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Press Release

Investment Advisor Charged with Defrauding Clients

For Immediate Release
U.S. Attorney's Office, District of Connecticut

Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that a federal grand jury in New Haven has returned an indictment charging AARON J. JOHNSON, 35, formerly of Haddam, with defrauding clients of his investment business.  The indictment was returned on February 4, 2016, and JOHNSON was arrested today.

As alleged in the indictment, JOHNSON was President and Chief Investment Officer of J. Capital Advisors, a Connecticut company, and a registered investment advisor with Trade PMR, a Florida company that provides brokerage and custody services for registered investment advisors.   From approximately May 2010 until approximately May 2013, JOHNSON engaged in a scheme to defraud his clients by causing excessive and unearned fees to be deducted from his clients’ accounts at Trade PMR and deposited into JOHNSON’s Trade PMR sundry account.

The indictment further alleges that JOHNSON attempted to delay and prevent the discovery of the full scope of his scheme by repaying fees he took from one victim, claiming to the victim and to investigators with the State of Connecticut Department of Banking, Securities and Business Investments Division that the fees were taken out due to a “glitch in the system.” Also, during the Department of Banking’s investigation, JOHNSON was asked to provide proof that he had funds with which to repay his victims.  JOHNSON then emailed a falsified account statement to investigators in which he purported to have more than $117,000 in his investment account when, in fact, he had a negative balance in the account.

The indictment also alleges that, in December 2012, JOHNSON took $150,000 from a second victim and promised to deposit the money into a trust account for the victim’s benefit.  On approximately February 20, 2013, JOHNSON presented the victim with an application purportedly to open the trust account.  By that time, however, JOHNSON had already spent all of the $150,000 he received from the victim.  Instead of depositing the money into a trust account, JOHNSON had deposited it into a J. Capital Advisors bank account and subsequently spent much of the money for his own personal use, including on the purchase of a convertible Jaguar and a $10,000 transfer into his personal account at SunTrust Bank.

The indictment charges JOHNSON with three counts of mail fraud, one count of wire fraud and two counts of interstate transportation of stolen money.  If convicted of mail fraud or wire fraud, JOHNSON faces a term of imprisonment of up to 20 years.  If convicted of interstate transportation of stolen money, JOHNSON faces a term of imprisonment of 10 years on each count.

Following his arrest, JOHNSON appeared before U.S. Magistrate Judge Sarah A. L. Merriam in New Haven and was ordered detained.  A detention hearing is scheduled for February 19 at 3 p.m.

U.S. Attorney Daly stressed that an indictment is not evidence of guilt.  Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This matter is being investigated by the U.S. Postal Inspection Service and the State of Connecticut Department of Banking.  The case is being prosecuted by Assistant U.S. Attorney Susan L. Wines.

The case has been assigned to U.S. District Judge Jeffrey Alker Meyer in New Haven.

Updated February 17, 2016

Financial Fraud