Former rep indicted in $2.5 million investment fraud

Patricia Miller promised clients high yields if they went into “investment clubs”

Jun 27, 2014 @ 12:14 pm

By Bruce Kelly

A former representative for an independent broker-dealer was indicted in Massachusetts Thursday on charges she orchestrated a $2.5 million investment fraud that promised clients high yields if they put their money in exclusive “investment clubs.”

Patricia S. Miller, 67, was charged with five counts of wire fraud in U.S. District Court for the Eastern District of Massachusetts in Boston. Ms. Miller was fired last month by Investors Capital Corp., an independent broker-dealer based in Lynnfield, Mass. She had been registered with Investors Capital since 2010. Before that she was registered with Janney Montgomery Scott. Neither firm was charged in the matter.

Ms. Miller's alleged fraud started in 2002 and continued until May, according to the indictment, which was filed by Assistant U.S. Attorney Ryan Disantis.

According to Ms. Miller's BrokerCheck report, Investors Capital fired her due to an allegation of “misappropriation of funds, borrowing money from customers, fraudulent investment activity, and creating false documents.”

A call to Ms. Miller's office in Hummelstown, Pa., was forwarded to Investors Capital Corp.

Investors Capital Corp. exposed the fraud and contacted the authorities, said Valerie Carter, counsel for Investors Capital.

Karen Shakoske, a spokeswoman for Janney Montgomery Scott, said that the company doesn't comment on current investigations but was cooperating fully with the authorities to examine what, if any, activities had an impact on clients' accounts during Ms. Miller's tenure with the firm.

“From in or about January 2002, through May 2014, [Ms.] Miller defrauded and obtained money and property from clients by means of materially false and fraudulent pretenses, representations and promises concerning purported investments that Miller never made on behalf of the clients,” according to the indictment. “Specifically, Miller promised investors high returns if they put their money into 'investment clubs' with names such as KS Investments and Buckharbor.”

Instead of investing the money, she allegedly misappropriated client funds, using them to gamble and write checks to herself, according to the indictment. She also allegedly used client money to buy groceries, pay utility bills and make loan payments, according to the indictment.

If convicted, Ms. Miller faces a maximum sentence for each count of wire fraud of 20 years in prison and a $250,000 fine.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

The undiscovered cyber threats advisers should really worry about

What's the biggest cyber security threat that could really hamper your practice? Cyber Expert Tony Scott offers some strategies to keep your firm safe.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Tax reform will boost food, chemicals, rail stocks. Technology? Not so much

Conagra and Berkshire Hathaway are two stocks that should benefit most from changes in the tax code.

Brace for steepest rate hikes since 2006 in new year

Citigroup, JPMorgan Chase predict average interest rates across advanced economies will climb to at least 1 percent in 2018.

Why private equity wants a piece of the RIA market

Several factors, including consolidation in the independent advice industry and PE's own growing mountain of cash, are fueling the zeal to invest.

Finra bars former UBS rep for private securities transactions

Regulator says Kenneth Tyrrell engaged in undisclosed trades worth $13 million.

Stripped of fat commissions, nontraded REIT sales tank

The "income, diversify and interest rate" pitch was never the main draw for brokers.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print