A Marlton investment firm defrauded clients of $40 million, spending $13.5 million on luxury cars, vacations, and a suite at the New Jersey Devils' arena, New Jersey Attorney General Paula Dow alleged Tuesday.
The firm, Carr Miller Capital L.L.C., sold unregistered nine-month notes to investors in New Jersey, Texas, Arkansas, and North Carolina from 2007 until it closed its offices in October or November, when the scheme began collapsing, the state said. Carr Miller promised investors returns of 10 to 15 percent.
"We charge that these defendants operated a Ponzi scheme for their own enrichment at the expense of investors," Dow said. "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."
Tuesday's announcement disclosed that the Office of the Attorney General and the Bureau of Securities filed a lawsuit last week in the Superior Court of New Jersey, seeking restitution for investors, disgorgement of profits, and the imposition of civil penalties from three defendants, including one with previous securities violations.
Named in the nine-count civil complaint were Everett C. Miller, 41, president of Carr Miller Capital; Brian P. Carr, 39, who was managing member of an affiliated registered investment advisory firm; and Ryan J. Carr, 34, whose position was not defined. The Carrs are cousins, officials said.
Ryan Carr's attorney, Rocco Cipparone, said: "From Ryan Carr's perspective, nothing he engaged in was knowingly fraudulent." Carr lives in Franklinville, Gloucester County.
A message left at Brian Carr's home in Chatham, N.J., was not returned. His attorney, Mark Astarita, also did not return a call.
Miller's lawyer, Tom Chiacchio, said: "Everett Miller and Carr Miller Capital look forward to having the attorney general's complaint adjudicated in a court of law, unlike the office of the attorney general's apparent preference to have the case adjudicated in the press."
Among the companies in which Miller invested his clients' money was Indigo-Energy Inc., a publicly traded natural-gas driller based in Henderson, Nev.
In November 2008, Carr Miller lent $1 million to Indigo for drilling operations. A financing arrangement called for Carr Miller to provide additional money to allow Indigo to keep operating, Securities and Exchange Commission documents show. Indigo lost $5 million in 2009 on revenue of $139,765. Its shares closed Tuesday at 0.9 cent.
The 2010 proxy statement for Indigo-Energy described Carr Miller as "developer of real estate, banking, and securities funding techniques." The proxy also said that Miller "has been in the investment banking, venture capital and securities business for more than 25 years."
Other firms noted in New Jersey's lawsuit include Carr Miller Entertainment, also of Marlton. Among its projects, according to its website, is Cabin Fever 2, a film about a high school prom facing a deadly threat: "a flesh-eating virus that spreads via a popular brand of bottled water."
The Octo Waterfront Grille on South Columbus Boulevard in Philadelphia also was linked to Miller in the lawsuit. The restaurant is described on its website as a holding of Carr Miller. The telephone there rang busy late Tuesday afternoon.
Brian Carr had a previous run-in with regulators, agreeing to pay a $10,000 fine and $19,787 in restitution for making unsuitable investment recommendations in 2006, according to Financial Industry Regulatory Authority records. He was suspended from selling securities.
Unlike many Ponzi operators, Carr Miller was registered with state securities regulators. Those licenses were revoked Monday.