New Jersey Firm Pays $7.2 Million In Ponzi Scheme

Investors' money wasn't invested

September 4, 2009

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A New Jersey investment company that defrauded investors in a Ponzi scheme will have to pay $7 million in restitution and $200,000 in civil penalties, under a state court judge's ruling.

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.

"Consumers must be wary of advisors who promise consistently high rates of return that are out of line with other financial investments," New Jersey 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 percent.

Hankin told the investors he would purchase the rights to viaticals and life insurance settlement policies from beneficiaries. Instead, according to prosecutors, he 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.

"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."

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