Alleged Ponzi scheme targeted military veterans and other pension holders, federal authorities say

Scott A. Kohn of Newport, California, is shown in two photos from an wanted poster. Kohn and FIP have been indicted for conspiracy to engage in mail and wire fraud, according to a Thursday news release from US Attorney for South Carolina Sherri A. Lydon.

A California man and a business entity called Future Income Payments LLC (FIP) have been charged in connection with a Ponzi scheme that took advantage of military veterans and other pension holders desperate for money, federal authorities said.

Scott A. Kohn, 65, of Newport Beach, California, and FIP have been indicted for conspiracy to engage in mail and wire fraud, according to a Thursday news release from US Attorney for South Carolina Sherri A. Lydon.

CNN has reached out to Kohn's public defender for comment. Kohn was arraigned Wednesday before a US magistrate judge in Greenville, South Carolina, according to the release.

The pensioners made monthly payments to FIP in exchange for a lump sum payment or loan, on which the adjusted annual percentage rate often exceeded 100%, the news release said.

According to the release, FIP then solicited investors to purchase "structured cash flows," at a rate of return between 6.5% and 8%, which were the pensioners' monthly pension payments.

"FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational," the news release said. "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 rule of law is essential to a prosperous economy, and those who avail themselves of our marketplace are expected to abide by our laws," Lydon said. "The scheme alleged in this Indictment took advantage of pensioners facing difficult financial situations -- including veterans of the US Armed Forces."

Kohn and FIP were indicted last March. He was arrested in September in California, according to The Post and Courier of Charleston, South Carolina.

The maximum penalty Kohn could face for the conspiracy charge is 20 years in federal prison and a fine of $250,000, the release said.