Rulebook

The Blotter Report: Despicable Dealings

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Scout's Honor

Called the “mini-Madoff” by his victims, a former fund manager for Geneva Fund Investments was convicted on Friday of swindling $2 million from investors, including a Boy Scout troop.

A jury found Orinda, Calif.-based Carl Blake Miller guilty of eight felony counts, including embezzlement and forgery, according to local news outlet the Contra Costa Times. The District Attorney claims Miller stole investors’ money placed in a real estate investment trust he managed, using the stolen funds to maintain a lavish lifestyle.

While many investors are still waiting for restitution, Orinda Boy Scout Troop 327 did get its money back. Miller allegedly withdrew $10,000 and $6,000 from the Scouts’ account he controlled to cover credit card debt and other bills, the paper reported. 

 Miller—who has been out on bail since pleading not guilty in July 2011—faces up to 12 years in a state prison for his alleged crimes. His sentencing hearing is scheduled for Nov. 15, 2013.

 

House of Cards

A former Merrill Lynch advisor who seemingly had it all at one time lost everything on Wednesday as he was sentenced to over three years in prison and forfeited his luxury home.

A judge sentenced St. Louis-based Greg Campbell to 38 months of jail and ordered the former broker to pay  $1.8 million and forfeit his Ladue home, according to local news station KMOV.

Last time we caught up with Campbell, he has just pled guilty to two felony counts of wire fraud. According to Missouri prosecutors, Campbell worked for Merrill Lynch from June 2006 until October 2011. During that time, Campbell transferred more than $1.4 million from clients’ loan management accounts that he oversaw into personal retirement accounts.

The scheme continued after Campbell left Merrill for Four Seasons Wealth Management in November 11. At Four Seasons—an LPL Financial firm—Campbell racked up $360,000 from clients’ IRA accounts. Four Seasons fired Campbell in October, after the firm discovered the advisor’s fraud.

 

Boiler-Room Bust

Another former Merrill broker is also facing the music this week. Louisiana-based Jonathan Fraiman's past caught up with him when the SEC barred him associating with anyone in the industry for at least 10 years as punishment for his role in a boiler-room earlier in his career.

Before his time with Merrill, Fraiman was hired away from AXA advisors by Edward M. Laborio in 2008 to market a hedge fund run by Envit Capital. But in reality, the purported fund never did any business. Instead, Laborio’s Boca Raton operation was actually a boiler room scheme with about 20 telemarketers who used high-pressure sales tactics and lies to lure investors in, the SEC alleged.

Laborio also tapped Fraiman to be the director and chief compliance officer of Envit Capital Private Wealth Management, the alleged investment adviser unit of Laborio’s  operations. In this role, the SEC claims  Fraiman raised hundreds of thousands of dollars lying to investors about the historical returns and financial health of the Envit.

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Compliance, regulatory and legal issues, with a fair amount of cops and robbers for fun.

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