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NEWARK
– The Office of the Attorney General
and New Jersey Bureau of Securities today
filed suit against a Monmouth County-based
investment company and its president for
allegedly operating a Ponzi scheme that
defrauded investors out of $12 million.
The
state’s eight-count complaint filed
in State Superior Court alleges that James
Hankins Jr. of Lavallette, Hankins Private
Client L.L.C., The Hankins Group Ltd. and
Hankins Life Settlement L.L.C. violated
the New Jersey Uniform Securities Law. The
violations include defrauding investors,
acting as a broker-dealer without registration,
employing unregistered agents, acting as
unregistered agents and selling unregistered
securities.
The
state is seeking court approval to freeze
the assets of the defendants, along with
payment of restitution to affected investors,
the assessment of civil penalties and disgorgement.
Additionally,
the Monmouth County and Ocean County Prosecutor’s
Offices are investigating potential criminal
violations committed by the defendants.
“The
defendants operated a Ponzi scheme that
ultimately collapsed on investors,”
Attorney General Anne Milgram said. “The
Ponzi scheme is decades old but investors
continue to fall prey to it.”
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 in motion.
Hankins
allegedly represented to investors that
the they would receive a guaranteed return
of between 7.5% and 36% annual interest
on the principal investment (depending on
the investor) and the return of their principal
at the end of the term of the promissory
note.
Investors
were falsely told that their funds would
be used to purchase life settlement insurance
policies and to pay the premiums on those
policies. Hankins allegedly falsely represented
that the life settlement policies would
be resold as investments to broker-dealers
such as Solomon Smith Barney or Bear Stearns,
or held onto and maintained until they matured,
meaning when the insured died.
“The
lure of high rates of return is what pulls
in unsuspecting investors,” Bureau
Chief Vincent J. Oliva said. “The
Bureau of Securities stands ready as a resource
for the public to use to check whether the
seller and the security are both registered
in New Jersey as legally required.”
At
least 20 investors are alleged to have been
defrauded by the defendants between 2005
and 2007. Hankins Private Client L.L.C.
and Hankins Life Settlement L.L.C maintained
an office in Manasquan. The Hankins Group
Ltd. was based in Island Heights.
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.
The
investigation was conducted by Bureau Chief
of Enforcement Richard Barry, investigators
Michael McElgunn, Thomas Della Torre, Sylvia
Kolankiewicz and James Lane. Deputy Attorneys
General Anna Lascurain and Victoria Manning
are representing the state.
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