Judge in Greenville orders Scott Kohn to pay $501 million in veterans' benefits case

A federal judge in Greenville has ordered California businessman Scott Kohn to pay $501 million in a civil case involving the buying and selling of military veterans' benefits, an illegal practice illuminated by an investigation of The Greenville News.

Kohn and a web of his affiliated companies must pay $436 million in restitution to thousands of veterans and other pensioners across the nation, according to an order that U.S. District Judge Bruce Hendricks signed last month.

Kohn and his companies also are required to pay $65 million in penalties to the federal Consumer Financial Protection Bureau.

Greenville News 'Indebted' investigation:Veterans suffered and investors lost millions in nationwide schemes

In a 2018 lawsuit filed in California and later moved to South Carolina, the bureau accused Kohn of preying on financially struggling veterans by deceiving them about exorbitant interest rates associated with cash advances. The veterans agreed to divert money from their monthly disability or pension incomes to repay the advances.

The fine and penalties in the case are among the biggest in the Consumer Financial Protection Bureau's history and the largest since the federal agency levied a $1 billion fine against Wells Fargo & Co. in 2018 for actions that harmed mortgage and auto-loan borrowers.

A spokesperson for the bureau declined to comment.

Attorney: Collecting the money will pose a challenge that will take years

Even though he once enjoyed a lavish lifestyle that included living in a $4.8 million home overlooking the Pacific Ocean, Kohn is not expected to pay the $501 million in restitution and penalties anytime soon.

He is currently being held at the Spartanburg County Detention Center while awaiting a federal trial on 12 counts of wire fraud and one count of conspiracy to commit wire fraud and mail fraud. The charges stem from the buying and selling of veterans' benefits.

Kohn's network of companies, which federal prosecutors say was part of a complex Ponzi scheme, has collapsed.

In last month's order, Hendricks appointed Greenville attorney Beattie Ashmore to track down the assets of Kohn and his companies on behalf of veterans and other pensioners.

Ashmore is performing a similar task in the criminal case in hopes of recovering money for investors who provided veterans with cash advances but were never repaid.

Thus far, Ashmore has filed nearly 90 lawsuits seeking about $30 million from financial advisors and insurance agents across the country who were implicated in Kohn's Ponzi scheme.

"It's one of the largest cases in the nation," Ashmore said in a recent interview.

Veterans' benefits case in SC is 'one of the largest in the nation'

"It's entirely too early to tell what type of recovery we might be able to make for the victims," Ashmore said. "It will be years before we will be able to liquidate it all out."

Ashmore knows from his work on previous Ponzi schemes that recovering money for victims is a complicated endeavor.

"The inherent problem in all these cases is that, generally, the bad guys know that the feds are coming well in advance of when the Ponzi ends and the arrests are made," he said. "They move assets around. Tracing all those assets, tracking down all those assets, is a pretty tall task."

In her order, Hendricks also instructed Kohn to cooperate with Ashmore.

That hasn't happened so far, said Ashmore, noting that Kohn has fired his attorney and is representing himself in the federal criminal case.

"He has been totally uncooperative," Ashmore said.

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Kirk Brown covers government, growth and politics for The Greenville News. Reach him at kebrown@greenvillenews.com or on Twitter @KirkBrown_AIM. Please subscribe to The Greenville News by visiting greenvillenews.subscriber.services.