President of New Jersey-Based Financial Services Firm Pleads Guilty in Multi-Million-Dollar Securities Fraud
Targeted Dozens of Investors Across the Country
|U.S. Attorney’s Office July 09, 2013|
CAMDEN, NJ—The president of an investment and financial services firm today admitted defrauding dozens of investors New Jersey, Pennsylvania, Texas, and elsewhere of $5 million and evading taxes, U.S. Attorney Paul J. Fishman announced.
Everett C. Miller, 43, of Marlton, New Jersey, pleaded guilty before U.S. District Judge Renee Marie Bumb in Camden federal court to an information charging him with one count of securities fraud and one count of tax evasion.
“The defendant in this case has admitted responsibility in a financial scheme that was both widespread and long-running,” U.S. Attorney Fishman said. “By preying on trusting investors around the country over a period of years, he was able to rob them of millions of dollars. He defrauded the public as well, by failing to pay taxes on his illegal proceeds. He will now face the punishment he deserves for his greed.”
Aaron T. Ford, special agent in charge of the FBI office in Newark, said, “Investment schemes such as that perpetrated by Mr. Miller prey on innocent investors and compromise our free market economy. Mr. Miller put his investors’ resources, pensions, and life savings at risk for his own gain. The FBI, together with its law enforcement and regulatory agency partners, will vigorously investigate these financial crimes and hold those responsible accountable.”
“Remember the old cliché: if it sounds too good to be true, it probably is,” Shantelle P. Kitchen, Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office, said. “Mr. Miller preyed upon trusting investors and then stole their hard-earned money. Today’s plea should be a reminder for investors to exercise caution when pitched with an investment opportunity that promises unbelievable returns.”
According to documents filed in this case and statements made in court: Miller was the founder, chief executive officer, president, principal, and sole owner of Carr Miller Capital LLC (CMC), an investment and financial services firm based in Marlton. Miller and others solicited investments through the firm from individuals located in New Jersey, Pennsylvania, North Carolina, Arkansas, Texas, and elsewhere. CMC had more than 30 affiliates and related entities and more than 75 related bank accounts. Miller controlled the firm’s finances and established himself as synonymous with CMC. Prior to founding CMC in June 2006, Miller was a registered financial advisor at several financial institutions.
Miller admitted that from June 2006 through December 2010, he and others issued promissory notes to more than 190 investors across the United States, and Miller and CMC received $41.2 million from these investors. The notes were provided as “securities,” but Miller and CMC never registered the notes as securities with any federal or state agency nor were the notes exempt from such registration requirements. The notes had a term of nine months and promised the investors returns of seven to 20 percent per year and a return of the principal investment at the end of the nine-month period.
Miller and others falsely represented to the investors that their money would be invested in certain ways, but the investors were not provided with material information about their investments or were misled about the risks of their investments. Miller commingled and pooled the investors’ money into one of CMC’s 75 related bank accounts. Unbeknownst to the investors, Miller used some of the money in the following ways: (1) to repay prior investors, most in Ponzi scheme fashion, (2) to pay CMC and its related entities’ payrolls and operating expenses, and (3) to support Miller’s lifestyle. Miller’s purchases included luxury automobiles; home furnishings and electronic equipment; tickets to entertainment and sporting events; travel, lodging, and vacations; and meals, entertainment, retail shopping, and groceries.
On August 11, 2009, the Arkansas Securities Department (ASD) initiated an investigation of Miller, CMC, and others for selling unregistered securities to investors in the form of the promissory notes. Following the investigation, the ASD issued a cease-and-desist order against Miller, CMC, and others from selling the notes.
From August 2009 through December 2010, despite knowing about the ASD’s investigation of the promissory notes and CMC’s inability to pay either the interest or the principal on them, Miller and others continued to sell the notes as unregistered securities to investors. They issued notes to approximately 50 new investors but never returned any of the principal to the new investors.
Miller admitted that for calendar years 2007, 2008, and 2009, he intentionally failed to provide the IRS with any information regarding the proceeds that he personally received in connection with his fraudulent scheme. Miller failed to disclose $218,770, $244,879, and $199,507 for 2007, 2008 and 2009, respectively. In total, Miller admitted failing to report $663,156 in taxable income to the IRS, resulting in a tax loss to the government of $47,342.
At today’s plea proceeding, Judge Bumb entered a consent judgment and order of forfeiture in the amount of $4,999,400, which constitutes the proceeds Miller obtained as a result of the securities fraud.
The securities fraud count to which Miller pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of $5 million. The tax fraud count is punishable by a maximum potential penalty of five years in prison and a fine of up to $250,000. Sentencing is scheduled for October 18, 2013.
U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation leading to today’s guilty plea. He also thanked the Financial Industry Regulatory Authority-Criminal Prosecution Assistance Group and the U.S. Securities and Exchange Commission’s Philadelphia Office for its assistance with this investigation. He also thanked the New HerseySecurities Fraud Prosecution Section, the Arkansas Securities Department, and the Texas State Securities Board for their roles in the investigation.
The government is represented by Assistant U.S. Attorneys Aaron Mendelsohn of the Economic Crimes Unit and Evan Weitz of the Asset Forfeiture and Money Laundering Unit of the U.S. Attorney’s Office in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.