What If Your Investment Disappears?

February 12, 2011, 3:30PM. By Heidi Turner

Newark, NJPeople with their money invested in the Carr Miller Capital Ponzi scheme might be wondering what they can do to get their money back. Often in a Ponzi scheme it can be difficult to recover losses—sometimes the money has gone to pay back previous investors and, in other cases, the money has gone right into the perpetrator's pocket. When it comes to securities fraud, getting the money back can be difficult.

Money that goes into the perpetrator's pockets can be especially hard to recover. In the case of the Carr Miller Capital Ponzi scheme, some of that money financed luxury vacations and a New Jersey Devils skybox. Money also went to automobile purchases and meals. Recovering money once it has been spent can be a difficult process, if it is even possible.

Even with a lawsuit brought by the New Jersey securities regulators, there is no guarantee that the money is still there. Some of the money may be recoverable—of $40 million lost in the scheme, approximately $13 million was spent on personal purchases. A further $16 million went into investment vehicles that were not authorized by the investors—but that money may be recovered.

Investors hoping to get their money back can file an arbitration or a lawsuit against Carr Miller to recover their losses.

Companies that Carr Miller invested in may also not be free from legal action, even if they did not know the money was obtained through illegal means. One company, Indigo-Energy, has been named a nominal defendant because Carr Miller invested with it, meaning Indigo-Energy benefited from money that was illegally obtained. That money could potentially be used to pay back investors who lost their money in the Ponzi scheme.

According to an investigation by the New Jersey State Bureau of Securities, investors were sold promissory notes issued at interest rates of between 10 and 15 percent. A lawsuit filed against Carr Miller and its principals—Everett Charles Ford Miller, Ryan J. Carr and Brian P. Carr—alleges the company did not give investors material information about their investments. Furthermore, Carr Miller is alleged to have falsely represented to clients where their money was being invested.

Approximately $8 million was paid out to investors, although the lawsuit alleges that Carr Miller often paid investors late before ceasing all payments.