It was as if the website read Dan Meehan's mind.

“You deserve to not wait for your money any longer.”

Meehan, a 51-year-old Navy Reserve veteran, needed cash in the spring of 2015, and he needed it right away. He had a check coming — he received $2,906.83 in military disability benefits the first of every month. Maybe he could leverage that to cover the next few rent payments.

Just $5,000 would do, he thought.

Meehan was a psychiatric patient in a Boston veterans hospital when he sat down at a computer, typed "veteran disability loans" into a search bar and found a Future Income Payments' website.

What he did later — dialing the number listed on the website — he said is the “biggest blunder in my life.”

Dan Meehan, a Navy Reserve veteran, swims at the Fourth Cliff Family Recreation Area in Massachusetts in August. He is one of thousands of veterans ensnared by what authorities are calling a nationwide Ponzi scheme. JOSH MORGAN/Staff

Meehan fell into a carefully conceived trap that lured vulnerable veterans desperate to keep their homes or pay off mounting medical bills or send a child to college. All they had to do was redirect part of their monthly benefits for a cash advance from investors.

It was too good to be true.

This business of buying and selling military benefits spread to at least 33 states before unraveling.

In the last two years, investigators cracked down on the companies. More judges ruled that their transactions violate states and federal laws.

The fallout created two sets of victims: Veterans and the people who provided 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 former Clemson University professor.

Everyone lost more than money. Faith and trust and hope, too.

The architects of these arrangements were the only ones who truly profited. Their bank accounts swelled, sometimes into seven figures. Their riches came from high commissions, sometimes up to 50%, hidden fees and exorbitant interest rates as high as 240%.

Future Income Payments, the company Meehan contacted, ballooned into what's been described as a billion-dollar enterprise. Investors lost $451 million when that business burst last year, according to records obtained by the FBI.

Indebted: Financial schemes targeted veterans while the businesses made millions Financial schemes have targeted veterans since before the internet in at least 33 states, but court cases in Greenville, SC, could mark a new era. Josh Morgan, Greenville News

Its founder, Scott Kohn, bought pricey 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 Pacific 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 benefits. The charge carries a maximum 20-year prison sentence. Jury selection is set for February.

Kohn was caught by U.S. marshals on a beach in San Diego on Sept. 21 as he tried to outrun law enforcement one last time.

Future Income Payments Indictment A federal grand jury in Greenville, South Carolina, indicted four former Future Income Payments executives. View documents

Three of his associates are charged with the same offense. One of them, California businessman Kraig Aiken, has reached a plea deal with prosecutors.

Greenville has emerged as the national epicenter for legal battles over the sales of military benefits, an investigation by The Greenville News has found. In the last year, our journalists have traveled across the country and interviewed dozens of veterans, investors and legal experts. They also reviewed thousands of court documents.

Nationwide reach of military benefits-buying schemes Infogram

The criminal case against Kohn and his associates is unprecedented. The filing of charges might mark a new era that could protect veterans and investors from a racket that's been remarkably hard to stamp out.

"Criminal prosecution, which I believe is deserved under these circumstances, may be the deterrent we need," said Stuart Rossman, director of litigation for the National Consumer Law Center.

How veterans' cash advances left them deeper in debt and broke federal laws

Meehan was in a treatment program for trauma and addiction when he signed his contract.

He didn't tell his counselor at the Veterans Affairs center what he was doing. He couldn't leave the treatment program without permission, so he found a police officer in the hallways who moonlighted as a notary, and the officer stamped the paperwork.

For the $5,000 that Meehan received, he agreed to divert a portion of his disability benefits for five years. With a 100% annual interest rate, he wound up owing more than three times his original payout — $18,780.

Gulf War veteran Stephen Schmelz had an interest rate twice as high. The disabled Army veteran needed money for spinal surgery bills, according to a 2017 lawsuit filed by the Minnesota state attorney general. The $2,700 cash advance Schmelz took left him with a $27,000 debt.

Michael Haring stands in his townhouse in Longmont, Colorado. He suffered financial hardships following his deployment in Iraq. JOSH MORGAN/Staff

The terms of the deal that Army veteran Michael Haring received caused him to file bankruptcy three years later. Haring, who served in Iraq, got a cash advance in 2013 because of a costly divorce.

“I had the lump sum that solved my immediate crisis needs," he said, "however, what it did is it reduced my income every month, which in the medium and long term was bound to create additional hardships.”

Simply put, the scams worked like this: Companies 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 a period of four to 10 years, using the monthly income from their military disability benefits or pensions.

Copy text Copy this quote's text The quote has been copied Tweet Facebook LinkedIn Share this article on LinkedIn Reddit Share this article on Reddit Michael Haring, Army veteran I had the lump sum that solved my immediate crisis needs; however, what it did is it reduced my income every month, which in the medium and long term was bound to create additional hardships. Quote icon

What veterans like Meehan didn't know is that these transactions were illegal, according to at least seven court rulings since 2011 in Arkansas, California, Oregon, Minnesota, South Carolina and Virginia.

The companies argued that they provided unregulated purchase agreements.

But judges ruled that these contracts were null and void. In some cases, judges said they violated state and federal lending laws. In others, the courts cited violations of federal anti-assignment laws.

There are no criminal sanctions such as prison sentences or fines for breaking anti-assignment laws, which date to the Civil War. The criminal cases against Kohn and his associates are based on allegations that they used interstate commerce and the U.S. Postal Service to commit financial fraud.

Veterans 'are people who we should be honoring, not exploiting'

A Government Accountability Office report issued in October said the U.S. Department of Veterans Affairs should do more to prevent the financial exploitation of veterans.

One recommendation in the report: "Centrally collect and analyze information, such as complaints against companies, that could show the prevalence of these scams, help VA target outreach to veterans, and help law enforcement go after scammers."

U.S. Government Accountability Office Report The U.S. Government Accountability Office issued a report in October detailing steps that the Department of Veterans Affairs could take to better protect veterans from financial exploitation. View documents

Susan Carter, director of the VA's office of media relations, said the agency is responding to the report's recommendations.

"What veterans do with their disability benefits they receive from VA is typically outside of VA’s control, but the department works to educate VA benefits recipients about their risk to fraud," she wrote in an email.

Congress has also failed to act, Rossman said. Reform legislation was proposed at least three times since 2013 but has not passed.

The Boston-based lawyer first heard about veterans selling their benefits as U.S. troops headed to Afghanistan and Iraq after the terrorist attacks of Sept. 11, 2001.

Stuart Rossman of the National Consumer Law Center in Boston poses for a portrait in his office in August. JOSH MORGAN/Staff

Veterans are particularly susceptible because their guaranteed income streams are akin to "waving a piece of bacon in front of a dog," he said. "It attracts scammers."

Rossman, whose father and father-in-law fought in World War II, said people who prey on veterans represent the "depths of depravity."

"These are people who we should be honoring, not exploiting," he said.

Kohn directed his employees to use late-night advertising and the internet to reach people “who were in financial disarray and desperate,” a former executive said in an interview with an FBI agent.

Meehan fit the bill. He said he has suffered trauma. He abused alcohol and drugs for decades.

The money he received by selling his benefits only worsened his problems. He paid his rent first as he planned — but the leftover dollars fueled a relapse.

Global conspiracy, nationwide scheme head to courts in SC

The alleged conspiracy involving Kohn and his associates was a global one. He had employees in the Philippines. His company also had offices in Nevada and Michigan.

Charges were filed in a Greenville courthouse partly because of the number of victims in the area, according to the U.S. Attorney's Office.

Ninety-six South Carolinians lost money in Kohn's scheme, the state attorney general's securities division said.

Greenville also is home to the civil suit that the federal Consumer Financial Protection Bureau filed against Kohn. Bureau lawyers are seeking $501 million in restitution and penalties. Kohn has not responded to this 2018 suit.

Besides the Kohn cases, attorneys in Greenville have battled over civil suits involving a smaller nationwide benefit-buying scheme. The central players in that enterprise were Arkansas businessman Andrew Gamber and Candy Kern-Fuller, an attorney from Easley, South Carolina, about 15 miles from Greenville.

Between 2016 and 2018, Kern-Fuller sued at least 34 veterans from Maryland to California who stopped paying back their cash advances. One of them, a Marine in Massachusetts, said he was unaware of the suit against him that resulted in a $78,000 judgment until he was told by The News this summer.

Kern-Fuller filed all of the suits at the Greenville County Courthouse, just blocks from the federal courthouse where Kohn's case will be heard.

2011 California Ruling A judge determined that buying and selling military benefits violates federal anti-assignment laws. View documents

In September, a judge approved a settlement in three federal civil suits that were filed by nine veterans against Kern-Fuller, Gamber and others. One of the veterans was a woman who served in Iraq and saw several of her friends burn to death in a tank. Another was an Army medic who completed 700 combat missions in Afghanistan before a roadside bomb left him totally disabled.

Kern-Fuller and others agreed to stop buying and selling military benefits as part of the settlement. But they still dispute that it violates federal law.

There is little hope the veterans will recover all of their money.

The 'lavish lifestyle' of Scott Kohn

Kohn was in the business of making businesses. Since 1988, the Michigan native created at least 47. There was Jewels by Kimberly. GoldyRocks. Krishna International Products. SK Judgment Recovery Services.

He founded most in either Nevada or California. Almost all are now defunct.

In 2006, Kohn pleaded guilty in California to three felonies for selling counterfeit computer equipment. He was sentenced to 15 months in federal prison.

Copy text Copy this quote's text The quote has been copied Tweet Facebook LinkedIn Share this article on LinkedIn Reddit Share this article on Reddit Robert Rikard, a Columbia attorney for a hundred investors who say they are among Kohn's victims We wake up in the morning and fix a cup of coffee. He would wake up in the morning and start a company. Quote icon

A few years later, he began building his benefit-buying empire. Future Income Payments was his flagship enterprise, but he had at least 20 other related businesses, including Pension Advance Carolinas and Pension Carolinas.

"We wake up in the morning and fix a cup of coffee," said Robert Rikard, a Columbia, South Carolina, attorney for a hundred investors who say they are among Kohn's victims. "He would wake up in the morning and start a company."

Kohn stayed out of the spotlight. He can't be found on Facebook. Or Twitter. He didn't make headlines — until he got arrested.

Kohn's favorite restaurant is IHOP, federal investigators said.

That's not to say he lived like the common man.

His house in Las Vegas, bought in 2016, had two putting greens in the back yard. He later lived in a gated enclave in California. Kohn's then-wife received $5,000 per pay period from Future Income Payments even though she did not work for the company, one of Kohn's associates told an FBI agent.

The indictment issued by a federal grand jury in Greenville spelled it out: Kohn lived "a lavish lifestyle."

South Carolina attorney Robert Rikard represents investors suing others connected to benefit-buying schemes across the country. JOSH MORGAN/Staff

His fortunes soured as state and federal regulators closed in on Future Income Payments. In the final days, the company devolved into a Ponzi scheme, according to Kohn's March 2019 indictment. It tried to stay afloat by funneling money from new investors to pay back previous investors.

During his six months as a fugitive, Kohn holed up in a San Diego apartment, Assistant U.S. Attorney Bill Watkins said.

Today, he is being held without bail. Kohn's considered a flight risk.

He does not have an attorney listed in federal court documents.

Black Harbor company is one of hundreds that found investors

On a Monday morning in September, six people sat among 40 chairs in a room at Furman University's Younts Conference Center in Greenville.

Matthew Dixon stood in front. He led a 90-minute seminar called "Social Security Facts 101 — A Workshop to Maximize Benefits."

He promised an individually tailored "complimentary Social Security report" from Black Harbor Wealth Management, where he is a partner. He promoted Black Harbor's weekend radio show, "Max Money Hour."

“I don’t do a little dog-and-pony show and try to backdoor you and make you pay for this thing,” Dixon said. “I’ve heard so many bad experiences that people have had with financial advisers... This is not going to be one of those.”

He didn’t mention that about 60 of Black Harbor’s clients have had bad experiences with the firm, according to lawsuits filed in South Carolina in 2018 and 2019.

The lawsuits seek to recover money for clients who suffered “devastating” losses. Black Harbor denies many of the claims in the suits, court records show.

The firm has offices in Greenville and in Seneca, about 40 miles away. It opened a location in Asheville, North Carolina, this summer.

Proposed Court Order A federal agency is seeking $501 million in restitution and civil penalties against Scott Kohn and several of his companies. View documents

Black Harbor was one of the firms Kohn relied on to find investors willing to provide cash advances to veterans. According to documents obtained by the FBI, 300 sales agents across the country received commissions from Future Income Payments. Some of the agents were paid more than $1 million a year in commissions.

Copy text Copy this quote's text The quote has been copied Tweet Facebook LinkedIn Share this article on LinkedIn Reddit Share this article on Reddit Matthew Dixon, a partner at Black Harbor Wealth Management We believed, at first, it was a credible thing. We are doing the best we can right now to get these people their money back. Quote icon

For about two years, Black Harbor peddled a financial plan that included life insurance policies with a death benefit and a source of retirement income. Clients also were encouraged to buy a second investment to fund the annual life insurance premiums.

Many of these clients said they didn't know the second investment was a cash advance to veterans through Future Income Payments, according to allegations in lawsuits.

The investors could not afford the life insurance premiums after the company failed and stopped collecting from veterans. When they defaulted on the premiums, investors lost most or all of their money.

“We believed, at first, it was a credible thing,” Matthew Dixon said in an interview at the Younts center. “We are doing the best we can right now to get these people their money back.”

School librarian is one of thousands who lost $451 million

Mary Orem said she handed Chris Dixon, founder of Black Harbor, a check for $50,507.59 in his Seneca office in December 2016. It represented savings from 25 years of work as a high school librarian.

Orem trusted Dixon, who is Matthew Dixon's father. He greeted her in his office waiting room with a hug, cookies and coffee. He knew people she knew.

"He was a personable guy, and he made you feel like he was here for you," she said.

Orem had started a new job at Tri-County Technical College in 2015.. The 58-year-old from Pendleton, South Carolina, was still years away from retirement.

Dixon promised he could grow her nest egg by 6% to 8% annually. Orem figured that would prevent her from spending her final years in a shoddy nursing home.

Show caption Hide caption Mary Orem of Pendleton, South Carolina, poses for a portrait with her dog Dexter in her home Wednesday, Oct. 30, 2019. Orem, a former high... Mary Orem of Pendleton, South Carolina, poses for a portrait with her dog Dexter in her home Wednesday, Oct. 30, 2019. Orem, a former high school librarian, is one of 2,600 people who lost more than $451 million in a "scam" connected to Future Income Payments. JOSH MORGAN/Staff

Now, she is unsure when she will stop working. She lost all but about $6,000, she said.

That's why she is suing Black Harbor.

"I know the world is scary and ugly out there and people are greedy and people are out for themselves; I just didn’t think I would run into anyone who would take advantage of me," Orem said.

She is among 2,600 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 company called Shurwest introduced Chris Dixon and other insurance agents across the country to Future Income Payments from 2016 to 2018, according to allegations in lawsuits.

Copy text Copy this quote's text The quote has been copied Tweet Facebook LinkedIn Share this article on LinkedIn Reddit Share this article on Reddit Mary Orem, former high school librarian I know the world is scary and ugly out there and people are greedy and people are out for themselves; I just didn’t think I would run into anyone who would take advantage of me. Quote icon

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.

Shurwest "had a stellar reputation," he said. Even Dixon's wife invested — and lost — money.

An attorney for Shurwest, Jason Lewis, denied the company had a relationship with Future Income Payments. He said Shurwest fired an employee who secretly worked with Kohn's company.

“It is unfortunate that Mr. Dixon, a financial advisor and fiduciary, recommended a fraudulent investment product to his clients so he could make an extra commission," Lewis said in an email. "It is also unfortunate that Mr. Dixon now chooses to make false accusations instead of taking responsibility for his own poor decisions."

Rikard, the attorney representing Black Harbor's clients, said the insurance agents and financial advisers working with Future Income Payments didn't do their homework. He is also suing Shurwest.

"It's unbelievable that these people in the middle, who are fairly sophisticated and fairly smart people, did not do 10 minutes of due diligence on the product they were selling — and they would have known that this was a horrible idea," Rikard said.

Biard said Dixon and other agents have provided federal authorities in South Carolina with documents about Kohn's company.

"Mr. Dixon, like hundreds of agents across the country, remains committed to helping his customers get their monies back and bringing any wrongdoers to justice," Biard said.

'Make it Southern': Kohn's associates come to court in Greenville

FBI special agent J. Douglas Mathews launched an investigation in May 2018, according to a forfeiture action filed in February. Federal authorities want to seize a lakefront home in Arkansas purchased by Joseph Hipp, one of Kohn's indicted associates.

The first person Mathews interviewed was Jeff Pickett, a financial adviser in Dublin, Ohio, at the time. Pickett said 46 of his clients lost $8 million they invested in Future Income Payments.

In 2015, Pickett met Hipp, a financial planner from Missouri who managed investor solicitations for Future Income Payments. Hipp told Pickett he wouldn't hesitate to have his own mother invest, the forfeiture action stated.

Copy text Copy this quote's text The quote has been copied Tweet Facebook LinkedIn Share this article on LinkedIn Reddit Share this article on Reddit Robert Rikard, the attorney representing Black Harbor's clients It's unbelievable that these people in the middle, who are fairly sophisticated and fairly smart people, did not do 10 minutes of due diligence on the product they were selling — and they would have known that this was a horrible idea. Quote icon

Hipp, 49, could not be reached for comment, and his attorney declined to comment. In court filings, he said he wants a judge to throw out Hipp's interview with two FBI agents last year.

The other two defendants connected to Kohn are Kraig Aiken and David Kenneally, former Future Income Payments financial officers.

Aiken and Kenneally traveled from California to the federal courthouse in Greenville on Aug. 8 for their arraignments.

They wore pullover shirts and khaki pants. Their lawyers wore suits, jackets and ties.

Greenville attorney AnneMarie Haynsworth Odom advised her client, Kenneally, to answer questions from Magistrate Judge Jacquelyn Austin with a "yes ma'am" or "no ma'am."

"Make it Southern," said George Workman Buehler, Kenneally's other attorney.

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Kenneally responded as instructed during the hearing, and he and Aiken were released on personal-recognizance bonds.

Assistant U.S. Attorney Bill Watkins told the judge both men had “cooperated fully” by giving statements to the FBI and turning over evidence.

In separate interviews with FBI Agent Mathews last year, Aiken and Kenneally said investors were falsely told that Future Income Payments could cover losses from veterans who didn’t pay back their cash advances. Even as losses mounted, Kohn brushed off their concerns.

Kenneally, who made $250,000 annually, told Mathews he helped hide the fraud because he needed his job. Aiken, who earned $175,000, offered a similar explanation.

A message to Kenneally was not returned, and his attorney declined to comment.

Aiken declined to comment to The News. He agreed in late October to plead guilty to conspiracy to commit mail fraud, court records show.

Authorities are trying to recover money for victims

Future Income Payments is in debt today.

It owes money to people like a retired Army medic from Minnesota. He's identified as "J.F." in a 2017 lawsuit filed by the Minnesota state attorney general.

J.F. took a cash advance for a down payment for a car, the lawsuit states. Nothing flashy, just something reliable so he could get to his volunteer shifts at an organization that helps veterans.

Money was tight, and life was hard. He suffered 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 Minnesota.

More than a year later, the company hasn't paid.

Minnesota Lawsuit The Minnesota state attorney general sued Future Income Payments in 2017. View documents

Since 2015, at least 13 other states have ordered Kohn's company to pay $68.4 million in refunds and other fees. Federal authorities are also trying to recover more than $400 million for other victims.

It's not clear how much money Kohn and his associates have.

A federal judge has instructed Greenville attorney Beattie Ashmore to track down what remains. Ashmore said about $5 million in assets have been identified so far.

“Unfortunately, in a case like this, the bad guys... were on notice that the gig was up, and they had a head start in terms of hiding and liquidating assets of probably a year or so," Ashmore said.

Between 2013 and 2018, more than $358 million was deposited in five accounts controlled by Kohn and his associates, according to FBI records.

Virtually all of that money has been drained.

Bilked veteran seeks another chance and a better future

Dan Meehan now lives with his mother in her townhouse outside Boston. A trained carpenter, he does projects around their home instead of paying rent. He built her an office this summer. A kitchen renovation is next.

That's not the dream, though. He's a paralegal who wants to be a lawyer.

Meehan approached Harvard Law School's Veterans Legal Clinic in 2016. After he stopped repaying his cash advance, he sought justice.

Meehan Lawsuit Dan Meehan, a Navy Reserve veteran, sued Future Income Payments in 2016. View documents

"I started to clear up, and I looked back on the terms (of the contract), and I'm like, 'What the heck is this?' I just gave away $15,000 of my money for so long,'" Meehan said. "This can't be right."

An attorney at the legal clinic filed a lawsuit against Future Income Payments on his behalf. Meehan dropped the case after the Massachusetts attorney general banned the company.

Meehan decided it wasn't worth it, even though he wanted to be in the courtroom sitting next to lawyers he admires.

These days, he's sober, he said. He volunteers. He places flags on veterans’ graves. He helps other veterans file disability claims.

Meehan finds peace at the Fourth Cliff Family Recreation Area. It's a narrow, rocky beach near an ocean inlet 20 miles east of his mother's house. Veterans, active military and their guests have exclusive access to the seaside resort.

Dan Meehan casts his fishing line into the water on a windy afternoon at the Fourth Cliff Family Recreation Area in August. He says he finds peace in nature. JOSH MORGAN/Staff

Meehan likes to fish 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 fishing 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.

Correction: This story was updated on Nov. 15, 2019, to accurately reflect the year Mary Orem started work at Tri-County Technical College.

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