Securities and Exchange Commission (SEC) has requested the Court’s approval of a proposed consent judgment against Lakenya Hopkins.
Back in September 2022, the SEC charged Money Magnet Platinum Membership Initiative LLC (“MMPMI”) and its principal, LaKenya Hopkins, with fraudulently raising funds and misappropriating those funds from investors.
The proposed consent judgment would impose permanent injunctions against future violations of the relevant securities law provisions and require Hopkins to pay full disgorgement of $262,280, plus prejudgment interest of $20,056, which will be deemed satisfied by the order of restitution of $289,630 entered against Hopkins in the related criminal case.
On September 8, 2022, the SEC charged Money Magnet Platinum Membership Initiative (“MMPMI”) and Hopkins with violations of Section 17(a) of the Securities Act of 1933 (the “Securities Act”), Section 10(b) of the Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 thereunder.
The Complaint alleges that, between approximately October 2020 and March 2021, Hopkins and her company, MMPMI, solicited more than 100 prospective investors to invest in MMPMI through promissory notes they called “magnets.” As alleged in the Complaint, MMPMI and Hopkins, without a reasonable basis, promised investors guaranteed and extraordinary monthly returns for each magnet they purchased. Hopkins and MMPMI, however, had no realistic means to produce those returns and failed to adequately disclose the risks of the contemplated investments.
Additionally, the Complaint alleges, Hopkins misappropriated investor funds for her own benefit.
On February 23, 2023, the Court entered bifurcated judgments as to Defendants Hopkins and Money Magnet Platinum Membership Initiative, LLC (“MMPMI”). The judgments ordered the injunctive relief the SEC sought and left open for later resolution, on the SEC’s motion, the issue of monetary relief.
That same day the Court also granted the parties’ joint request for a stay of these proceedings pending the resolution of the Criminal Case against Hopkins, which concerns the same conduct at issue in this action. The Court also granted the parties’ request to set a deadline for the SEC to move for disgorgement and penalties following an acquittal or imposition of a criminal judgment.
Thereafter, on November 21, 2023, Hopkins pleaded guilty to one count of securities fraud in the Criminal Case. On July 31, 2024, the court in the Criminal Case sentenced Hopkins to 24 months, and ordered her to pay restitution of $289,630 and forfeiture of $291,630. The $291,630 of forfeiture represents the total amount of investor funds that the Government showed Hopkins raised in the Criminal Case. The restitution of $289,630 is $2,000 less than the forfeiture because the Government’s evidence showed that she paid that amount back to investors.
The proposed judgment would permanently enjoin Defendant Hopkins from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. It would also order Hopkins to pay disgorgement $262,280, plus prejudgment interest of $20,056, which will be deemed satisfied by the order of restitution of $289,630 entered against Hopkins in the Criminal Case.
The SEC is forgoing seeking a criminal penalty against Hopkins in light of her criminal conviction and sentence. The SEC is also forgoing seeking disgorgement, prejudgment interest, and a penalty against MMPMI because Hopkins misappropriated the funds it raised and because a monetary judgment against MMPMI would be uncollectable given that it is defunct and has no assets.
