A financial advisor who sought to have his fraud conviction overturned for insufficient evidence received a 10-year prison sentence and an order to pay millions of dollars in restitution.
Douglas T. Hawkins, an advisor, lawyer and preacher, sold more than $2 million worth of investments into notes tied to residential real estate properties while making material misrepresentations and omissions about the financial condition of the assets and the commingled use of the money,
"Educated and privileged people will be held accountable for these crimes," Caldwell said at the May 9 sentencing, according to a report
Hawkins filed a notice on May 22 that he plans to appeal his February conviction on charges of mail fraud, securities fraud and investment advisor fraud, court records show. At his sentencing, he pledged to make his former clients whole and told his family and friends he was sorry for the embarrassment of his legal case, according to the local newspaper.
"There has not been a bigger burden to carry in my heart than the financial burden I have caused the clients," he said.
Hawkins' attorney, Whitney True Lawson, said in an interview that advisors should view the case as "more of a cautionary tale than it is a Bernie Madoff" about the need for diligence in researching investments and managing clients.
"The government's theory is that it was fraudulent in how he did it, but there's also a really good argument that it was bad business," Lawson said. "It should give them pause and make them think about, 'Hey, how am I running my practice? How am I running my firm?'"
The case also provides the latest example of disturbing allegations against advisors.
Hawkins' sentencing came the month after two advisors in Ohio got hit with dozens of felony charges based on a case accusing them of
The defense put forth by Hawkins essentially used a "'don't hold me to perfection' argument," said regulatory expert
"An advisor acting in a fiduciary capacity must not play a passive role and rely on investors to fend for themselves. If you are in the position to know, you cannot assure a non-swimmer that their feet will touch the bottom of the pool when it's actually 12 feet deep," Straney said. "Fiduciaries have the duty to know and disclose material facts to potential investors. It is implausible to imagine that a licensed attorney and registered investment advisor was unaware of his duties of full disclosure, truth, loyalty and trust."
From the middle of 2013 until 2021, Hawkins sold clients of his RIA, Lexington-based Accelerated Wealth, promissory notes secured by the deeds of trust tied to rental homes in Jackson, Mississippi, without providing them with a prospectus about their investments, according to investigators. Other omissions included the fact that many of the homes were uninhabitable and frequently robbed and vandalized, as well as the use of their combined money to pay other investors and purchase an employee's Harley Davidson, investigators said.
Hawkins never meant to defraud them, according to his March filing seeking to overturn the verdict.
"Throughout trial in this matter, and as confirmed at closing, the government identified specific conduct of Mr. Hawkins which it deemed 'proof' of his fraudulent intent," the filing stated. "In reviewing each of these alleged acts, the evidence is not only insufficient but regularly contradicted by proof of Mr. Hawkins' good faith intent to make the investors whole."
In the government's response, it rejected the argument entirely.
"Many factual episodes were shown during trial from which a jury could reasonably infer the defendant's intent to defraud," prosecutors said. "Seven separate client witnesses gave unrebutted testimony that the Defendant omitted or misled them about the Mississippi properties — their value, condition, and rental status."
Caldwell tossed the motion for acquittal on May 4 after finding that "a rational trier of fact could have found that [the] defendant acted with the intent to defraud beyond a reasonable doubt," she wrote in her order. Hawkins is seeking the overturning of the jury's decision or a new trial through a filing in the U.S. Court of Appeals for the Sixth Circuit. He's currently a resident of the Woodford County jail ahead of a pending transfer to federal prison, inmate records show.
