PREVIOUSLY CONVICTED PONZI SCHEMER
HEADS BACK TO PRISON
November 22, 2011
ATLANTA, GA - JON EDWARD HANKINS, 38, of Knoxville, Tennessee, was sentenced to prison today by United States District Judge Amy Totenberg on charges of wire fraud, in connection with his scheme to lure investors to invest into his fraudulent hedge fund. HANKINS had recently been convicted in federal court for another fraud scheme.
United States Attorney Sally Quillian Yates said of the case, “Before he was even discharged from an earlier federal sentence for investment fraud, he launched another fraudulent scheme. Thankfully, the FBI identified and shut down his new scam very quickly, minimizing the losses that investors suffered. Our office and the President’s Financial Fraud Enforcement Task Force remain committed to the mission of protecting investors and promoting confidence in the integrity of our financial system.”
HANKINS was sentenced to 3 years, 4 months in prison to be followed by 3 years of supervised release. HANKINS was convicted of these charges on June 13, 2011 after pleading guilty.
According to United States Attorney Yates, the charges and other information presented in court: In the winter of 2009/2010, HANKINS was serving the home confinement portion of a federal prison sentence he received for a 2007 securities fraud conviction relating to an $8 million fraud scheme involving his Knoxville-based investment company, “Tenet Asset Management.”
Shortly after his home confinement began, HANKINS concocted another scheme. He created a website, fake brochures and other business documents, and rented office space and mail forwarding addresses in the names of two entities, “Christian Financial Brotherhood” and “Banker’s Trust Annuity.” He advertised these entities on the internet and elsewhere and solicited investors, investment advisors and stock brokers to invest their funds with him.
From at least December 2009 through February 2010, HANKINS represented to a prospective victim that Banker’s Trust managed over $100 million in assets for various clients, that the funds were held at an account at the leading Wall Street firm Goldman Sachs, and that he was making substantial investment returns for existing clients in a hedge fund he called the “Strategic Arbitrage Fund.” HANKINS produced a brochure that claimed that the “Strategic Arbitrage Fund” maintained over $30 million in client funds, and that listed various individuals, including a retired general and the son of a former cabinet secretary, as supposed directors of the fund. None of this was true, as Christian Financial and Banker’s Trust were shams; had nothing close to the assets that HANKINS represented; had been “in business” for only a few months; had not been engaged in profitable securities trading; and was not associated with the high profile individuals listed on the brochure.
HANKINS, in soliciting investors, deliberately omitted mention of his securities fraud conviction, Tenet Asset Management, or that he was still serving a federal sentence.
The FBI quickly learned of HANKINS’ scheme, and conducted a search warrant that shut down the scheme in April 2010. Because this new investment scheme was caught quickly, HANKINS obtained less than $600,000 from his victim-investors, of which over $200,000 was recovered and returned to victims.
This law enforcement action was undertaken as part of President Barack Obama's Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case was investigated by Special Agents of the Federal Bureau of Investigation. The Atlanta Division Office of the U.S. Securities & Exchange Commission provided assistance.
Assistant United States Attorney Justin S. Anand prosecuted the case.
For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.justice.gov/usao/gan.