The former Morgan Stanley adviser who pleaded guilty in July to wire and investment adviser fraud for stealing more than $6 million from clients including older adults will spend five years in federal prison, the Justice Department reported Thursday.
U.S. District Judge Paul W. Grimm sentenced Michael Barry Carter, 47, of Potomac Falls, VA, to five years in federal prison, to be followed by three years of supervised release, Acting U.S. Attorney for the District of Maryland Jonathan F. Lenzner said. Grimm also ordered Carter to pay a money judgment in the amount of the net proceeds he obtained from the scheme, which was at least $4.35 million, according to Lenzner.
“For more than 12 years, Michael Carter perpetrated a brazen scheme that defrauded victim account holders at a global bank of their life savings,” Lenzner said. “This case reflects the reality that large-scale fraud can still occur at a global institution with a robust compliance program, and it also reflects our commitment to holding bad actors accountable in order to provide restitution to victims and restore confidence in our system. The U.S. Attorney’s Office will continue to work closely with our federal law enforcement partners and the Securities and Exchange Commission to hold accountable financial advisers who defraud victims whose investments they are supposed to protect.”
Carter’s fraud was first discovered when a client and her adult daughter attempted to obtain a bridge loan from the financial institution to cover relocation expenses to an assisted living facility in Florida until the sale of the client’s home in Columbia, MD, was completed. When they applied for the loan, the client and her daughter discovered that an $800,000 loan already had been obtained in the client’s name, without her knowledge or permission.
The financial institution determined that the disbursement of the loan proceeds went to Carter’s personal bank account and that Carter had used his personal email address in furtherance of the fraud. The financial institution then learned that Carter had transferred approximately $5 million in unauthorized funds associated with clients of the financial institution.
