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SEC: Michigan Advisor Fooled Clients With Fictitious Investment

The Commission said Mark L. Hopkins directed more than $1 million from brokerage accounts towards his own account at a credit union in a complaint filed Friday.

A Michigan-based registered investment advisor misappropriated at least $1.15 million from at least five of his brokerage clients by touting an investment opportunity that did not exist, according to a complaint filed by the Securities and Exchange Commission.

The SEC complaint argues that Mark L. Hopkins started approaching brokerage customers in 2017, singing the praises of an investment opportunity at a local credit union concerning a new branch office opening; Hopkins made up the opportunity, according to the complaint. At first, Hopkins targeted three clients, including a married couple in their 60s and one client in their late 80s. According to Hopkins, the clients would see a 6-7% profit in their earnings within six to nine months, according to the complaint. At this point, the married couple and elderly client invested $250,000 and $500,000, respectively.

“Rather than investing these funds in the nonexistent Investment Program, Hopkins deposited them directly into an account that he controlled at the local credit union,” the complaint read. “Hopkins later provided these customers with falsified account statements.” 

Though the SEC complaint does not name Hopkins’ brokerage firm, FINRA BrokerCheck shows that there is a Mark Lewton Hopkins who was registered with American Portfolios Financial Services, from 2009 until the end of July 2018. The BrokerCheck profile shows him as operating out of Grand Blanc, Mich., which is where the SEC said Hopkins’ office was located.

About six months after the initial offer, Hopkins approached a married couple in their 60s, and subsequently agreed for Hopkins to sell all their securities to the non-existent investment opportunity, with the $400,000 from their account ending up in Hopkins’ own account at the credit union in June 2018. The SEC said that one year later Hopkins used money from his account to repay one of the first investors $267,500, which equaled the principal and interest Hopkins had promised would be forthcoming.

Suspicion among investors and Hopkins’ brokerage firm intensified over time, with the firm demanding that Hopkins return the second investors’ funds (though Hopkins managed to convince them to keep it invested in his account, continuing to tout the fictitious investment opportunity). But they became suspicious when they never received documentation about their investment, even after asking Hopkins, according to the complaint. Hopkins falsified a statement from the credit union on their investment, but after questioning its legitimacy, the investors never heard back from Hopkins.

The SEC’s seeking disgorgement of ill-gotten gains and prejudgment interest, as well as civil penalties in the complaint, which was filed last Friday.

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