A California man serving time at a federal correctional institution in Seagoville has received an additional eight years in federal prison for running a $1.4 million Ponzi scheme from behind bars.
U.S. Attorney for the Northern District of Texas Chad E. Meacham made the announcement on Wednesday, June 1.
According to prosecutors, Michael David Carroll, 46, of Long Beach, California, admitted to deceiving investors into putting their money into a joint investment venture in September 2017. By the time Carroll began this scheme, he had already served 36 months out of a 70-month sentence for a previous fraud conviction.
Prosecutors said Carroll pitched investors on bridge loans with the promise of making them up to 50% return on initial investments in just one to three months. Bridge loans are short-term loans used to buy assets or cover obligations until the borrower can find longer-term financing.
Carroll lied to the investors that each bridge loan was covered by a bank and therefore guaranteed.
Prosecutors said Carroll set up a Ponzi scheme with the investors’ money. Carroll used money from new investors to pay older investors.
Carroll’s payment to older investors gave them a false sense of security, which encouraged them to further invest in Carroll’s supposed business.
Investigators said Carroll used excesses from his Ponzi scheme to fund his extravagant lifestyle, which included private jet service, luxury vehicles, suites at NFL games, and high-end dining.
“This defendant had the audacity to mount a million-dollar Ponzi scheme while serving time for a prior fraud. But for a second time, his avarice caught up with him: A federal judge more than doubled his sentence,” said Meacham in response to Carroll’s sentencing. “The U.S. Attorney’s Office and the FBI are determined to hold accountable those who defraud honest investors.”
According to prosecutors, Carroll tricked over 20 investors into investing in his fictitious business venture. The 46-year-old fraudulently obtained around $1.4 million. He transferred the funds from investor accounts into accounts tied to his businesses, STR America Holdings, SLJ Holdings, and MCC Holdings.
“The defendant deceived dozens of investors to preserve his complex financial scheme and fund a lavish lifestyle. Many Ponzi scheme victims do not recover their investment and are often left financially devastated,” said FBI Dallas Special Agent in Charge Matthew DeSarno. “The FBI will continue working with our partners to hold individuals accountable for defrauding investors and robbing them of their livelihood. We encourage the public to thoroughly research investment opportunities and to report any potential fraud to the FBI’s Internet Crime Complaint Center at ic3.gov.”
The 46-year-old also concealed his fraud conviction from investors. When asked about the conviction, Carroll would lie to investors that he had been falsely accused and that the charges were dismissed.
Carroll pleaded guilty in November 2021 to wire fraud. U.S. District Judge David C. Godbey sentenced him on May 31 to eight additional years in prison. Judge Godbey also ordered him to pay $1,346,499.90 in restitution to victims of his scheme.
For more Dallas crime-related news, see how Dallas City Councilmember Chad West of District 1 was named The Dallas Express’ Crime Boss of the Month for January 2022.