The Securities and Exchange Commission today announced an emergency action against a New York City-based investment banker charged with insider trading for nearly $1 million in illicit profits.
The SEC alleges that while working on Wall Street, Frank “Perk” Hixon Jr. regularly logged into the brokerage account of Destiny “Nicole” Robinson, the mother of his young child. He executed trades based on confidential information he obtained on the job, sometimes within minutes of learning it. Illegal trades also were made in his father’s brokerage account. When his firm confronted him about the trading conducted in these accounts, Hixon Jr. pretended not to recognize the names of his father or his child’s mother. However, text messages between Hixon Jr. and Robinson suggest he was generating the illegal proceeds in lieu of formal child support payments.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Hixon Jr.
“Hixon Jr. violated the trust of his employer and clients by abusing his special access to nonpublic market-moving information,” said David Woodcock, director of the SEC’s Fort Worth Regional Office. “Hixon Jr. went to great lengths to hide his wrongdoing and even denied knowing his father or the mother of his child.”
A federal judge has granted the SEC’s request and issued an emergency order freezing Robinson’s brokerage account, which the SEC alleges contains the majority of proceeds from Hixon Jr.’s illegal trading with a balance of approximately $1.2 million.
According to the SEC’s complaint unsealed today in federal court in Austin, Texas, Hixon Jr. illegally tipped or traded in the securities of three public companies. He traded ahead of several major announcements by his client Westway Group in 2011 and 2012. He traded based on nonpublic information he learned about potential client Titanium Metals Corporation ahead of its merger announcement in November 2012. And Hixon even illegally traded in the securities of his own firm Evercore Partners prior to its announcement of record earnings in January 2013. Hixon Jr. generated illegal insider trading profits of at least $950,000.
According to the SEC’s complaint, when Hixon Jr.’s employer asked him in 2013 whether he knew anything about suspicious trading in accounts belonging to Destiny Robinson and his father Frank P. Hixon Sr., who lives in suburban Atlanta, Hixon Jr. denied recognizing either name. When later confronted with information that he did in fact know these individuals, Hixon Jr. continued his false claims, saying he didn’t know Robinson as “Destiny” and asserting in a sworn declaration that when approached he didn’t recognize the name of the city where his father lived for more than 25 years. Hixon Jr. was subsequently terminated by his employer.
The SEC’s complaint alleges that Hixon Jr. violated the antifraud provisions of the Securities Exchange Act of 1934. In addition to the asset freeze, the complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. Hixon Sr. and Robinson have been named as relief defendants for the purposes of recovering the illegal trading profits held in their accounts.
Source- http://www.fbi.gov/birmingham/press-releases/2014/former-attorney-pleads-guilty-to-securities-and-bank-fraud
ANNISTON—A former Birmingham attorney pleaded guilty today in federal court to charges connected with a securities fraud scheme involving the fraudulent taking of more than $2.8 million dollars in investment funds, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein, Jr., and Alabama Securities Commission Director Joseph Borg.
Christopher Shawn Linton, 34, of Alabaster, entered his plea before U.S. District Judge Virginia Emerson Hopkins to one count each of wire fraud, mail fraud, securities fraud, and money laundering as part of the investment fraud scheme. He also pleaded guilty to one count of bank fraud arising from the submission of a fraudulent commercial loan application to Iberia Bank for a loan of $908,650.
As part of his plea agreement, Linton is required to pay $2.5 million in restitution to the investors he defrauded and to pay restitution to Iberia Bank in an amount that will be determined at sentencing. Sentencing is scheduled May 29.
“This commission is proud to be able to combine our efforts and resources with those of the U.S. Attorney’s Office, Northern District of Alabama, and the FBI to achieve a just and strong conviction against Linton,” Borg said. “Hopefully, this verdict will provide some relief to victims involved in this case who were defrauded out of their hard-earned dollars.”
According to Linton’s plea agreement, he conducted the securities fraud scheme as follows:
In 2007, Linton became an officer, partner, and part-owner of a business known as Integrity Capital Inc. by purchasing stock in the company. Integrity Capital Inc. was a factoring business located in the greater Birmingham area. Its business was to make advance payments to lawyers who had submitted payment vouchers for work performed for the state of Alabama. Integrity Capital would then receive the voucher payments from the state and keep a percentage as a fee.
In 2009, Linton formed Integrity Capital LLC. Beginning about August 2009, Linton recruited investment advisors to solicit investments in Integrity Capital LLC in order to purchase the assets and capital stock of Integrity Capital Inc. Between September 2009 and December 2011, 12 individuals invested more than $2.8 million in Integrity Capital LLC. The investors mailed, wired, or delivered money to Linton, who deposited the money into one of several bank accounts held by the law firm where he was a partner.
After receiving the investor funds, Linton fraudulently converted them for personal use by writing personal checks to himself and by using the funds for non-investment purposes. The non-investment purposes included, but were not limited to, the purchase of his personal residence, construction projects at the residence, private jet flights, vacations, recreational vehicles, furniture, luxury items, Auburn football tickets, and a donation to the Heisman Trophy Trust.
Linton committed bank fraud in January 2012 when he submitted fraudulent personal financial statements to Iberia Bank and received two commercial loans totaling $908,650, according to his plea agreement. His financial statements inflated the value of his personal residence and falsely stated that he owned the residence and other real property.
The maximum penalty for wire fraud and for mail fraud is 20 years in prison and a $250,000 fine; the maximum penalty for money laundering is 10 years in prison and a $250,000 fine; and the maximum penalty for securities fraud is five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years in prison and a $1 million fine.
