Federal officials have arrested the alleged ringleader of a nationwide scheme who convinced veterans to sell their military pensions and duped retirees into investing in those monthly benefits. Dozens of his alleged victims live in South Carolina.
The U.S. Marshals Service apprehended Scott Kohn, the owner of Future Income Payments LLC, on Saturday on Mission Beach, a boardwalk neighborhood in San Diego.
The U.S. Attorney's office in South Carolina secured indictments against Kohn, a 65-year-old California resident, in March, accusing him of conspiracy to commit mail fraud. But he'd been on the run since that time.
According to the federal charges, Kohn and several of his partners operated a scheme that lured in people receiving pensions, including military veterans, and persuaded them to sell their future benefit payments for upfront cash.
The businesses then marketed that income to retirees and other investors all over the country, promising up to an 8 percent return on their money.
The federal prosecutors allege Kohn and his companies owe investors more than $297 million. Even more, they argue the military pensions and disability payments Kohn used to recruit many of those investors aren't transferable under federal law.
Kohn and his network of business partners weren't alone in operating this type of scheme.
The Post and Courier reported last week on the Upstate Law Group, a small South Carolina firm that helped run a nearly identical operation for more than seven years. That operation switched names at least four times over the past seven years, helping them elude state regulators and a string of lawsuits filed by investors.
Future Income Payments was also reprimanded by securities regulators in multiple states.
The Securities Commissioner of South Carolina is one of the latest investment regulators to order Kohn to cease his operations. It reported 96 South Carolinians bought into the alleged investment scam before it was shut down earlier this year.
The number of state enforcement actions against Kohn created problems for his business, according to federal prosecutors. By 2018, they allege he was essentially operating a Ponzi scheme by using money from new recruits to pay off the people who opted into the scheme earlier.
Kohn is currently being held in the Western Region Detention Facility in San Diego, according to Deputy U.S. Marshal Ben Walker.
The jury selection for Kohn's case is set for Feb. 13, 2020.