Former Morgan Stanley financial adviser accused of stealing $ 6 million from clients


Carter, 47, allegedly robbed the victims, including an elderly investment advisory client who had been saving a college fund for her grandchildren and people she knew “through family ties and friendship,” according to a complaint filed by the Securities and Exchange Commission. The complaint alleges that he used the money to finance an expensive lifestyle that included a luxury car and a large mortgage.
Carter has yet to file a statement in response to the SEC charges. Federal criminal charges were also filed against Carter, of which he pleaded guilty Monday, according to a statement from the Maryland District Court.

“For more than 12 years, Michael Carter has perpetrated a blatant scheme that defrauded victim account holders whose investments he was supposed to protect,” US Attorney for the Maryland District Robert Hur said in the statement. “When his fraud was discovered, Carter paid some victims by taking money from other victim accounts.”

Carter worked as a financial advisor and broker at Morgan Stanley (em)McLean, Virginia’s office from 2006 to 2019, except for a period of several months in 2011, when he worked for another financial services company, according to the SEC’s register of investment advisers. He was fired from Morgan Stanley in July 2019 following allegations of embezzlement of client funds, the site shows, and he is no longer licensed to work as a broker or investment advisor.

Carter could not be reached for comment. A Morgan Stanley spokesperson told CNN Business in a statement that the firm is “firmly committed to protecting clients’ assets and acting quickly when fraudulent activity is discovered.”

“The adviser’s employment ended as soon as his activity caught our attention, and we immediately reported the matter to the appropriate police and regulatory authorities and have been cooperating with his investigations,” the spokesperson said. “There were a limited number of clients affected and any money misappropriated by the advisor was returned.”

The SEC claims that Carter falsified internal documents to make dozens of wire transfers from brokerage clients’ accounts to his personal account. To carry out the alleged scheme, Carter sold securities without the authorization of the client and diverted the account statements of the clients to the addresses it controlled.

Carter also allegedly made nearly $ 1.5 million in unauthorized transfers from the elderly advisory client’s accounts, sending almost $ 1 million to himself and using part of the remainder to pay for funds he had taken from another client, according to the complaint from the SEC.

After being fired from Morgan Stanley last July, Carter admitted to company employees in August that he had defrauded five people and “had falsified customer signatures on bank authorization forms, which had created false financial statements for disguise your theft, and in some cases mailed those financial statements, “according to a press release from the Maryland District Court.

In the case of a victim, known as Victim 1, Carter admitted that he had met the woman at his home and “answered Victim 1’s phone to authorize the transactions, without Victim 1’s knowledge,” as a way to overcome the financial institution. multi-factor verification system, the Maryland court said.

The SEC is seeking relief, including the return of Carter’s “illicit earnings” and a civil penalty. Regarding criminal charges, Carter faces a maximum sentence of 20 years in federal prison for wire fraud and a maximum sentence of five years for investment adviser fraud. As part of his plea agreement, Carter will have to pay a monetary judgment of nearly $ 4.4 million, the total net income he earned from the scheme.

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