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
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.