SEC sues New York City attorney over $8.4 million Ponzi scheme

The SEC Building in Washington, DC. Chip Somodevilla/Getty Images

According to a statement released yesterday (March 27) by the US Securities and Exchange Commission (SEC), a New York law firm is said to have been involved in an $8.4 million pyramid scheme in which money was stolen from nearly 30 investors.

Earlier this week, the agency sued Aaron Cain McKnight, a Texas resident who, as of 2018, along with attorney Kevin Miller and his law firm Frost & Miller, operated three separate investment programs that the SEC alleges aided and abetted McKnight’s fraud.

Portraying himself as “a seasoned professional who controls financial services firms,” ​​McKnight, 48, allegedly offered investment opportunities that didn’t exist, raising millions of dollars from investors in the process.

The first program began in March 2018, when McKnight offered a high-yield investment trading program, which refers to plans that offer lucrative returns with little to no risk to the investor, according to the SEC’s complaint, which was filed in Texas federal court . McKnight promised pooled funds would be used for multimillion-dollar investments, and instead allegedly used investors’ nearly $5.6 million for cash withdrawals, a down payment on his property, and to fund a jazz club he partially owned.

“None of the investors received any returns on their investments or their principal investment, apart from some Ponzi payments, and at least one investor lost their home,” the complaint reads. McKnight also initiated more than $2 million through bank accounts associated with Frost & Miller, a law firm McKnight had previously represented.

Miller, 72, allegedly “followed McKNight’s directions blindly” and failed to exercise due diligence in the transactions his law firm received and distributed, the SEC said. The attorney “knowingly lent an air of legitimacy to McKnight’s plan and gave investors a false sense of security, thereby furthering McKnight’s deception.”

According to Miller’s LinkedIn, he has represented companies on corporate and securities matters and has extensive experience advising clients on SEC compliance issues. He is also a graduate of George Washington University Law School and currently resides in New York.

Miller was unaware of McKnight’s alleged fraud, Steven Paradise, an attorney representing Miller, said in an emailed statement, adding that McKnight misrepresented to financiers that Miller’s firm was the trustee for investors . “To the contrary, the facts will prove that Frost & Miller was a victim of Mr. McKnight,” he said. “Frost & Miller was in no way involved in the solicitation of these investments, in directing investors to send money to the law firm, or in the alleged underlying transactions.”

A fake UN background

Throughout the program, McKnight claimed he ran a group of investment firms known as the CGE Group, which the SEC’s complaint said had “billions in assets under management and a connection to the United Nations (UN).” He also posed as the chief operations officer of the Global Millennium Development Foundation, a nonprofit organization affiliated with the United Nations, and his LinkedIn account claimed he had been working for the organization since 2015.

In reality, he had no credentials or real connection with the UN, the SEC said.

McKnight is also said to have been involved in two other schemes, which began in April 2019 and September 2021 respectively, resulting in more than $2.3 million in losses to investors, according to the complaint. Funds received for an alleged insurance policy and bond offering were instead allegedly used to pay off a pawn shop, Uber and restaurant fees, and money transfers to friends and family.

Sherry Rebekah Sims, a former girlfriend of McKnight, and McKnight’s sister Harmony were also named in the fraud allegation complaint. McKnight could not be reached for comment.