In browsing the charges against Michael Barry Carter, it seemed like a typical case of a financial adviser stealing from his clients. The total amount was large. The math of how much he stole from his clients and how much he pocketed confused me in browsing the two press releases.
The US Attorney’s headline has Mr. Carter stealing $6 million and the SEC’s story says he transferred millions. After reading through the complaint, it seems clear that he was stealing to enrich himself and repay some of the thefts to cover his tracks. The classic scenario of robbing Peter to pay Paul.
Mr. Carter has plead guilty to the US Attorney for the criminal charges. The SEC investigation is continuing.
According to the SEC complaint, Mr. Carter started his misdeeds, sadly, by stealing from an elderly relative in 2007. He accomplished this by falsifying authorization forms, diverting the real account statements and producing fake account statements.
He continued pilfering from other clients.
It ended when one of Mr. Carter’s victims applied for loan and the credit review discovered that an $800,000 line of credit has established at Mr. Carter’s brokerage firm without the victim’s knowledge or permission. The brokerage firm investigated and found that Mr. Carter had transferred millions from his clients without authorization.
In the end, Mr. Carter stole over $6.1 million and pocketed at least $4.3 million of that. The rest was used to pay his other victims to cover his misdeeds, robbing Peter to pay Paul.
Sources:
- SEC Complaint
- SEC Charges Financial Advisor with Fraud for Stealing Millions from Investors
- Virginia Fraudster Pleads Guilty in U.S. District Court in Maryland to Federal Charges of Wire Fraud and Investment Adviser Fraud in Connection with a Scheme to Steal More Than $6 Million
- Michael Barry Carter – BrokerCheck
- Ex-Financial Advisor Pleads Guilty In $6M Fraud Scheme
