Judge Finds Monmouth County Company Defrauded Investors via a Ponzi Scheme, Orders $7 Million to be Paid in Restitution
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 operated.
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 Jr.
"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 http://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 state.