Ponzi Scheme Operator Leader Jailed 10 Years, Forfeits $297m, For Duping 13, 000 Retirees

Ponzi Scheme Operator Leader Jailed 10 Years, Forfeits $297m, For Duping 13, 000 Retirees 

The ringleader of a $300 million Ponzi scheme that targeted veterans and the elderly, Scott A. Kohn, has been convicted and sentenced to 10 years in prison, after he pleaded guilty to the charges of defrauding 13,000 veterans in exploitative loans.

The 68 years old convict, from Newport, California, USA, was indicted in 2019 in South Carolina for a nationwide fraud conspiracy operated through his corporation Future Income Payments LLC from 2011 to 2018.

“Kohn and his co-conspirators reached across the country to steal from veterans and seniors who desperately needed their money,” said U.S. Attorney Adair F. Boroughs, for the District of South Carolina in a statement, “These hundreds of millions in losses will reverberate through the victims’ lives long after the defendants serve well-deserved federal prison sentences.”

Kohn and his co-conspirators recruited pension holders, most of them veterans who were in dire financial circumstances and offered them lump-sum payments in exchange for the rights to their monthly pensions and disability benefits, according to court documents.

While FIP framed these transactions as sales, they were essentially loans with exorbitant interest rates, sometimes as high as 240 percent. Moreover, the buying and selling of military benefits is illegal under US’ federal law.

The conspiracy then sought out retirees looking for safe investments and promised them reliable “structured cash flows”, really just the veterans’ monthly pension payments.

As state regulators began clamping down on FIP and pensioners struggled to pay the extremely high interest, FIP relied on funds from earlier investors to pay its newer ones. These transfers of funds from investor to investor made the conspiracy a Ponzi scheme, according to the indictment.

Meanwhile, per the indictment, Kohn and his co-conspirators lived “lavish lifestyles” thanks to the scheme.

When the scheme collapsed, 13, 000 veterans had taken out the exploitative loans, and more than 2,500 retirees lost a total of $310 million, according to a Justice Department news release on Thursday.

Following his indictment in March 2019, Kohn was said to have went on the run for six months, until U.S. Marshals caught him on a beach in San Diego.

In addition to his prison sentence, Kohn will have to be on supervised release for three years after he leaves prison and forfeit $297 million.

Four co-conspirators already pleaded guilty before this year: 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; and Joseph P. Hipp, 52, of St. Louis, Missouri.

Their sentencing hearings have not yet been scheduled, according to the Justice Department.

Source-: Military Times

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