Investment Fraud Update: Patricia Miller Charged in Ponzi Scheme

shutterstock_143179897Our law firm is currently investigating an alleged Ponzi scheme run by financial advisor Patricia S. Miller (Miller) of McMurray, Pennsylvania. According to the United States Attorney Office, on June 6, 2014, Miller was arrested on charges that she orchestrated a massive Ponzi scheme and committed wire fraud.

Our attorneys encourage investors to contact our office if they have been an unfortunate victim of Miller’s. Our attorneys have significant experience recovering investor funds by holding brokerage firms and Ponzi schemer’s responsible. In a similar fraudulent investment scheme our attorneys obtained a $2.8 million award on behalf of a group of defrauded investors including $1.9 million in punitive damages. See Reuters, Arbitrator orders alleged Ponzi-schemer to pay $2.8 million (Aug. 8, 2013) and the Award here.

In Miller’s case, the United States has alleged that Miller used and abused her position of trust and her association with a Massachusetts broker dealer in order to obtain money from clients. While Miller represented to clients that their funds would be invested prudently, it is becoming clear that Miller never made such investments. According to the United States Attorney’s Office, Miller promised high returns in “investment clubs” called KS Investments and Buckharbor, among others. Miller represented, that the investment clubs would be placed in fixed-income notes and other investments. Instead, Miller has been accused of misappropriating the client’s funds for her own personal use. If convicted, Miller could face a maximum sentence of 20 years in prison and a $250,000 fine.

Miller was registered with several brokerage firms that were obligated to put in place reasonable supervisory procedures to prevent frauds such as Miller’s scheme from occurring. Those firms include Janney Montgomery Scott LLC and Investors Capital Corp. (Investors Capital). Miller’s fraud came to light on May 19, 2014, when Investors Capital received a complaint alleging that an investor provided Miller with $80,000 that disappeared. Two days later Investors Capital discharged Miller alleging that the broker has been accused of misappropriating funds, borrowing money from customers, fraudulent investment activity, and creating false documents.

In the industry, the allegations against Miller are commonly referred to as “selling away” activity. Selling away occurs when a broker solicits securities that were not approved by the broker’s affiliated firm. Under industry rules, a brokerage firm owes a duty to properly monitor and supervise its employees outside business activities to prevent selling away. When brokerage firms fail to inspect offices and otherwise ignore clues of investment fraud referred to as “red flags” firms fail to reasonable supervisory or implement their supervisory requirements.

Investors who have suffered losses through Miller’s alleged Ponzi scheme may be able recover their losses through securities arbitration. Our consultations are free of charge and the firm is only compensated if you recover.

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