According to the U.S. Attorney’s Office for the District of South Carolina, the mastermind behind a $300 million Ponzi scam targeting vulnerable military veterans was sentenced to 10 years in prison.
Scott Kohn, 68, of Newport, California, was indicted in 2019 for the fraudulent plan he used to support his extravagant lifestyle from his $4.8 million estate with expansive views of the Pacific Ocean.
Along with accomplices Kraig Aiken, David Kenneally, and Joseph Hipp, the con artist was charged with conspiracy to conduct wire fraud and mail fraud for his attempt to defraud veterans with loans secured by their pensions that included exorbitant interest rates.
In addition to the prison sentence, Judge Bruce Hendricks ordered Kohn to forfeit $297 million and to serve three years of supervised release after his release. Between 2011 and 2018, when the fraud fell, his firm gave veterans and retirees with financial advances that were later reimbursed by their pensions, with $310 million put into five accounts controlled by Kohn and his accomplices.
According to The Greenville News, Kohn pocketed at least a third of this staggering figure. Reportedly, he also spent vast sums on fancy automobiles and artwork.
The financially vulnerable traders were not informed that the interest rates on the advances may exceed 240 percent per year. The first capital came from investors who were promised returns of up to 8% on their investments. Up to 13,000 veterans were enrolled in the predatory loans.
Kohn and three friends were able to amass hundreds of millions of dollars by exploiting the disparity between the interest rates paid by traders and those earned by investors.
According to prosecutors, Kohn managed a business named Future Income Payments LLC. At least 2,600 individuals have fallen victim to the fraud and invested in the company.
According to The News’ Indebted series, Kohn instructed his workers to utilize late-night advertising and the Internet to target individuals, and more than 90 South Carolinians were among those who fell victim.
According to a news statement with the US Attorney’s Office, Kohn and his co-conspirators would then approach pensioners in financial difficulties, primarily military veterans, and offer them an upfront lump amount in exchange for an assignment of the rights to their monthly pensions and disability payments. According to The Greenville News, among Kohn’s claimed victims were a Vietnam War veteran who needed money for his wife’s cancer treatment and a Minnesota widow who needed money for the operation of her pet dog.
Dan Meehan, a 51-year-old Navy Reserve veteran, got $2,906.83 per month in military disability payments and took out a $5,000 loan from Kohn.
As he slid deeper into debt paying up to 50 percent hidden fees and 240 percent interest rates, he eventually referred to it as the “worst mistake of my life.”
Meanwhile, Kohn resided in an upscale gated enclave south of Los Angeles, where his $4.8 million villa offered panoramic views of the Pacific Ocean.
When Kohn was indicted in March 2019, he first fled and the FBI created a “Most Wanted” poster for him.
Near September of that year, agents from the US Marshals apprehended him on a beach in San Diego.
At least 25 states were touched by the Ponzi fraud, from South Carolina to Minnesota.