Bernie Madoff’s $50 billion Ponzi scheme uncovered in 2008 apparently was just the tip of the iceberg. Other significant examples of investor fraud have surfaced since then including Carr Miller Capital LLC and Diversified Lending Group, Inc. scams that fleeced investors out of hundreds of millions of dollars. While federal and state regulators have filed complaints against both of these firms and their principals, it is doubtful that enough funds will be recovered by the regulators to help aggrieved investors recover much, if anything, as a result of these actions.
Carr Miller Capital LLC
The New Jersey Office of the Attorney General and the Bureau of Securities filed a lawsuit against Carr Miller Capital LLC and its three principals. The allegation is use of a Ponzi scheme and other means to defraud investors of over $40 million. The lawsuit filed in State Superior Court in Newark alleges that the defendants violated numerous state Uniform Securities Laws by committing fraud, commingling funds and selling unregistered securities.
According to the lawsuit, in or about 2007, Carr Miller Capital LLC and/or Capital Markets Advisory LLC through the defendants sold and continued to sell securities in the form of promissory notes. The document states that the Carr Miller notes had a term of nine months and promised returns of between 10 percent and 15 percent per year and return of the principal investment at the end of the nine-month period. Between 2007-2009 Carr Miller Capital LLC and related companies received $40 million in deposits. About $36 million of those deposits was from individuals and IRA's. The investigation revealed that $16 million of the total was transferred into businesses purportedly operated by related companies including hedge funds, real estate, film production companies and an oil and gas venture.