What You Need to Know
- The ex-broker and RIA pleaded guilty last year to charges of wire and investment advisor fraud.
- In addition to criminal charges, he was also the target of an SEC complaint for his scheme.
- Morgan Stanley terminated the advisor in July 2019, after learning of his activities, it says.
The former Morgan Stanley advisor who pleaded guilty in July to wire and investment advisor fraud for stealing more than $6 million from clients including senior citizens was sentenced by U.S. District Judge Paul W. Grimm on Thursday to five years in federal prison, according to the Justice Department.
The prison sentence will 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 $4.355 million, according to Lenzner.
Michael Barry Carter, 47, of Potomac Falls, Virginia, worked for Morgan Stanley from 2006-2019 other than a brief stint at Ameriprise in 2011, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website. He is no longer registered as an RIA or broker, according to BrokerCheck.
“Morgan Stanley is strongly committed to the protection of client assets, and to act quickly when fraudulent activity is uncovered,” a company spokeswoman said in a statement provided to ThinkAdvisor on Friday.
Carter’s employment was “terminated as soon as his activity came to our attention in July 2019, and we immediately reported the matter to the appropriate law enforcement and cooperated with their investigation,” she added. “There were a limited number of clients impacted and any money misappropriated by the advisor was returned.”
Attorneys who represented Carter did not immediately respond to a request for comment on Friday.
Carter stole at least $6.1 million over a nearly 12-year period, according to the DOJ, noting the ex-advisor had faced up to 20 years in federal prison for wire fraud and up to five years for investment advisor fraud.
The Securities and Exchange Commission also separately charged Carter with misappropriating about $6 million from brokerage customers, including a senior citizen related to him and an elderly investment advisory client, from about October 2007 through May 2019. The money he misappropriated included money held in 529 college savings plan accounts and involved the falsification of documents while he worked for Morgan Stanley in McLean, Virginia, according to the complaint filed July 20 in U.S. District Court for the District of Maryland.