The Securities and Exchange Commission said Monday that it charged a convicted felon with creating three separate fraudulent investment schemes through which he allegedly stole over $8.4 million from at least 28 investors.
In a complaint filed Thursday in U.S. District Court for the Northern District of Texas in Dallas, the SEC charged Aaron Cain McKnight, 48, of Dallas, with running the three schemes between March 2018 and September 2021.
McKnight is already a convicted felon, the SEC noted in the complaint. In 2000, he was indicted for and ultimately pleaded guilty to charges of conspiracy to import and distribute the controlled substance MDMA (ecstasy) and was sentenced to 110 months (more than nine years) in prison.
In the same complaint filed Thursday, the SEC also charged Harmony Brooke McKnight, 40, of Texas, sister of Aaron Cain McKnight; BPM Global Investments, a Delaware company that the regulator said was "purported to be a financial services firm" under the control of the two McKnights; and BPM Asset Management, a Texas company also "purported to be a financial services firm" under her control.
Neither one of the BPM entities, each under the control of the two McKnights, was ever registered with the SEC, according to the regulator.
The SEC also charged attorney Kenneth Miller, 72; his New York law firm, Frost & Miller; and Sherry Rebekka Sims, 55, of Waxahachie, Texas, a former friend of McKnight's and control person of the SubGallagher Investment Trust.
A 'Similar Pattern'
Although the three schemes were separate, they "followed a similar pattern," according to the SEC. In each one, McKnight allegedly portrayed himself as an experienced professional controlling financial services firms, through which he offered investment opportunities promising extraordinary returns.
In reality, the investment opportunities "did not exist," according to the SEC. Using his fabricated credentials, McKnight allegedly raised funds from several investors.
Instead of using the funds to make investments for the clients, McKnight instead used the investors' money for non-investment purposes, including his personal expenses, operation of his outside business and on Ponzi-like payments to earlier investors, according to the SEC.
