Call it a new take on assignment of benefits.
A South Carolina attorney who used a network of insurance agents and financial advisers has pleaded guilty to defrauding military veterans of more than $31 million in retirement and disability payments, the U.S. Attorney for South Carolina announced.
“It is reprehensible that a former member of the South Carolina state bar would participate in such a scheme and use her standing as a lawyer to give victims a false confidence,” U.S. Attorney Adair Boroughs said in a statement this week.
Candy Kern, 55, of Anderson, South Carolina, managed a small law firm that specialized in labor and employment law, real estate, and estate planning, according to the state Bar. She could face up to five years in prison and more than $250,000 in fines, plus restitution, her plea agreement notes.
The 10-year scheme worked like this, prosecutors said in a felony information document: Kern helped set up structured cash flow businesses that would recruit veterans, offering lump-sum cash payments in return for the veterans assigning their monthly benefits payments to the business. The law firm provided legal and escrow services and also acted as a debt collector on the assigned benefits, going so far as to file suit against the victims of the scheme.
From 2012 to 2021, the structured-cash businesses controlled more than $14 million in illegally assigned benefits and Kern’s law firm earned more than $1.4 million. Altogether, veterans lost about $31.4 million, prosecutors said.
Utilizing insurance agents and financial advisers, the businesses solicited investors to purchase the assigned pension payments.
The scheme began to collapse when cash-strapped veterans were unable to pay their purported obligations. Some also stopped paying after learning that assigning a pension is illegal under federal law, something Kern never disclosed when contracts were signed, prosecutors said.
“This elaborate scheme preyed upon and exploited some of our most vulnerable populations, and when it collapsed, it left thousands of veterans in financial ruin and scores of retiree-investors without adequate resources to retire,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the U.S. Justice Department’s Civil Division.
The department did not indicate if others, including the insurance agents who solicited investors, will now face charges.
Topics South Carolina
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