KABOOM! Carr Miller Capital LLC, its associated advisory busineses and its principals have been stripped of their advisory registrations and charged in New Jersey with operating a Ponzi scheme that sold unregistered securities and gathered at least $40 million, state prosecutors said.
At least $36 million of the $40 million came from individuals or IRAs of the investors, meaning their individual retirement savings were directed into a rathole, investigators said. Investors’ futures were compromised when their money was used to purchase what was described in court filings as “decorative concrete flooring” and “satellite television equipment.”
Other dream-killing “indulgences” were even more dramatic, prosecutors said.
Included in the indulgences, new Jersey Attorney General Paula Dow said, was $13.5 million for a New Jersey Devils sky box at the Prudential Center in Newark, personal automobile purchases, travel and luxury vacations, retail purchases and meals.
“Instead of investing funds to produce high rates of return as promised, we allege that the defendants spent investors’ hard-earned money on personal luxuries and indulgences,” Dow said.
It was a “classic” Ponzi scheme, according to a state official.
“These defendants operated a classic Ponzi scheme, using funds from new investors to pay money to earlier investors, all in an attempt to perpetuate the deception,” said Thomas R. Calcagni, acting director of the Division of Consumer Affairs.
“The promised rates of return sounded too good to be true and, sadly, that turned out to be the case,” Calcagni said.
Investors in the unregistered offering were told they were purchasing nine-month notes that would yield an annual return of between 10 percent and 15 percent, investigators said.
Dow sued the company and principals — Everett Charles Ford Miller, 41, Ryan Jude Carr, 34, and Brian Patrick Carr, 39 — in a nine-count complaint.
Although $16 million was put into various hedge funds, real estate, film-production companies and an oil-and-gas venture, the expenses were not authorized by or disclosed to investors, Dow said.
About $8 million was doled out to investors in the form of Ponzi scheme payments, investigators said.
The securities “were not registered for sale in New Jersey and Ryan Miller was not registered to act as an agent,” authorities said.
“Unregistered investments and unregistered individuals should be an immediate red flag to potential investors,” said Marc B. Minor, chief of the N.J. Bureau of Securities. “The Bureau is a resource that investors can use to perform due diligence as they decide how and with whom to invest.”
