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NEWARK
– The Office of the Attorney General
and the Bureau of Securities has filed suit
against Carr Miller Capital LLC of Marlton
and its three principals for their alleged
use of a Ponzi scheme and other means to
defraud investors of over $40 million.
Everett
Charles Ford Miller, 41, President of Carr
Miller Capital, and Ryan Jude Carr, 34,
and Brian Patrick Carr, 39, cousins and
employees of Carr Miller Capital, are named
as defendants in the state’s nine-count
Complaint. The lawsuit, filed in State Superior
Court in Newark, alleges that the defendants
violated numerous New Jersey Uniform Securities
Laws by committing fraud, commingling funds,
and selling unregistered securities.
Judge
Kenneth Levy yesterday approved the freezing
of assets held by Miller and his related
companies, and the appointment of a receiver
who will oversee and control those assets.
The judge also approved the appointment
of a fiscal monitor for the Carrs, and one
nominal defendant. Their assets cannot be
moved or transferred without the approval
of the fiscal monitor.
The
state’s Complaint seeks restitution
for investors, disgorgement of profits,
and the imposition of civil penalties.
In
a related action, the Bureau of Securities
yesterday revoked the Investment Advisor
registrations and/or exemptions of Carr
Miller Capital, Capital Markets Advisory,
LLC, Miller, Brian Carr and Ryan Carr, effectively
barring them from the state’s securities
industry.
“We
charge that these defendants operated a
Ponzi scheme for their own enrichment at
the expense of investors,” Attorney
General Paula Dow said. “Instead of
investing funds to produce high rates of
return as promised, we allege that the defendants
spent investors’ hard-earned money
on personal luxuries and indulgences.”
As
detailed in the first four counts of the
state’s Complaint, the defendants
made false statements and omitted materials
facts when dealing with investors and also
deployed invested funds for unauthorized
uses.
The
Bureau’s investigation revealed that
$13.5 million of investors’ monies
were used to pay for a New Jersey Devils
sky box at the Prudential Center in Newark,
personal automobile purchases, travel and
luxury vacations, retail purchases and meals,
among other things. An additional $16 million
was put into various hedge funds, real estate,
film production companies, and an oil and
gas venture, among other ventures not authorized
by or disclosed to investors.
Carr
Miller Capital offered nine-month notes
that purportedly provided rates of return
between 10% and 15% annually. Certain investors
were told they could renew the notes for
additional nine-month terms or be paid out
at the end of the term. Approximately $8
million of the $40 million was sent to investors
as “interest” payments, when,
in fact, they were merely new investors’
capital being used to keep the Ponzi scheme
in operation.
“These
defendants operated a classic Ponzi scheme,
using funds from new investors to pay money
to earlier investors, all in an attempt
to perpetuate the deception,” said
Thomas R. Calcagni, Acting Director of the
Division of Consumer Affairs. “The
promised rates of return sounded too good
to be true and, sadly, that turned out to
be the case.”
The
securities offered by the defendants were
not registered for sale in New Jersey and
Ryan Miller was not registered to act as
an agent, as alleged in Counts V and VI
of the state’s Complaint.
“Unregistered
investments and unregistered individuals
should be an immediate red flag to potential
investors,” said Marc B. Minor, Chief
of the N.J. Bureau of Securities. “The
Bureau is a resource that investors can
use to perform due diligence as they decide
how and with whom to invest.”
Minor
added that any suspected unregistered individuals
operating in New Jersey, or any unregistered
investment products, should be reported
to the Bureau for investigation. The Bureau
of Securities can be contacted toll-free
within New Jersey at 1-866-I-INVEST
(1-866-446-8378) or from outside New Jersey
at 973-504-3600. The public
is encouraged to visit the Bureau's web
site at www.njsecurities.gov.
Investors
across the country were solicited by the
defendants, and other state securities regulators
provided information and assistance to New
Jersey investigators and legal staff. Anyone
who has invested with Carr Miller or who
has information about this firm is encouraged
to contact the Bureau.
Deputy Attorneys General
Anna M. Lascurain, Chief of the Securities
Fraud Prosecution Section, as well as Victoria
Manning and Stacy-Ann Davy are representing
the state in this matter. Supervising Investigator
Arlene Ferris Waks and Investigator Rosemary
Gonzalez conducted the investigation. They
were assisted by Captain Richard Osieja
of the Mountainside, N.J., Police Dept.
and also the Arkansas Securities Department
and the Texas Securities Division.
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