NEWARK - The defendants in
a lawsuit filed by the Office of the Attorney
General on behalf of the New Jersey Bureau
of Securities have been ordered to pay approximately
$7 million as restitution to defrauded investors,
plus pay $220,000 in civil penalties, under
a judge’s finding that they defrauded
investors through a Ponzi scheme that they
Defendants James Hankins Jr.,
Hankins Private Client Group L.L.C., The Hankins
Group Ltd. and Hankins Life Settlement L.L.C.
also are permanently barred from the New Jersey
securities industry, under the Final Judgment
issued by Superior Court Judge Thomas W. Cavanagh
"Consumers must be wary
of advisors who promise consistently high
rates of return that are out of line with
other financial investments,” Attorney
General Anne Milgram said. “They sound
too good to be true because they usually are.”
Based on information provided
by Bureau of Securities investigators, the
judge found that the defendants sold promissory
notes to at least 101 investors. The promised
rate of return was between 10% and 15%. Rather
than purchase the rights to viaticals and
life insurance settlement policies from beneficiaries
as he stated to investors, Hankins used the
invested monies for his personal benefit,
including the purchase of a vacation home
in Florida, fractional interest in a private
jet, and the purchase of jewelry and watches.
In a Ponzi scheme, a con artist
promises high returns to investors and uses
money from new investors to pay previous investors.
Inevitably, the scheme collapses and the only
people who consistently make money are the
promoters who set the Ponzi scheme in motion.
The judge also found that
James Hankins violated the New Jersey Uniform
Securities Law by acting as an agent without
being registered and by selling unregistered
securities. Hankins Private Client Group L.L.C.
and Hankins Life Settlement L.L.C maintained
an office in Manasquan. The Hankins Group
Ltd. was based in Island Heights.
"Investors should always
check to insure that the person, as well as
the investments offered by that person, are
registered in New Jersey as legally required,"
said Bureau Chief Marc Minor. “I can't
stress enough the value of checking with us
before investing your hard-earned cash.”
The Bureau of Securities can be contacted
toll-free within New Jersey at 1-877-I-INVEST
(1-877-446 8378) or from outside New Jersey
at 973-504-3600. The Bureau’s
web site is located at www.njsecurities.gov.
In a Consent Order entered
by the judge, the Bureau’s case against
Dina Hankins, the ex-wife of Mr. Hankins who
was named as a relief-defendant, was resolved
through a settlement. The Consent Order, among
other things, requires her to pay $275,000
in restitution to investors.
The investigation of this
matter was conducted by Bureau investigators
Michael McElgunn, Sylvia Kolankiewicz, Thomas
Della Torre, and former investigator Richard
Barry. Deputy Attorneys General Victoria Manning
and Samuel Scott Cornish of the Securities
Fraud Prosecution Section represented the