North Carolina Man Ordered to Pay $5.2 Million for $1.8 Million Ponzi Scheme

North Carolina Man Ordered to Pay $5.2 Million for $1.8 Million Ponzi Scheme

 A federal judge ordered a North Carolina man to pay over $5 million in penalties and restitution for operating a commodities Ponzi scheme that took in nearly $2 million from investors.  Michael Anthony Jenkins and his company, Harbor Light Asset Management, LLC ("HLAM"), were ordered by U.S. District Judge James C. Fox to pay $1.3 million in restitution and $3.9 million in restitution for operating a commodities Ponzi scheme that solicited at least $1.8 million from nearly 400 investors.  Jenkins and HLAM were also permanently banned from commodities trading as well as enjoined from future violations of federal securities laws.  

Beginning in January 2011, Jenkins began soliciting investors for HLAM in person, in small groups, and by phone.  Jenkins told potential investors that HLAM was engaged in the business of investing in E-mini S&P 500 futures ("E-mini Futures"), and promised potential lucrative trading gains.  Investors were assured that their funds would be immediately wired to a specific trading account where they would be used to trade E-mini futures, and were provided with near-monthly account statements from Jenkins showing significant profits.  In total, Jenkins and HLAM raised at least $1.8 million from approximately 377 investors.

However, of the approximately $1.8 million raised, only $138,825 - less than 10% of the total - was transferred as promised to a specific account to trade E-mini futures.  This trading did not result in the hefty gains advertised in investors' monthly statements, but rather a total loss of approximately $3,500.  The remainder was diverted by Jenkins for a variety of unauthorized uses, including trading in gold and oil futures, cash withdrawals, payment of personal expenses, and payments of principal and purported trading profits to investors.  Additionally, of the payments made to investors, more than $400,000 was paid to certain investors in excess of their invested principal.  

Of note, Jenkins was the subject of discipline by the National Association of Securities Dealers in 1989, who barred him from associating with any of its members and imposed a $5,000 fine after Jenkins was found to have misappropriated a $5,000 customer check for his own personal use.   Additionally, while Jenkins had applied for registration with the CFTC as an associated person in April 2011, the application was subsequently withdrawn without Jenkins having obtained registration.

The order imposing relief is below:

 For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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