Architect of $300 million Ponzi scheme targeting disabled veterans sentenced in SC
The California man behind a $300 million Ponzi scheme that targeted veterans and elderly investors was sentenced to 10 years in federal prison.
U.S. District Court Judge Bruce Hendricks on Thursday handed down the sentence to Scott Kohn after he pleaded guilty to conspiracy to commit mail fraud and wire fraud for his role in orchestrating a complex, two-pronged financial scheme, according to a statement released by the U.S. Attorney’s office.
“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. “These hundreds of millions in losses will reverberate through the victims’ lives long after the defendants serve well-deserved federal prison sentences.”
The fraud targeted both distressed pension holders who were short of cash — primarily disabled veterans — and investors looking to protect their retirement savings.
The case was prosecuted by Assistant U.S. Attorney William Watkins for the District of South Carolina and Trial Attorneys Ehren Reynolds and Yolanda McCray Jones of the Civil Division’s Consumer Protection Branch.
Through several companies, most prominently, Future Income Payments, LLC, Kohn “purchased” the pensions of disabled veterans. In exchange for an upfront, lump sum, Kohn would gain the rights to payouts from the pension.
But what Kohn called a “purchase” was really a “usurious loans with annual interest rates of as much as 240%,” according to the U.S. Attorney’s Office.
Kohn and his co-conspirators would then turn around and sell financial products to elderly investors across the country that promised returns of over 6%. These returns were in fact fueled by the payouts from the pensions.
By the time Kohn’s seven-year-long scheme fell apart in 2018, he had locked more than 13,000 veterans into exploitative loans, which had then been sold as risky financial products to over 2,500 retirees.
Elderly investors, who believed that they were investing their savings into a safe “structured cash flow” product lost over $310 million, federal prosecutors said.
All the while, U.S. Attorneys allege that Kohn and his co-conspirators siphoned money out of the businesses to fund their own lavish lifestyles.
Kohn, who was represented by Rose Mary Parham, has also been ordered to forfeit $297 million and will be placed on supervised release for three years after he is released from prison. Judge Hendricks has also ordered Kohn to forfeit artwork and a house in the exclusive Napa Valley wine growing region, just down the street from the world-renowned French Laundry restaurant, according to court documents.
Four other co-conspirators previously pleaded guilty to conspiracy charges for their roles in the scheme. They have yet to be sentenced.
This story was originally published August 20, 2022 at 4:12 PM.