States Files Suit Against Monmouth County Investment Company;
Investors Lost $12 Million in Ponzi Scheme
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.