Future Income Payments Fraud: Class Action, CFPB Judgment, and Payouts

The Future Income Payments class action lawsuit, filed as Underwood v. Future Income Payments, LLC, was a case brought on behalf of veterans and retirees who were sold pension advances that regulators later concluded were illegal high-interest loans. The private class action’s plaintiffs’ firm is no longer accepting inquiries, but a separate federal receivership is now the live path to recovery: on February 4, 2026, a South Carolina federal judge approved the receiver’s plan for claims administration and initial distributions to victims.{¹}{²}

What Future Income Payments Sold

FIP, run by Scott Kohn, offered a lump-sum cash payment in exchange for years of a pensioner’s future income. The paperwork called it an “Asset Purchase Agreement” and told customers there was no interest rate because they were selling a portion of their future income stream, not borrowing. After a $300 setup fee, the customer authorized FIP to pull automatic withdrawals from the bank account where the pension or disability payment landed.{³}

The numbers behind the label were the reason regulators moved in. One veteran received $1,500 and owed $18,000 over five years. Another netted $5,200 and owed $35,420 over the same term.{⁴} The CFPB calculated effective annual percentage rates as high as 183 percent; state regulators documented averages around 139 percent and some contracts near 200 percent.{³}{} Typical state usury caps sit around 12 percent.

On the other side of the business, FIP sold investors the right to collect those future payments, promising annual returns of 6 to 12 percent. Federal prosecutors later described that investor side as a Ponzi scheme, with money from new investors used to pay earlier ones.{⁵}

Who Was Harmed

FIP’s customer base was pensioners who depended on that income to live. A review of 122 FIP contracts in Minnesota found 60 tied to Department of Veterans Affairs payments, seven to Department of Defense payments, and 17 to state government pensions.{⁴} By the time the scheme collapsed, more than 2,500 retirees had been affected and losses topped $310 million.{⁶}

A boundary worth knowing: many of the income streams FIP contracted for cannot legally be assigned. The CFPB has said pension advances involving VA and Department of Defense pensions are illegal under federal law.{⁷} Borrowers who stopped paying often kept receiving their pensions in full, which meant investors who had bought those streams took losses too. Both groups — borrowers and investors — are victims here.

The Underwood Class Action

The class action was filed on behalf of borrowers, with lead plaintiff John Underwood, a disabled U.S. Air Force veteran. The complaint alleged predatory lending, violations of consumer protection and consumer finance statutes, elder abuse, and false advertising, and it charged that FIP failed to disclose that federal law bars assignment of military pensions.{⁸}

Sommers Schwartz, the firm that represented the plaintiffs, has stated that it is no longer taking inquiries on the matter.{²} If you were an FIP customer, recovery now runs through the federal receivership described below rather than through the class action.

The CFPB Judgment and Criminal Case

The Consumer Financial Protection Bureau sued Kohn, FIP, and more than a dozen affiliated entities on September 13, 2018, alleging deceptive practices under the Consumer Financial Protection Act and failure to disclose finance charges and APRs under the Truth in Lending Act. None of the defendants answered. On February 22, 2021, Judge Bruce Hendricks entered a default judgment of more than $436 million in consumer restitution and a $65.5 million civil penalty, and permanently banned the defendants from selling pension-advance products. The court also appointed Beattie B. Ashmore as permanent receiver over the defendants’ assets.{⁹}

On the criminal side, Kohn was indicted in March 2019 in the District of South Carolina and pleaded guilty to conspiracy. On August 18, 2022, Judge Hendricks sentenced him to ten years in federal prison, ordered forfeiture of $297 million, and imposed three years of supervised release.{⁵} Four co-defendants pleaded guilty to conspiracy as well.{¹⁰}

Getting Paid: The Receivership and Distribution Plan

Recoverable assets will fall well short of the $436 million restitution figure, but the receivership has moved to actual payouts. On February 4, 2026, Judge Hendricks approved receiver Ashmore’s plan for claims administration and distribution.{¹}

The plan calls for an initial distribution to eligible claimants under a “Rising Tide” method, which prioritizes people who never received any money back from Kohn or FIP. A second distribution may follow. Written objections were due by March 9, 2026, and a hearing on unresolved objections was set for April 1, 2026.{¹}

The CFPB still lists its case as pending because of the ongoing receivership.{¹¹} Victims who signed an FIP contract or invested in one should check the receiver’s website for their claim status and any further distribution notices.

1
Receiver for Kohn/FIP. Message From Receiver
2
Sommers Schwartz. Future Income Payments LLC Still Robbing Veterans’ Futures
3
Consumer Financial Protection Bureau. CFPB Complaint Against Future Income Payments LLC
4
FIP Lawsuit. What Happened
5
U.S. Department of Justice. California Man Receives 10-Year Sentence Following Guilty Plea in South Carolina Fraud
6
Greenville Online. Ponzi Scheme Leader Scott Kohn Sentenced to 10 Years After Veterans Lost Millions
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Consumer Financial Protection Bureau. I Was Offered a Pension Advance — What Should I Look Out For
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ClassAction.org. Underwood v. Future Income Payments LLC et al.
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Consumer Financial Protection Bureau. Entry of Default Judgment and Order, Future Income Payments
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Stars and Stripes. Ponzi Scheme Steals Money From Veterans
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Consumer Financial Protection Bureau. Enforcement Action: Future Income Payments LLC