On Monday, former Morgan Stanley financial advisor Michael Barry Carter pleaded guilty to federal charges of Wire Fraud and Investment Adviser Fraud in connection with a scheme to steal more than $6 million, announced the United States Department of Justice.
United States Attorney for the District of Maryland Robert K. Hur and Special Agent in Charge Jennifer C. Boone of the Federal Bureau of Investigation, Baltimore Field Office, announced the guilty plea.
“For over 12 years, Michael Carter perpetrated a brazen scheme that defrauded victim account holders whose investments he was supposed to protect,” said U.S. Attorney Robert K. Hur. “When his fraud was discovered, Carter repaid some victims by taking money from other victim accounts. The U.S. Attorney’s Office will do everything we can to ensure that justice is served by holding accountable financial advisers who defraud investors of their life savings.”
In all, Carter stole at least $6,149,162.77 from a variety of victims as well as a non-profit sports organization. He made at least $4,355,110.39 as part of the fraud and will be required to pay a money judgment in that amount as part of his plea agreement. He faces a maximum sentence of 20 years in federal prison for wire fraud and a maximum sentence of five years in federal prison for investment adviser fraud.
The Securities and Exchange Commission also charged Carter on Monday with stealing approximately $6 million from brokerage customers and an elderly investment advisory client. Morgan Stanley was not managed in either filing, but the fraud occurred while he worked for the firm in McLean, Virginia.
U.S. District Judge Paul W. Grimm has scheduled sentencing for Nov. 9.
Elsewhere, David Hu, the co-founder and chief investment officer of a New York RIA firm, was arrested Friday. He stands accused of involvement in a “string of frauds” aimed “to cover up tens of millions of dollars in losses on bad bets in order to keep his investment advisory business, the International Investment Group LLC (“IIG”), afloat,” according to the Securities and Exchange Commission.
According to a press release from the agency, “Hu allegedly sold at least $60 million in fake trade finance loans to other investors and used the proceeds to pay the redemption requests of earlier investors and other liabilities.”
