Manhattan Man Pleads Guilty in Manhattan Federal Court to Engaging in a Fraudulent Investment Scheme
|U.S. Attorney’s Office November 01, 2013|
Preet Bharara, the United States Attorney for the Southern District of New York, announced that S. George Milter pled guilty today in Manhattan federal court to participating in an investment scheme that defrauded foreign investors of nearly $1 million. As part of the scheme, Milter lured investors with false promises that their funds would be safely invested in the U.S. financial markets through a legitimate broker-dealer. Instead, Milter and his co-defendant Cliffe R. Bodden misappropriated the money by transferring it to related individuals and entities and using it to pay certain personal expenses. Milter pled guilty today before U.S. District Judge Katherine B. Forrest.
Manhattan U.S. Attorney Preet Bharara said, “George Milter lied to foreign investors about the safety and performance of their funds while he diverted their money for his own purposes. With his guilty plea today, he joins the disgraced ranks of those convicted for perpetrating investment fraud.”
According to the Indictment against Milter and Bodden, and statements made during Milter’s plea allocution today, and prior court proceedings:
Milter held himself out as the chief executive officer of Lempert Brothers International U.S.A., a registered broker-dealer in Manhattan, and president and chief executive officer of Lempert Capital Management Ltd., which purportedly was incorporated in the Cayman Islands and managed by Lempert Brothers. Bodden held himself out as a Managing Director of Lempert Capital.
Starting in approximately 2005, Milter lured foreign investors into sending at least $946,509 to Lempert Brothers under the pretense that those funds would be invested in the U.S. financial markets. To induce investors into wiring funds, Milter falsely told them that the funds would be safeguarded, and that if the value of the funds dropped more than 20 percent, the money would be frozen and all remaining funds available for return to investors. In fact, Milter and Bodden misappropriated the nearly $1 million of investors’ funds by using the money to pay their personal expenses and diverting the funds to a member of Milter’s family and entities affiliated with Bodden.
To keep the scheme going, Milter and Bodden sent fraudulent monthly account statements to the investors. These statements falsely reflected that the investors’ funds were invested and earning substantial income. When the investors attempted to withdraw money from their accounts at Lempert Brothers, Milter and Bodden made additional false and fraudulent representations as to why the funds could not be returned when requested. For example, they falsely told investors that their money was illiquid because it had been invested in various companies that had not yet gone public.
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Milter, 35, of New York, New York, pled guilty to one count of wire fraud and faces a maximum sentence of 20 years in prison. In addition, he has agreed to a money judgment of $946,509 representing the amount of the crime proceeds. Milter is scheduled to be sentenced by Judge Forrest on March 7, 2014, at 2:00 p.m.
Bodden pled guilty in September 2012 to one count of conspiracy to commit wire fraud and one count of wire fraud for his participation in the investment scheme. He was sentenced by Judge Forrest in February 2013 to 74 months in prison and ordered to pay a money judgment and restitution of $946,509 representing the amount of the crime proceeds, as well as a fine of $25,000.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Carrie H. Cohen is in charge of the prosecution.
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