Mastermind of $300 million Ponzi scheme targeting veterans sentenced to 10 years
The mastermind behind a $300 million Ponzi scheme has been sentenced to 10 years in prison for his role in exploiting military veterans in desperate financial straits, according to the U.S. Attorney's Office for the District of South Carolina.
Scott Kohn, 68, of Newport, California, who was indicted in March 2019, was accused alongside coconspirators of conspiracy to commit wire fraud and mail fraud in connection with the buying and selling of military benefits.
The Greenville News spent a year investigating the scheme as part of its Indebted series.
During the seven years the scheme operated, Kohn drew upon fraudulently obtained funds to live a lavish lifestyle, according to prosecutors.
And when the Ponzi scheme ultimately collapsed, Kohn and his coconspirators had caused more than $310 million in losses to more than 2,500 retirees and had placed more than 13,000 veterans into exploitative loans, prosecutors said.
Indebted: Veterans suffered and investors lost millions in nationwide schemes
Previous coverage: Co-defendant in $1B Ponzi scheme targeting veterans pleads guilty in Greenville
Kohn ran a corporation called Future Income Payments LLC. For several years, Kohn and partners used FIP as their vehicle for their nationwide scheme, prosecutors said. Kohn directed employees to use late-night advertising and the Internet to reach people, and more than 90 South Carolinians were among those ensnared, according to The News' Indebted series.
According to a press release from the U.S. Attorney's Office, Kohn and his coconspirators solicited pensioners experiencing financial distress, most of whom were military veterans, by offering an upfront lump-sum payment in exchange for an assignment of the rights to their monthly pensions and disability payments. Even though the assignment transactions were characterized as sales, they were actually loans with annual interest rates of as much as 240%, prosecutors said.
Kohn and his coconspirators — working through a network of hundreds of financial advisors and insurance agents nationwide — then solicited thousands of seniors to purchase FIP’s “structured cash flows,” which were the pensioners’ monthly pension payments. Kohn and his coconspirators induced these seniors to invest their retirement savings with FIP by making false assurances of a significant rate of return on their investment, concealing the nature of FIP’s transactions with the pensioners and lying about the financial health of the corporation, prosecutors said.
In addition to a prison term, Judge Bruce Hendricks ordered Kohn to forfeit $297 million and be placed on supervised release for a period of three years after completing his prison term.
Kohn does not have an attorney listed in federal court documents.
Four other defendants previously pleaded guilty to conspiracy for their roles in this scheme: Kraig S. Aiken, 53, of Rancho Santa Margarita, California; David N. Kenneally, 59, of Greenville, South Carolina; Melanie Jo Schulze-Miller, 40, of Peoria, Arizona; Joseph P. Hipp, 52, of St. Louis, Missouri. Sentencing hearings have not yet been set for them.
Check back for more on this developing story.
Tamia Boyd is a Michigan native who covers breaking news in Greenville. Email her at tboyd@gannett.com, and follow her on Twitter @tamiamb.
This article originally appeared on Greenville News: Ponzi scheme leader sentenced to 10 years after veterans lost millions
