Thursday, March 28, 2019

Federal Grand Jury Returns Indictment in $300 Million Nationwide Investment Fraud and Ponzi Scheme

Greenville, South Carolina ---- United States Attorney Sherri A. Lydon announced today that a Federal Grand Jury in Greenville, South Carolina, returned an Indictment alleging a conspiracy to engage in mail and wire fraud.  Scott A. Kohn, age 64, of Newport, California, and Future Income Payments, LLC (FIP), an entity organized under the laws of Nevada, are charged in the Indictment.

According to the Indictment, FIP operated a Ponzi scheme in which it actively recruited pension holders who were desperate for money, including many veterans of the United States Armed Forces.  The pensioners made monthly payments to FIP in exchange for a lump sum payment or loan.  The adjusted annual percentage rate on these transactions often exceeded 100%.

FIP then solicited investors to purchase “structured cash flows,” which were the pensioners’ monthly pension payments.  FIP promised the investors a rate of return between 6.5% and 8%.  It took active steps to conceal from the investors the usurious nature of its transactions with the pension holders.  FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational.  When FIP ceased doing business in early 2018, investors were owed approximately $300 million.  The scheme alleged in the Indictment victimized over 2,600 individuals.

“The scheme alleged in this Indictment took advantage of pensioners facing difficult financial situations – including veterans of the U.S. Armed Forces – and preyed upon innocent investors to the tune of roughly $300 million,” said U.S. Attorney Lydon.  “Along with our federal, state, and local partners, the U.S. Attorney’s Office for the District of South Carolina will continue to aggressively prosecute those who seek to line their own pockets by robbing individuals of their hard-earned money.”

The maximum penalty Kohn could face for the conspiracy charge is 20 years in federal prison and a fine of $250,000.  The case is being investigated by agents of the Federal Bureau of Investigation and is assigned to Assistant United States Attorney Bill Watkins of the Greenville office for prosecution.

The United States Attorney stated that all charges in this Indictment are merely accusations and that all defendants are presumed innocent until and unless proven guilty.

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