|NEWARK – A State Superior Court Judge has issued a judgment that orders the perpetrators of a Ponzi scheme to pay $29.8 million for the benefit of defrauded investors and an additional $6.5 million in civil penalties to the New Jersey Bureau of Securities.
Judge David B. Katz in Newark rendered a decision in favor of the Bureau of Securities, granting its Motion for Summary Judgment and Final Judgment by Default filed by Deputy Attorneys General with the Division of Law, thus concluding the lawsuit as to Carr Miller Capital, LLC and three of its principals including the company’s president, Everett Charles Ford Miller. The company was based in Marlton prior to the Bureau and the Attorney General filing a lawsuit and obtaining a Court order in December 2010 to freeze Miller’s assets and place a receiver in charge of his related companies.
Carr Miller Capital offered unregistered nine-month notes that purportedly provided rates of return of up to 20% 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. Funds sent to investors as “interest” payments were, in fact, merely new investors’ capital being used to keep the Ponzi scheme in operation.
The defendants who are jointly responsible for paying the $29.8 million in restitution, which represents the losses suffered by investors who fell victim to the Ponzi scheme, plus individual civil penalties as noted below, are:
- Carr Miller Capital, LLC, $2.34 million;
- Everett Charles Ford Miller, 43, former President of Carr Miller Capital, $1.87 million;
- John Paul Fish, 39, former Vice President of Carr Miller Capital, $1.18 million; and
- Ryan Jude Carr, 37, former Vice President of Carr Miller Capital, $1.18 million.
The receiver currently is identifying assets that will be liquidated and used to pay investors.
“Ponzi schemes continue to be perpetrated against investors and this case should be taken as a cautionary tale by consumers and also would-be fraudsters,” Acting Attorney General John J. Hoffman said. “Those who think they can defraud investors and enrich themselves will find out how wrong they are, as these three did.”
Judge Katz found that over 8,800 violations of the state’s Uniform Securities Law were committed, based on the investigation conducted by Bureau of Securities Supervising Investigator Arlene Ferris-Waks and Investigator Rosemary Gonzalez and the prosecution led by DAsG Victoria A. Manning, Emanuel S. Asmar, Paul E. Minnefor, and Stacy-Ann T. Davy of the Securities Fraud Prosecution Section in the Division of Law. The Bureau and the Division of Law were assisted by the Arkansas Securities Department, the Texas State Securities Board, the U.S. Attorneys’ Office, and Captain Richard Osieja of the Mountainside, N.J., Police Dept., among other law enforcement agencies.
“This multi-agency investigation underscores how law enforcement agencies and securities regulators continue to focus on securities and investment fraud in the post-Madoff era,” said Eric T. Kanefsky, Director of the State Division of Consumer Affairs. “We remain committed to getting money back into the hands of those who were defrauded.”
The Bureau’s investigation also revealed that over $13.5 million of investors’ monies were used to pay for personal expenses, including meals, entertainment, and travel, automobile purchases, a New Jersey Devils sky box at the Prudential Center in Newark, Carr Miller broker commissions, transfers to Carr Miller insiders and their family members, and payroll, among other things. Over an additional $22 million was put into various hedge funds, real estate, film production companies, a seasonal waterfront restaurant in Philadelphia, mortgage banks, and an oil and gas venture, among other high-risk ventures, which incurred significant losses and were not authorized by or disclosed to most investors.
“Promised high rates of return must be viewed with extreme caution in today’s low-interest rate environment,” said Amy G. Kopleton, Acting Chief of the Bureau of Securities. “In this matter, we had unregistered investments being sold, which is a red flag that requires potential investors to perform due diligence before investing.”
The Bureau can be contacted to inquire whether a security and the person offering it for sale are both registered, or may be exempt from registration. The Bureau 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.