Noah Myers, a financial adviser from Lyme, Connecticut, pleaded guilty in federal court this week to defrauding a number of his client through what is called a “cherry-picking” securities fraud. Myers waived his right to indictment and entered his plea before U.S. District Judge Stefan Underhill in Bridgeport, Connecticut.
Myers, who was first investigated by the SEC in 2012, was the sole owner of MiddleCove Capital, LLC in Essex, Connecticut. He admitted to taking profits from successful investments for himself and favored accounts while giving losses to disfavored accounts. This process was made possible as Myers would wait to assign a trade to an account until after he determined the investment was profitable, a practice known as “cherry-picking.”
Myers scheme resulted in client losses of over $2 million. Simultaneously, as the SEC alleges, Myers made off with $460,000. What makes the matter worse is that a number of Myers’ clients who lost their funds were retired or were utilizing their accounts to save for retirement funds and had requested low-risk investments.
The lid came off the scheme in 2010 when MiddleCove employees were notified of possible illegal trades through a computer program designed to find favorable allocation of profitable day trades.
The U.S. Attorney’s office defines cherry-picking as a “fraudulent securities trading practice in which the responsible individual executes trades without assigning those trades to a particular trading account until the individual determines whether or not the trade has become profitable or suffered losses.” The trader then “allocates profitable trades to favored accounts – often the individual’s own account – and assigns unprofitable trades to disfavored accounts.”
Myers pleaded guilty to one count of securities fraud and is looking at a maximum sentence of twenty years, plus a fine of as much as $5 million. He will be sentenced January 12, 2015.
If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.