Former Gov. Neil Goldschmidt and his wife, Diana Snowden, filed a lawsuit (PDF) this week against an Arkansas investment company alleging they'd been duped into investing $601,599 in products the lawsuit describes as "payments arising out of U.S. military disability and retirement contracts."

The lawsuit, filed in Multnomah County Court on Dec. 10 by Goldschmidt's attorney, Ted Runstein, says Goldschmidt and his wife bought nine investment contracts between April 2011 and March 2012 from Voyager Capital Group, LLC. Goldschmidt and Snowden now say those contracts were bogus.

"The Defendants failed to register the offer and sale of the Investment Contracts as securities as required by ORS 59.055. Consequently, the offer and sale of the Investment Contracts were unlawful," the suit says. "[Voyager] failed to disclose and they concealed from Plaintiffs the fact that U.S. military pensions may not be lawfully assigned, anticipated or attached."

Goldschmidt and Snowden are seeking repayment of their original investment.

Investing in military pensions and disability payments is a twist on the controversial practice of buying interests in other people's life insurance policies.

Those so-called "stranger-originated life insurance" investments have been banned in some states and have taken withering fire from insurance regulators. In 2009 Congressional hearing, Illinois insurance director Mike McRaith said such investments are "predatory, abusive practices that convert the lives of our elderly parents, friends and neighbors into commodities."

Goldschmidt and his wife invested in products that convert the pensions and disability payments of veterans into commodities. Just as hard-up senior citizens have traded their life insurance policies for lump-sum cash payouts, military veterans have sold their future pension and disability payments for cash. Investment companies such as Voyager buy those future payments at a discount, repackage them and create attractive returns for investors, as the Wall Street Journal has reported.

Goldschmidt was Portland's mayor from 1973 to 1979 and Oregon governor from 1987 to 1991. He retreated from public life in 2004, when WW reported his sexual abuse of a 14-year-old girl in the 1970s.

Andy Caldwell, Voyager's general counsel, says he has not seen a copy of lawsuit and cannot comment.