Raleigh trader under investigation

February 21, 2012 3:32:54 PM PST
A Raleigh day-trader is under investigation by the Securities Division of the North Carolina Secretary of State's Office.

Court documents reveal allegations of a ponzi scheme and hundreds of investors who may have lost hundreds of thousands of dollars.

Greg Frank told ABC11 he invested $500 with trader Michael Jenkins last summer, but had no idea than less than six months later it would all be gone.

"I figured well, I'll invest a little bit of money, and keep my fingers crossed, and hope for the best," said Jenkins. "We spent several hours with him, and he seemed to be legitimate. He seemed to know what he was doing."

And for a few months, Frank said things were looking good. An invoice from November shows his investment - at least on paper - had more than tripled. A bank statement seemed to show Jenkins with plenty of money to pay his clients - some 8.3 million dollars.

"We did know people who were requesting to take some money out, and they were getting their money, so we were like 'Okay, we'll just continue to move forward, see what happens,'" Frank said.

But the red flags started coming quickly. There were late account statements and emails that bounced back. Frank said Jenkins told him he was behind on paperwork and was joining other investment partners for help.

But then Frank got an email from one of those partners saying his funds were lost.

"It was absolutely devastating," he said.

ABC11 caught up with Michael Jenkins at his house in north Raleigh. He answered the door, but declined to comment.

The I-Team obtaining a search warrant showing a long list of items seized from his home - ranging from computers and hard-drives, to cell phones and documents.

The search warrant also says Jenkins went the Securities Division himself at the end of January - telling them his investments had become overwhelming and he wanted to 'make things right'. But the investigator described it bluntly, saying Jenkins would 'pay out funds to investors from the funds he was receiving from other investors - consistent with what is commonly referred to as a ponzi scheme.

Despite the investigation, Greg Frank isn't convinced Jenkins intentionally took people's money. He told us he simply wants to know what happened.

"You just end up speculating about all kinds of things - like was there really 8.3 million dollars in the bank? If so, how did it disappear in a month? What actually happened? Those are the kinds of answers we hope to find out," he said.

For more information on how to avoid losing money on investments, click here to visit the North American Securities Administrators Association web site.

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