporate flash Forfeiture Case is applied, as provided in M21-1, Part X, Subpart iv, 3.B.1.d.  The case must be routed to the St. Paul RACC for processing.

X.iv.3.B.2.b.  Process for Forfeiture of Benefits Based on Fraud or Treasonable Acts
The table below describes the stages in the process for handling forfeiture of benefits when VA receives evidence of qualifying fraud or treasonable acts.
Stage
Description
1
The authorization activity suspends any current payments effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share in any case where there is a current award of gratuitous benefits.
2
The development activity collects, or develops for, any additional evidence needed that
  • the Veteran was guilty of mutiny, treason, sabotage, or rendering assistance to an enemy of the United States or one of its allies, or
  • the information or evidence submitted in connection with a claim is
    • false or fraudulent, and
    • material to the question of eligibility for the particular benefit.
References:  For more information on
3
The development and/or authorization activity
  • evaluates the evidence (which includes determining its credibility), and
  • prepares an administrative
    • proposed forfeiture decision if the evidence presented indicates forfeiture, or
    • non-forfeiture determination if the evidence does not meet the standard for forfeiture.
The decision must address the standard, as applicable, for forfeiture for
Important:  The court has held in Del Rosario v. Peake, 22 Vet. App. 399, 404 (2009), that forfeiture is supported only if the underlying conduct is shown beyond a reasonable doubt.
If a proposed forfeiture decision is issued, it must include
  • the specific charges against the person
  • a detailed statement of the evidence supporting the charges, subject to regulatory limitations on disclosure of information
  • citation and discussion of the applicable statute(s), and
  • the right to
    • submit a statement or evidence within 60 days, either to rebut the charges or to explain the person’s position, and
    • a hearing within 60 days, with representation by counsel of the person’s own choosing, but that fees for representation are limited in accordance with 38 U.S.C. 5904(c) and that no expenses incurred by a claimant, counsel or witness will be paid by VA.
4
The development and/or authorization activity submits the proposed forfeiture decision or non-forfeiture decision to
  • an authorizer for concurrence, and
  • the Veterans Service Center Manager (VSCM) or designee for approval.
5
The VSCM or designee approves or rejects the decision.
6
The development and/or authorization activity
  • refers the claims folder and decision to District Counsel, and
  • establishes a suspense date to trigger the review of the status of the District Counsel referral.
Contact District Counsel if there are any questions about submission procedures.
7
District Counsel considers the claim and takes appropriate action.
If District Counsel … Then they will …
approves of a proposed forfeiture decision
  • furnish the claimant with due process as provided in 38 CFR 3.905, and
  • reassign the case to the RACC for any additional work that may be required, such as filing evidence received or scheduling a hearing during the due process period.
<p”>Go to Stage 8.</p”>
agrees with a non-forfeiture determination
  • reassign the case to the RACC with a memorandum setting forth the basis for the decision, and
  • the authorization activity will provide notice to the Veteran of the non-forfeiture decision.
Disregard the remaining stages in this table.
disagrees with the decision made by the RACC – whether that is a
  • proposed decision finding forfeiture criteria are met, or
  • a non-forfeiture decision
  • reassign the case to the RACC with a memorandum setting forth the basis for the decision, and
  • the RACC will take corrective action.
Go to Stage 3.
8
At the end of the 60-day due process period following proposed forfeiture, refer the case back to District Counsel.  District Counsel must consider any additional evidence (including any hearing testimony) and argument.
If District Counsel … Then they will …
still recommends forfeiture
reassign the case to the RACC with a memorandum setting forth that determination.
Go to Stage 9.
no longer recommends forfeiture
  • reassign the case to the RACC with a memorandum setting forth the basis for the decision, and
  • at the RACC
    • the development activity must prepare a non-forfeiture determination
    • the decision must be approved by the VSCM or designee, and
    • the authorization activity will provide notice to the Veteran of the non-forfeiture decision.
Disregard the remaining stages in this table.
9
The development and/or authorization activity
  • prepares a final administrative decision finding forfeiture based on fraud or treasonable acts, and
  • submits the decision to
    • an authorizer for concurrence, and
    • the VSCM or designee for approval
10
The authorization activity refers the claims folder and final decision to District Counsel to determine whether or not it will submit the case to Compensation Service or Pension and Fiduciary (P&F) Service for consideration of forfeiture.
11
District Counsel determines whether or not it will submit the case to Compensation Service or P&F Service for consideration of forfeiture.
  • If District Counsel decides to submit the case to Compensation Service or P&F Service, the process continues with Stage 1 of the process described in M21-1, Part X, Subpart iv, 3.B.2.c.
  • If District Counsel decides not to submit the case to Compensation Service or P&F Service,
    • it reassigns the case to the RACC with a memorandum setting forth the basis for the decision, and
    • the RACC will prepare and issue a non-forfeiture determination.
References:  For more information on

X.iv.3.B.2.c.  Submitting Cases of Forfeiture Based on Fraud or Treasonable Acts to Compensation Service or P&F Service

 The table below describes the process for submitting cases of forfeiture of benefits based on fraud or treasonable acts to Compensation Service or P&F Service for consideration.
Stage Description
1 District Counsel notifies the RACC that it is submitting the case to Compensation Service or P&F Service for consideration of forfeiture under the circumstances outlined in 38 CFR 3.901 or 38 CFR 3.902.
2 The authorization activity
  • checks whether suspension was already effectuated as provided in M21-1, Part X, Subpart iv, 3.B.2.b (Stage 1) and suspends any current payments effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share if suspension was not already effectuated
  • furnishes a final decision notice to the beneficiary, and
  • returns the claims folder to District Counsel to submit to Compensation Service or P&F Service.
3 District Counsel
  • prepares the submission letter to Compensation Service or P&F Service for consideration of forfeiture under the circumstances outlined in 38 CFR 3.901 or 38 CFR 3.902, and
  • notifies the RACC when the claims folder is ready for transfer to Compensation Service or P&F Service
4 The RACC notifies either Compensation Service or P&F Service by e-mail of the case that is awaiting its review. Important:  The period behind “Svc” must be included when addressing the e-mail to P&F Service. Reference:  For more information on transferring claims folders, see M21-1, Part II, Subpart ii, 3.
5 The Director of Compensation Service, the Director of P&F Service, or designated staff officials within these services
  • determine whether or not benefits will be forfeited
  • notify District Counsel of the determination, and
  • return the case to the RACC.
Reference:  For more information on the procedure for resuming payments when Compensation Service or P&F Service does not declare forfeiture, see M21-1, Part X, Subpart iv, 3.B.4.b.

3.  Handling Forfeiture of Benefits for Subversive Activities

Introduction

 This topic describes the processes for handling forfeiture of benefits for subversive activities including

Change Date

 February 27, 2023

X.iv.3.B.3.a.  Definition: Subversive Activities

 Subversive activities means any offense for which punishment is prescribed in any of the statutory sections (including UCMJ articles) specified in 38 CFR 3.903. Examples:
  • 18 U.S.C. 175 defines offenses relating to biological weapons.
  • 18 U.S.C. 229 defines offenses relating to chemical weapons.
  • 18 U.S.C. 831 defines offenses related to nuclear material.
  • 18 U.S.C. 793 defines a number of offenses that involve gathering, transmitting or losing defense information.
  • 18 U.S.C. 794 defines gathering or delivery defense information to aid a foreign government.
  • 18 U.S.C. 2332a defines offenses related to use of weapons of mass destruction.
  • 18 U.S.C. 2332b defines offenses involving acts of terrorism that transcend national boundaries.
  • 18 U.S.C. 2381 defines the offense of treason.
  • 18 U.S.C. 2383 defines the offense of rebellion or insurrection.
  • 18 U.S.C. 2384 defines the seditious conspiracy.
  • 18 U.S.C. 2389 defines the offense of recruiting for service against the United States.
Important:  The offenses listed in 38 CFR 3.903(a)(2) are only applicable to  claims filed on or after December 17, 2003.

X.iv.3.B.3.b.  VA Notification of Subversive Activities

 The Attorney General, Secretary of the Defense, or Secretary of the Treasury will notify VA whenever a person is indicted or convicted of a subversive activity under any of the statutes listed in 38 CFR 3.903.

X.iv.3.B.3.c.  Handling Forfeiture of Benefits Based on Subversive Activity Under 38 CFR 3.903

 The table below describes the process handling cases involving forfeiture of benefits based on subversive activity under 38 CFR 3.903.
Stage Description
1 On notification of indictment under any of the statutory provisions listed in 38 CFR 3.903(a), the authorization activity
  • suspends any current payments effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, and
  • establishes a suspense date to trigger the review of the status of criminal proceedings.
2 Upon disposition of the criminal proceedings one of the following actions occurs:
  • benefits are resumed as provided in M21-1, Part X, Subpart iv, 3.B.4.b if VA receives notification that criminal charges have been dropped, or
  • District Counsel will refer the case to Compensation Service or P&F Service for automatic forfeiture.
3 The Director of Compensation Service, the Director of P&F Service, or designated staff officials within these services, will
  • make the automatic forfeiture determination
  • notify District Counsel of the determination, and
  • return the case to the RACC.

4.  Additional Matters Related to Forfeiture of Benefits

Introduction

 This topic discusses additional matters related to forfeiture of benefits, including

Change Date

 February 27, 2023

X.iv.3.B.4.a.  Entitlement to Benefits Based on Subsequent Service

 Forfeiture of benefits based on one period of service does not affect entitlement to benefits based on a period of service beginning after the offense causing the forfeiture. Important:  Process a claim of this type based on the nonforfeiture period of service only. Reference:  For information on forfeiture of benefits based on one period of service, see 38 CFR 3.900(a).

X.iv.3.B.4.b.  Resuming Payments

 Resume payments effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share under 38 CFR 3.669, if the payment of benefits is otherwise in order and
  • a non-forfeiture determination was made finding no grounds for that forfeiture for fraud or treasonable acts and that was approved by District Counsel without referral to Compensation Service or P&F Service
  • Compensation Service or P&F Service returns the claims folder and District Counsel provides notification that no forfeiture was declared, or
  • District Counsel provides notification that the indictment for subversive activities was dropped or the beneficiary was acquitted of subversive activities.

X.iv.3.B.4.c.  Presidential Pardon Petitions

 Individuals whose benefits have been forfeited may apply through the Department of Justice for a pardon from the President of the United States. Important:  The effective date of any resumed benefits based on a presidential pardon (after discontinuation based on forfeiture) is the date of the pardon. Reference:  For more information on the resumption of benefits based on a presidential pardon, see

X.iv.3.B.4.d.  Processing Apportionments in Forfeiture Cases

 Use the table below to process apportionments when a forfeiture of benefits is invoked.
If forfeiture was invoked … Then …
before September 2, 1959 continue apportionments in these cases as long as the dependents remain entitled. The amount payable to the dependents is the lesser of
  • the applicable survivors benefit payable, which is either
    • Death Compensation or Dependency and Indemnity Compensation, if the Veteran was receiving compensation, or
    • Survivors Pension, if the Veteran was receiving non-service-connected disability pension, or
  • amount of compensation or pension being paid the Veteran at the time of the forfeiture.
Important:  Do not pay benefits to or for any person who participated in the fraud or treasonable act causing the forfeiture.
after September 1, 1959 do not make apportionment to any dependents.

X.iv.3.B.4.e.  Handling Disagreements With Forfeiture Decisions

 When a legacy notice of disagreement (NOD) or decision review request regarding a forfeiture decision is timely filed, forward the following to Compensation Service or P&F Service:
  • the legacy NOD or decision review request, and
  • any material submitted with it.
Compensation Service or P&F Service will subsequently prepare a statement of the case or review decision, as appropriate. References:  For more information on