Ex-Morgan Stanley Advisor Who Defrauded Seniors Gets 5-Year Prison Sentence

"For more than 12 years, Michael Carter perpetrated a brazen scheme that defrauded victim account holders at a global bank of their life savings," Lenzner said Friday in announcing the sentencing.

"When his fraud was discovered, Carter repaid some victims by stealing money from other victim accounts, and ultimately he stole close to $5 million," according to Lenzner. "This case reflects the reality that large-scale fraud can still occur at a global institution with a robust compliance program, and it also reflects our commitment to holding bad actors accountable in order to provide restitution to victims and restore confidence in our system."

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According to Carter's guilty plea, from Aug. 7, 2006 to April 29, 2011, and again from Nov.16, 2011 to July 29, 2019, Carter managed and had authority over multiple investment accounts maintained by "Victims 1 through 5" (as they were identified in the indictment) with Morgan Stanley, which contained a mix of assets including securities and cash deposits, according to Lenzner.

As detailed in the statement of facts, from at least October 2007 to at least July 2019, Carter made many unauthorized transactions from the victim accounts for his personal benefit, defrauding the victims of at least $5 million, Lenzner said. Carter used the money to pay for his lifestyle expenses, including mortgage, credit card bills and country club membership fees, according to Lenzner.

Among his admissions, Carter said he met with Victim 1 at her home and answered her phone in order to authorize transactions, unbeknownst to the client, Lenzner said. "Carter did this in order to overcome the financial institution's multi-factor verification system required to execute the transactions," according to Lenzner.

According to the plea agreement, over the course of his scheme, Carter made at least 53 unauthorized transfers from his clients' accounts to his own accounts, and also admitted to embezzling more than $50,000 from a nonprofit sports organization located in Loudoun County, Virginia, Lenzner said.

Before his offenses were detected, Carter returned $1.8 million to the victims, according to Lenzner. After learning his fraud was discovered, in October 2019, Carter also repaid the nonprofit organization for its loss. However, of the total repaid, $1.1 million was repaid through transfers Carter made from other victim accounts, Lenzner said.