Many financially vulnerable veterans fell into a carefully conceived trap that lured them into redirecting part of their monthly benefits for a cash advance from investors, USA Today reported. 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 fell deeper into debt, while investors saw their nest eggs vanish as the veterans stopped paying and the companies collapsed. 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 percent, hidden fees and exorbitant interest rates as high as 240 percent. The company Future Income Payments 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. Its founder, Scott Kohn, was indicted in Greenville, S.C., 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. 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."
