“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 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.”
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.
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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