Felon Wipes Out $100 Million In Pension Money From Unwitting Investors

From the "things you don’t see at market bottoms" department, this morning the WSJ reported about a 64-year-old felon named Scott Kohn was able to rip off unwitting and financially unsophisticated investors for over $100 million, under the guise of being able to allow them to earn more retirement income by borrowing against their pensions in their later years.

The report details the demise of Mr. Scott Kohn and his company, Future Income Payments. As of today, the company is embroiled in litigation with parties like the Illinois Attorney General, its clients and other regulatory agencies who are seeking recourse for over $100 million that was irrevocably lost.

The scam product, which was then turned around and sold by different investment advisors seeking high commissions, highlights how dangerous private market investment products can be. How did Future Income Payments work: here is the WSJ:

Future Income essentially sold investors other people’s pensions. Mr. Kohn’s firm would find workers entitled to pension payments and temporarily buy the rights to those payments—effectively lending the beneficiaries money against their future pension income in what is called a “pension advance.” Then, Future Income would sell the rights to investors for a lump sum. An investor might put up $100,000 in exchange for an income of 7% for five years, for example.

But Future Income’s apparent collapse has left investors stranded. The company is no longer collecting the pension money that funds its own payments to investors, according to court documents. Mr. Kohn couldn’t be reached for comment. It isn’t clear if he has a lawyer.

Today Kohn’s company, Future Income Payments, is shut, according to court filings, and his investors are likely to be wiped out, according to lawyers representing them, who plan to sue scores of firms that sold Future Income products as soon as this week.

As the WSJ nots, "the blow-up shines a light on the boom in opaque private markets, to which investors have flocked in the hope of doing better than they can in traditional stock and bond markets."

One story highlighted by the Wall Street Journal exemplifies how this scheme targeted those with a little financial acumen and are of retirement age:

JC and Mary Barb of Hemet, Calif., say their financial adviser Kevin Kraemer persuaded them to invest some $78,000 with Future Income last year. “He came to us and said, ‘Hey we can make some more money on your money,’ [and] sold us this new deal,” said Mrs. Barb, a 66-year-old retired postal worker. Her husband, a 63-year-old retired teacher, said the money “was to be a big help to us in our retirement and now it’s not there, it’s gone.” Mr. Kraemer declined to comment.

Some clients were even advised to "refinance their homes" to buy FIP's products:

Unlike publicly traded investments, there are few rules on how pension advances can be sold or by whom. “They illustrate the problems with the financial services industry selling opaque, high-commission private investments,” says Joe Peiffer, a New Orleans-based plaintiffs’ lawyer representing some purchasers of Future Income’s products. “We have clients who were advised to cash in their pensions and refinance their homes to buy these things.”

Then in April of this year it all collapsed and Cohn had sent a letter to his investors stating FIP was under “intense regulatory pressure and legal expense,” before telling his investors that there were “no guarantees [they] would receive all payments.” Despite the fact that the company, run by a felon, claimed in its marketing materials that it had over 200 employees, it was found to be run from a rental mailbox in a UPS store near Las Vegas which Cohn had used for previous businesses.

Future Income called itself “America’s largest pension cash-flow originator,” boasting of a “global footprint of over 200 employees.” Its mailing address is a mailbox at a United Parcel Service Inc. store in a strip mall outside Las Vegas. The same address has been used by Mr. Kohn for dozens of other companies, most of them now defunct, state records show.

Kohn had also previously pled guilty to trafficking and counterfeiting goods in 2006 and spent over a year in federal prison as a result. Bizarrely, regulators had been on the case of FIP since 2014, initially over the terms with which it was buying pension benefits. Regulators alleged that the company was lending illegally and breaching certain state laws limiting interest rate maximums on loans. The WSJ found one instance where a Gulf War veteran was charged $450/month for five years to repay a loan of $2,700. It was 10x what he had borrowed and worked out to an APR of 200%.

Not only were the FIP products toxic to begin with, but the way they were flipped and sold to people by investment advisors was just as ugly:

The sellers included Live Abundant, a firm based in Salt Lake City that promises on its website to “empower you to live a more abundant life by replacing your old, outdated retirement philosophy.” It has sold products from both Future Income Payments and Woodbridge Group of Cos. LLC, another private-market investment that collapsed, according to lawyers representing investors who said they intend to sue Live Abundant.

Loren Washburn, an attorney for Live Abundant, said the firm plans to review what it “could have done better” in vetting the deals. “This outcome where we’re having to explore options to collect [the money due to investors] is obviously not optimal.”

The sellers also included independent advisers registered with the Securities and Exchange Commission, such as Gus Marwieh of Austin, Texas. Mr. Marwieh “used his strong religious beliefs to engender trust from investors,” said Mr. Peiffer, who is representing some of them. Mr. Marwieh confirmed he sold Future Income products but declined to comment further.

The worst part: if retirees are buying the line that they can be somehow making more money than in traditional investments - after the stock market has been on a decade long run higher - we can't help but wonder that when we hit the inevitable coming recession, these types of scams will only intensify in hopes of preserving the ponzi and become more abundant, instead of fading away, as scammers continue feeding naive retirees the one commodity that is in endless demand: hope.

Comments

dot.dot ACP Mon, 07/23/2018 - 22:56 Permalink

The saying, "It is hard to cheat an honest man" certainly holds true here.  These people thought they could get free money and signed on the dotted line.

Hard to feel sorry for these greedy geezers.  Notice how each of these boomers retired w/ a gov't pension.  How nice for them.

In reply to by ACP

glenlloyd ACP Tue, 07/24/2018 - 01:16 Permalink

I'm surprised this has come to light now, it's usually when the crisis happens and the bottom falls out of everything that this sort of scam shows up under the lights.

I would say that it's a bit early but for this to happen but who knows. I'm sure this won't be the last one either.

All these financial advisors that recommended this stuff need to be held to account for recommending something they had little time and due diligence invested in.

When it looks too good to be true it always is.

In reply to by ACP

peippe FireBrander Tue, 07/24/2018 - 01:04 Permalink

I fear their friendly local banking concern sold their info, income data points, the oh-so-frequent DDs

to their joint account. 

These lemmings were set up, just one cold call & the vampire is in the door.  

Sucks, but this is America & the old MaBell hard line into the house announces you're a target. 

Fact. Bank sold a list, & the rest is history. And the oldsters believe there's a free lunch, somewhere.

In reply to by FireBrander

August FireBrander Tue, 07/24/2018 - 10:37 Permalink

>>>I've always wondered how people dumb enough to fall for these scams managed to not live under a bridge their entire life?

Just think about the intelligence of the average government employee. 

And half of them are even dumber than that.

In reply to by FireBrander

MK ULTRA Alpha nmewn Mon, 07/23/2018 - 23:56 Permalink

Scott Kohn has ripped off a load of disabled veterans. In the investigation by disabled veterans using the internet to meet and share data, it was discovered Scott Kohn is a Jew.

This is big and considering the Awan brothers and Wasserman Shultz, the Iraq war contracts rip off by Senate Appropriation Committee member Feinstein and her cabal of billionaires and her billionaire husband, all made men with government money, the TARP bank robbery, the tech crash rip off etc. The general roiling of the economy over and over, with now the highest level corruption and compromise of DOJ and the rest of the government, I don't expect anything to come of this.

Millions of houses stolen in the TARP bank robbery, mom and pop investors wiped out over and over. No one goes to jail.

IRS robbing people, land being taken, farmers and ranchers destroyed has led to the belief Trump will save us, well I have news for you, how many have gone to jail?

Former CIA officer Dr. Scheuer, who has written some really critical books on all of this, has called for Trump supporters to begin killing these former officials like Brennan. He worked with Brennan and knows the inside of the Deep State. After Awans/Wasserman Shultz espionage treason, the fake war on Russia and the penetration of Zionism into all aspects of our government, Dr. Scheuer is calling for a kill off of these people because they have committed treason and he knows it.

In reply to by nmewn

MK ULTRA Alpha Hugh_Jorgan Tue, 07/24/2018 - 01:42 Permalink

Hey, what about Feinstein ripoffs. she was forced off the committee, Wasserman Shultz espionage case, no indictment on a national security case? and so many cases it's now obvious to those who aren't brainwashed, they're not for us, and us? us is America. It doesn't look like the Jews are in it for America, more like for themselves.

The reality for you, is you've been brainwashed to believe in Zionism and you will sell out America for it. Israel First over America? right?

It's because of your racial belief system of Zionist Christianity, Jews on top, then whites and blacks on the bottom. This is the main target of the communist.

In the US today, less than ten percent actually attend Christian churches nationwide. The hypocrisy shown by the Jews and their supporters the Zionist Christians has been proven over and over, now less and less believe in Israel and their Zionist agenda. By the way, the church says 30% but after closer investigation it has been proven less than ten percent are functioning in the Zionist Christian belief system, there has been a great movement away from the Zionist Christian racial caste system brainwashing.

Unfortunately, general officers have been approved because of their loyalty to Israel over America, it is now a mercenary force, not beholding to the American people. This was actually proven in a ZH article proving a US Air Force general turned his command over to Israel.

We now have US Army Israel command and US troops all over Israel, some reported, most not. It was approved in NDAA by the Israel lobby controlled congress for the preparations for the invasion of Lebanon for the gas field and to protect the Golan land grab and oil fields.

We are murdering innocent people for Israel, real Christian isn't it?

Also, the racial part, when whites use the word Nigger, I often told them I didn't want to hear that word, those white people would later try to do me in because I didn't hate the blacks, the same Zionist Christian whites would do the same thing when I said, I don't support Israel or the Jews. So I did research for years on this issue to prove, the whites have a fantasy belief system of a racial caste system dictated by their book, that Jews are on top, then whites and everyone who isn't a Jew or white on the bottom. It's pure ignorance and anti-American. The majority of the whites who believe in this strange belief system cheer the killing of people of color all over the world and will give our last dime to Israel.

Many surveys have been done lately, the majority of Americans hate America, no love for America. Could it be, Jewish controlled MSM from NYC is working over time to divide us and to lie to us causing a great division to control us, or a better word to rob us? It sure doesn't look like the Jews care about America.

Your America is what the majority hate, unconditional support for Israel and the robbing of the American people's last dime, and the militarization of the government to be used against the American people if we say this is wrong.

Is the US at $21 trillion debt and trillion deficits bankrupt? we're on the edge of the abyss. When you end up choking your guts out in a ditch remember I told you why.

In reply to by Hugh_Jorgan

WarPony MK ULTRA Alpha Tue, 07/24/2018 - 14:34 Permalink

I don't get the down votes MK ULTRA Alpha.  I've done that research for years also and You are 1000% ABSO-F'N-LOOTLEY CORRECT!  Look who runs the Fed Res - look who saturates the media - look where our military is acting up - & look at the division by the two factions: Trump/Adelson/BiBi vs. media/Soros/BiBi - said division being the old "divide and conquer" ruse (((they))) are so well known for.  It looks like it is all planned to cause great emotional division, leading to violence. Look squirrel / pay no attention to the man behind the curtain - - Kill the Goy!  Brilliant! 

In reply to by MK ULTRA Alpha

Refuse-Resist FullHedge1 Tue, 07/24/2018 - 05:42 Permalink

(((Kohn))).

Every.

Single.

Time.

The shekelsteins have to go back to Israel. THey are not us and they will never be. In fact they hate us with a passion we can never understand. All we need to understand is that they will always try to destroy us no matter what we do for them. It's their nature.

Askepathy is genetic, and it's real. Time to grow up and accept the truth. They are not our friends. They are not anybody's friend but themselves and everything they do is tribe-centric.

Every.

Single.

Time.

 

 

In reply to by FullHedge1