For nearly seven years, a small South Carolina law firm helped operate a nationwide scheme that preyed on desperate military veterans, misled investors and netted millions of dollars in allegedly illegal profits.
The Upstate Law Group, with its office in Pickens County, worked with a network of salesmen to lure in cash-strapped veterans and convince them to sign over their monthly pensions and disability payments.
The businesses then persuaded retirees to invest in the federal benefit payments, promising up to an 8 percent return on their money.
The veterans received a lump-sum payout for handing over several years of future income to the investors. The upfront cash came at a steep cost.
The problem is the entire arrangement is illegal, according to state and federal authorities. Federal law prohibits veterans from assigning their pension or disability payments to another person.
That didn’t stop Candy Kern-Fuller, owner of the Upstate Law Group. Since 2012, she helped her associates sell the military benefit contracts across the country.
The name at the top of the paperwork changed over the years: Voyager Financial Group, SoBell Corp., BAIC Inc., Performance Arbitrage Company and Life Funding Options.
But the system continued.
Using websites, the string of companies persuaded veterans from states as far flung as Florida, Idaho, Texas, Alaska and Michigan to sign over their benefits. And they peddled those supposedly “secured” payments to retirees in places like Nevada, New York, Arizona, Tennessee and California.
The scope of the operation is staggering. Records obtained by state regulators show the companies lured in hundreds of veterans and pocketed millions of dollars in fees, which they siphoned off the top of each deal.
The Upstate Law Group effectively served as the banker, legal counsel and debt collector for the operation — offering an air of legitimacy to the scheme.
Kern-Fuller and her attorney, David Overstreet, declined multiple requests for an interview for this story. But documents from numerous lawsuits and regulatory actions highlight the Upstate Law Group’s role.
Kern-Fuller and her employees ensured each contract was filled out. They handled the bank accounts where the veterans and investors wired millions of dollars. And if veterans stopped the monthly payments, Kern-Fuller sued them in South Carolina court seeking hefty damages for backing out of the contracts.
“I’ve been doing consumer advocacy for 20 years, and of all the issues that I deal with, I think this one gets under my skin the most,” said Stuart Rossman, the National Consumer Law Center’s director of litigation. “To try to rip off veterans for disability and retirement pensions just absolutely fries me.”
This isn’t the first operation to target veterans and their military benefits. The National Consumer Law Center warned about similar operations as far back as the early 2000s. Several people involved in a nearly identical scheme were charged with fraud in South Carolina federal court earlier this year.
The companies the Upstate Law Group worked with didn’t go unnoticed.
Investment regulators in at least eight states reprimanded the businesses since 2013. Witnesses in a U.S. Senate hearing raised red flags about the contracts the companies were hawking all over the country in 2015. And the Securities and Exchange Commission investigated the operation in 2016.
But it did little to slow them down. Each time one company got in trouble, another would pop up to take its place.
The Upstate Law Group’s involvement remained constant.
In October 2012, John Pelinski, 35, was out of a good job with Michelin, and running out of money. The rent came due. His car payments piled up. The cost of living overwhelmed the Army combat veteran.
Looking for a way to avoid financial ruin, Pelinski found a website claiming he could sell his disability payments. He asked for an application and submitted his personal information to Voyager Financial Group. He accepted a roughly $17,000 lump-sum payment.
In exchange, Pelinski agreed to give up $60,777 in future disability payments over the next seven years. The federal benefits were the only remaining income for Pelinski, who served a tour in Iraq in 2005 and 2006. And his wife’s wages weren't enough.
Pelinski, who lives in Batesburg, hoped the lump sum payment would cover his bills as he looked for another job. It helped him catch up on late payments for his car, his rent, his water and his electricity. Some of it went toward groceries.
But when the money ran out, he didn’t see any other choice. He contacted Veteran Affairs and got the agency to transfer his monthly disability payments back to his own bank account.
“I was hard up. I’m not going to lie to you. I was looking for every honest penny I could get,” he said. “I couldn’t afford it. I couldn't find a job at the time. If I could go back and redo it, I would.”
Pelinski wasn’t the only veteran to opt into a contract with Voyager around that time. Records from the Arkansas Securities Commissioner show 317 veterans in 31 states decided to sell their pensions or disability payments with the company by 2012.
It’s unclear how many other Army, Navy, Air Force and Marine Corps veterans signed similar deals in the following years as the businesses swapped names to elude lawsuits and regulators.
For a time, Pelinski thought he’d escaped the contract he signed. Then, in 2015, the court summons arrived.
The Upstate Law Group filed a lawsuit against him in Greenville County. They wanted the benefit payments he promised, and they asked state Circuit Judge Robin Stilwell to force Pelinski to pay even more money for breaking the contract.
By that point, investment regulators in Pennsylvania and California ordered Voyager to stop doing business in their states. They alleged the contracts were illegal under federal law.
But Pelinski didn’t know that.
He searched for defense attorneys to represent him. But they wanted to be paid up front. It was a cost he couldn’t afford. He never showed up in court. In his absence, the judge ruled he owed $58,841.
The judgment forced Pelinski into bankruptcy, and nearly ruined his marriage.
“We were getting by until that lawsuit came in, and that just scared the living daylights out of me,” he said. “At that time, our backs were up against the wall and we had nowhere to turn besides the bankruptcy.”
Kern-Fuller wasn’t done. She pursued Pelinski into bankruptcy, and eventually got $15,968 through the federal court case.
He was lucky. It ended far worse for other veterans.
Winning by default
Kern-Fuller opened the Upstate Law Group in Easley in 2008, along with her law partner Howard Sutter. And for several years, court records show Kern-Fuller busied herself with divorce proceedings, employment disputes and personal injury cases.
The law firm’s now-defunct website said Kern-Fuller modeled the business “after the ‘hometown’ law practices of years gone by.”
But the cases she filed in Greenville County court changed dramatically in late 2013. The small town law firm began suing dozens of veterans for breach of contract.
Documents from an ongoing case in Arizona show Kern-Fuller first became involved in the scheme in 2012. An email between her and Andrew Gamber, the former owner of Voyager Financial Group, show the two establishing their business relationship in September of that year.
They were introduced by one of Kern-Fuller’s former legal clients.
From there, the Upstate Law Group quickly became immersed in the pension and disability contracts. The money began pouring into the firm’s bank accounts. And the lawsuits began piling up in Greenville County.
The Post and Courier identified more than 60 lawsuits in South Carolina court where Kern-Fuller and her partners litigated cases against veterans. The lawsuits were often filed on behalf of the very investors who entrusted the Upstate Law Group with their money.
There are numerous reasons why veterans broke the contracts. Many could no longer afford to go without their pension or disability payments. Some came to regret the terms of the deal. And others took back control of their benefits after learning the contracts might be illegal.
Take a veteran from Illinois who was sued in 2015. He explained his decision to state Circuit Judge Perry Gravely. He pointed to a newspaper article about an ongoing lawsuit against Voyager in California, and highlighted the alleged illegality.
“I feel that myself and the investors were both scammed by Voyager Financial Group,” the veteran wrote. “I am currently seeking legal representation to have this suit dismissed.”
That plea and many others didn’t work. Almost none of the veterans hired a defense attorney. And they rarely showed up in court. Many lived hundreds of miles from the Greenville County courthouse, where the contracts mandated any legal dispute be resolved.
The Upstate Law Group took advantage of that fact. They repeatedly asked judges to rule without a jury trial ever taking place. It worked in many instances. They won by default, and the results were sometimes devastating.
One Florida veteran who received a $30,750 lump sum payment was ordered to pay back $203,276 for breaking his contract. Another veteran from Georgia accepted $99,999 but was ordered by a judge to pay $304,914.
And then there’s a veteran from Kentucky. He received $53,377 in 2013. But Circuit Judge Lawton McIntosh ordered him to pay back more than half a million dollars. An obituary shows the 39-year-old veteran died a year and a half later. The Post and Courier couldn’t determine the cause of his death.
The lack of legal counsel often extended into bankruptcy court.
In a case from 2015, Kern-Fuller leveled accusations of fraud and embezzlement against a North Carolina veteran in federal court. The legal threats pressured him into signing a settlement agreement before his bankruptcy case could be resolved.
He's now expected to make payments on the $67,000 debt until June 2026.
A 'low risk' investment
The veterans aren’t the only people still paying for their involvement with the Upstate Law Group.
Lawsuits and regulatory cases show more than a few investors also came to regret the money they handed over to Kern-Fuller and her business associates.
One of the latest examples is a retired couple from Tennessee who sued the Upstate Law Group and Kern-Fuller earlier this year. They purchased several of the military benefit contracts between 2015 and 2016. Altogether, they put nearly half a million of their life savings into the deals.
The contracts were supposed to provide a steady return. But the monthly installments stopped arriving in early 2017. Sporadic payments were made in the months that followed. And then they ended altogether.
The Tennessee couple is now left with few answers, and no way of knowing whether they’ll ever see their money again. But they’re not the first.
Investors in California and Pennsylvania filed similar lawsuits in past years against Voyager after they lost tens of thousands of dollars.
The scheme even netted former Oregon governor Neil Goldschmidt. He and his wife sued Voyager over the $600,000 he invested in the benefit contracts in 2012, according to The Oregonian newspaper.
It’s unclear how much money any of them recovered from the lawsuits. But the businesses continued selling the investments across the country.
Some investors purchased their contracts through insurance brokers or private investment advisors. The marketing material provided to them suggested the monthly payments were “secured” and the contracts “binding.”
Voyager and the companies that followed in its footsteps tried to reassure investors their money would be safe.
They purchased life insurance for the veteran and made the investors the recipients of those policies. In some cases, they backed that up with another insurance plan, which they bluntly referred to as a "suicide wrapper."
Later, they offered so-called “default protection” in case the veterans stopped paying. And they constantly reminded investors they could rely on the Upstate Law Group to be there to represent them if the deal went sour.
Many investors only realized how vulnerable they were when the money began to disappear. Emails from investors in Arizona highlight the terror and anger they felt when the monthly deposits stopped arriving in their bank accounts.
“I hope you're not sick of seeing questions about this, but on the other hand, I hope the Upstate Law Group is real ... like not a Ponzi scheme or some other organization of like ilk,” one investor in Arizona wrote.
“So much for my $106,000 low-risk, conservative investment in my future,” another said. “Is it just me/my account or do you have other clients who are experiencing the same thing?”
It’s unclear how many retirees and other investors lost their savings over the past seven years. Mark Corbett, a California man who helped recruit the veterans, suggested under oath in Arizona that 80 to 90 percent of the contracts never paid out for investors.
Kern-Fuller and the other middlemen got their money up front by taking a cut of the lump sum payment the investors provided. Documents obtained in the Arizona case detail the fees they pulled from each transaction.
The people who accepted applications from veterans got several hundred dollars for each contract. Several thousand dollars went to the companies matching the veterans with investors. And the Upstate Law Group netted thousands more to “perfect” each deal.
That cash machine finally stopped working earlier this year.
The “Notice to Buyers” was sent out on Feb. 12, 2019.
In an email, Life Funding Options, the latest business to traffic in military pension and disability payments, notified investors it had “purchased” their benefit contracts.
And it informed the investors the company was shutting down operations and freezing their payments.
“Unfortunately, due to the actions of the Consumer Financial Protection Bureau and the South Carolina Department of Consumer Affairs, Life Funding Options Inc. had no choice but to suspend our operations for 90 to 180 days, and maybe permanently,” the notice said. “As such, we are left unable to transact business at this time.”
The company went on to profess its innocence. It explained that it was unable to honor the “default protection” plans the investors paid for. And it informed the investors they’d have to find their own attorneys if they still wanted to sue the veterans.
The email signaled a possible end to years of the Upstate Law Group and its business partners profiting off the veterans and investors.
Kern-Fuller and her associates are now under pressure on multiple fronts.
A group of veterans filed lawsuits against them in South Carolina federal court accusing the entire network of civil fraud and racketeering. The South Carolina Department of Consumer Affairs subpoenaed Kern-Fuller in January. And federal attorneys with the Consumer Financial Protection Bureau asked to interview Kern-Fuller about her work with the contracts last month.
But Kern-Fuller wasn't interested in talking. She filed a lawsuit in federal court in July seeking to halt the request from the Consumer Financial Protection Bureau. She argued the entire federal agency was unconstitutional.
The federal agency already entered orders against two other people involved in the operation. It accused them of pushing illegal contracts and banned them from operating a similar business ever again.
Gamber, the former owner of Voyager, was ordered to pay $2.7 million. And Corbett, the man who recruited veterans, was punished with a $1 fine.
To this point, Kern-Fuller and the Upstate Law Group have escaped unscathed.
Meanwhile, more than 16 veterans are still facing lawsuits in Greenville County over the contracts they signed.