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tors cracked down on the companies.
More judges ruled that their transac-
tions violate states and federal laws.
The fallout created two sets of vic-
tims: veterans and the people who pro-
vided them money.
Veterans, like Meehan, fell deeper
into debt. Investors saw their nest eggs
vanish as the veterans stopped paying
and the companies collapsed. They are
factory workers, a school librarian and a
couple who relied on their pastor for fi-
nancial advice.
Everyone lost more than money.
Faith and trust and hope were lost, too.
The architects of these arrangements
were the only ones who truly profited.
Their bank accounts swelled, some-
times into seven figures. Their riches
came from high commissions, some-
times up to 50%, hidden fees and exor-
bitant interest rates as high as 240%.
Future Income Payments, the com-
pany Meehan contacted, ballooned into
what’s been described as a billion-dollar
enterprise. Investors lost more than
$451 million when that business burst
last year, according to records obtained
by the FBI.
Its founder, Scott Kohn, bought pri-
cey artwork, high-end cars and a
$1.7 million mansion in Las Vegas. He
also lived in a $4.8 million California
home with panoramic views of the Pa-
cific Ocean.
In March, Kohn, 65, was indicted in
Greenville, South Carolina, on a federal
charge of conspiracy to commit wire
fraud and mail fraud in connection with
the buying and selling of military bene-
fits. The charge carries a maximum
20-year prison sentence. Today, he is
being held without bail and is consid-
ered a flight risk.
The criminal case against Kohn and
his associates is unprecedented. The fil-
ing of charges might mark a new era that
could protect veterans and investors
from a racket that has been remarkably
hard to stamp out.

$5,000 came at a heavy price

Meehan was in a treatment program
for trauma and addiction when he
signed his contract.
For the $5,000 that Meehan received,
he agreed to divert a portion of his dis-
ability benefits for five years. With a
100% annual interest rate, he wound up
owing more than three times his original
payout – $18,780.
The terms of the deal that Army vet-
eran Michael Haring received caused
him to file bankruptcy three years later.
Haring, who served in Iraq, got a cash
advance in 2013 because of a costly di-
vorce.
“I had the lump sum that solved my
immediate crisis needs,” he said, “how-
ever, what it did is it reduced my income
every month, which in the medium and
long term was bound to create addition-
al hardships.”
The scams worked like this: Compa-
nies provided struggling veterans with
cash advances from investors ranging
from less than $5,000 to nearly
$98,000. Veterans agreed to pay back
the money over four to 10 years, using
the monthly income from their military
disability benefits or pensions.

What veterans like Meehan didn’t

know is that these transactions were il-

legal, according to at least seven court

rulings since 2011 in Arkansas, Califor-

nia, Oregon, Minnesota, South Carolina

and Virginia.

The companies argued that they pro-

vided unregulated purchase agree-

ments.

But judges ruled that these contracts

were null and void. In some cases,

judges said they violated state and fed-

eral lending laws. In others, the courts

cited violations of federal anti-assign-

ment laws.

Easy prey for scammers

A Government Accountability Office

report issued in October said the U.S.

Department of Veterans Affairs should

do more to prevent the financial exploi-

tation of veterans.

Congress has also failed to act. Re-

form legislation was proposed at least

three times since 2013 but has not

passed.

Veterans are particularly susceptible

because their guaranteed income

streams are akin to “waving a piece of

bacon in front of a dog,” said Stuart

Rossman, director of litigation for the

National Consumer Law Center. “It at-

tracts scammers.”

“These are people who we should be

honoring, not exploiting.”

A ‘scary, ugly’ world

Mary Orem said she handed Chris

Dixon, founder of Black Harbor Wealth

Management, a check for $50,507.59 in

his office in December 2016. It repre-

sented savings from 25 years of work as

a high school librarian.

Black Harbor, which has three offices

in the Carolinas, was one of the firms

Kohn relied on to find investors willing

to provide cash advances to veterans.

According to documents obtained by

the FBI, 300 sales agents across the

country received commissions from Fu-

ture Income Payments. Some of the

agents were paid more than $1 million a

year in commissions.

Orem, 58, trusted Dixon. He prom-

ised he could grow her nest egg by 6% to

8% annually. Orem figured that would

prevent her from spending her final

years in a shoddy nursing home.

Now, she is unsure when she will stop

working. She lost all but about $6,

and is among at least 100 former clients

who are suing Black Harbor.

“I know the world is scary and ugly

out there and people are greedy and

people are out for themselves,” she said.

“I just didn’t think I would run into any-

one who would take advantage of me.”

She is one of the estimated 2,

people who lost more than $451 million

in 2018 as Kohn’s operation went under,

according to the documents obtained by

the FBI.

An Arizona-based marketing compa-

ny called Shurwest introduced Dixon

and other insurance agents across the

country to Future Income Payments, ac-

cording to allegations in lawsuits. Dixon

had no reason to believe that Shurwest

would promote a venture “that would

place his customers’ assets at risk,” said

his attorney Benjamin Biard.

An attorney for Shurwest, Jason

Lewis, denied the company had a rela-

tionship with Future Income Payments.

Virtually all the money is gone

Future Income Payments is in debt

today.

It owes money to people like a retired

Army medic from Minnesota. He’s iden-

tified as “J.F.” in a 2017 lawsuit filed by

the Minnesota state attorney general.

J.F. took a cash advance for a down

payment for a car, the lawsuit states, so

he could get to his volunteer shifts at an

organization that helps veterans.

Money was tight, and life was hard.

He suffered a traumatic brain injury in

the service.

In July 2018, a judge ordered Future

Income Payments to refund $491,000 to

him and more than 120 victims in Min-

nesota. The company hasn’t paid.

Since 2015, at least 13 other states

have ordered Kohn’s company to pay

$68.4 million in refunds and other fees.

It’s not clear how much money Kohn

and his associates have. Between 2013

and 2018, more than $358 million was

deposited in five accounts controlled by

Kohn and his associates, according to

FBI records.

Virtually all of that money has been

drained.

Another chance

Dan Meehan now lives with his

mother in her townhouse outside Bos-

ton. A trained carpenter, he does pro-

jects around their home instead of

paying rent. He built her an office this

summer.

That’s not the dream, though. He’s a

paralegal who wants to be a lawyer.

An attorney at the legal clinic filed a

lawsuit against Future Income Pay-

ments on his behalf. Meehan dropped

the case after the Massachusetts attor-

ney general banned the company.

These days, he’s sober, he said. He

volunteers. He places flags on veterans’

graves. He helps other veterans file dis-

ability claims.

Meehan finds peace at the Fourth

Cliff Family Recreation Area. It’s a nar-

row, rocky beach near an ocean inlet

20 miles east of his mother’s house. Vet-

erans, active military and their guests

have exclusive access to the resort.

Meehan likes to fish there, but he

hasn’t caught a lot. That’s not the point

anyway, he said.

“It’s about making myself get out into

nature,” he said. “It makes me realize

how small we really are, how blessed

you should be.”

Meehan was there on an overcast

Saturday afternoon in August. It was

windy, and the eyelet at the end of his

fishing rod was broken, but that didn’t

stop him.

He cast his line once, twice, a dozen

times. Each attempt was another

chance.

It could work, he thought.

Maybe next time.

Veterans

Continued from Page 1A

Nationwide reach of military benefits-buying schemes

SOURCE Greenville News compilation of court records, and orders from judges

and state regulatory agencies

USA TODAY

States in which veterans’ benefits were purchased

CONN.

R.I.

N.J.

DEL.

MD.

N.H.

MASS.

VT.

States where Scott Kohn’s businesses orchestrated military

benefits-buying arrangements:

Alabama, California, Colorado, Connecticut, Georgia, Illinois, Indian, Iowa,

Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York,

North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee,

Virginia, Washington, West Virginia, Wisconsin

States where investors have filed lawsuits against brokers and

agents who handled arrangements connected to Scott Kohn:

California, Florida, Illinois, New Jersey, Ohio, South Carolina, Texas, Utah

States where Andrew Gamber’s military benefits-buying operations

have been banned:

Arizona, Arkansas, California, Florida, Iowa, Mississippi, New Mexico,

Pennsylvania, Texas

States where courts have ruled the sale of military benefits

violates law:

Arkansas, California, Minnesota, Oregon, South Carolina, Virginia