The Securities and Exchange Commission charged a Texas resident and several other defendants in connection with fraudulent investment schemes, reports ThinkAdvisor.
The SEC alleged that 48-year-old Aaron Cain McKnight of Dallas orchestrated three separate schemes to steal over $8.4 million from at least 28 investors, and that he had help from a lawyer, his law firm, a promoter, and McKnight’s sister.
According to a complaint filed in federal court for the Northern District of Texas, McKnight ran the three schemes between March 2018 and September 2021. It was alleged that he portrayed himself as an experienced professional controlling financial services firms, and offered extraordinary returns on investments that in reality did not exist. The SEC said that McKnight used the money raised from numerous investors for other purposes, including personal expenses, operation of his outside business, and/or Ponzi-like payments to earlier investors.
The complaint also states that lawyer Kenneth Miller and his law firm, Frost & Miller, LLP assisted McKnight’s first scheme by receiving and distributing over $2 million of investor funds at McKnight’s direction without knowing why the funds were sent to F&M, who the funds had come from, or what function the investors expected F&M to serve. Sherry Rebekka Sims, a former friend of McKnight’s and control person of the SubGallagher Investment Trust, was charged with aiding and abetting the fraud.
Also charged in the case was McKnight’s sister, 40-year-old Harmony Brooke McKnight of Texas, along with BPM Global Investments, a Delaware company that the regulator said was purported to be a financial services firm under the control of Aaron and Harmony McKnight; and BPM Asset Management, a Texas company also purported to be a financial services firm under her control.
McKnight, BPM Global Investments, LLC and BPM Asset Management, LLC were charged with violating various antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking permanent injunctions, including conduct-based injunctions, disgorgement of ill-gotten gains, civil penalties, and officer and director bars.
The SEC noted that McKnight had pleaded guilty in 2000 to conspiracy to import and distribute the controlled substance MDMA (ecstasy) and was sentenced to 110 months in prison.
The attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter
