Jon Edwards Hankins, of Knoxville, Tennessee, was sentenced to three years and four months in prison late last month for perpetrating an investment scheme while still on home confinement for a 2007 securities fraud conviction.
According to officials, from 2009 to 2010, Hankins distributed false marketing materials for two sham companies ("Christian Financial Brotherhood" and "Banker’s Trust Annuity") and solicited investments in "Strategic Arbitrage Fund," a fraudulent hedge fund. Hankins told investors that Banker’s Trust Annuity managed over $100 million in client assets. He also said Strategic Arbitrage Fund maintained over $30 million in client funds. Neither of these statements was true.
In reality, the entire thing was a fraud. The companies didn’t engage in profitable securities trading, the marketing materials were false, and the representations made to lure investors into the scheme were lies. Hankins also never disclosed that he was still serving federal time for a securities fraud conviction.
"Before he was even discharged from an earlier federal sentence for investment fraud, he launched another fraudulent scheme," said United States Attorney Sally Quillian Yates.
The 2007 securities fraud conviction was in connection to a multi-million dollar investment fraud scheme that involved Hankins’ Knoxville-based investment company "Tenet Asset Management." The charges came after the SEC filed a civil injunction against Hankins in 2005, in which the Commission accused Hankins of making gross misrepresentations to and concealing large investment losses from investors. (For more information about the SEC’s 2005 charges, click here.)
The FBI shut down Hankins’ latest investment scheme in April 2010. Of the $600,000 Hankins obtained from his unsuspecting investors, $200,000 was returned. Hankins pled guilty to charges of wire fraud in connection with the investment scheme on June 13, 2011. His prison sentence will be followed by three years of supervised release.