An investment advisor based in New York and Santa Fe, N.M., has been charged with swindling dozens of clients out of more than $8 million by recommending investments in a fund he controlled and then transferring the assets out to pay for personal expenses.
The U.S. Attorney’s Office for the Southern District of New York said Martin Adrian Ruiz, 45, of Carter Bain Wealth Management targeted elderly clients, promising them safe investments. In fact, the attorneys said, he "stole clients’ retirement savings and lined his own pockets” by inducing them to invest in a vehicle called the “Ram Fund,” whose purpose was supposedly to invest in real estate and commercial loans.
According to the Securities and Exchange Commission, Ruiz got dozens of clients to invest $10 million in the fund by purchasing limited partnership interests. The agency said Ruiz had been soliciting these funds since March 2011 and that a large number of the investors live in near Deming, N.M., where Carter Bain has an office. Ruiz was raised there and still has family in the area, according to the SEC complaint.
Ruiz was arrested August 12 and presented to Magistrate Judge Barbara Moses, said the Justice Department. He has been charged with one count of investment advisor fraud and faces five years in prison, according to the DOJ.
“Rather than invest the funds in legitimate investment projects and real estate, as he represented to clients, Ruiz misappropriated more than $8 million of client funds from the RAM Fund, transferred those funds through a series of entities [he] also controlled and spent the vast majority of the funds on personal expenses, including the purchase of a home, rent payments on several apartments, and the payment of his personal credit card bills,” The U.S. Attorney’s Office said in a statement.
Attempts to reach Ruiz were not successful. A person who answered the phone at the Las Cruces office of Carter Bain refused to give his name but said, “We’re all in shock.” When asked if he was an employee, he said only, “I was. None of us have jobs now.” The employee said Ruiz mostly lived in New York.
The SEC said last week it had filed a relief order against Ruiz, Carter Bain and the Ram Fund to stop the alleged ongoing fraudulent securities offering and freeze Ruiz’s assets. The complaint, unsealed August 12, said Ruiz induced 56 investors, many of whom were elderly clients of Carter Bain, to invest $10.6 million in the RAM fund, then misappropriated the assets to support a lavish lifestyle. In particular, the agency said Ruiz paid for his residences in New York and New Mexico, covered millions in credit card bills and paid down student loans. The SEC also said Ruiz hid the fraud by making Ponzi scheme-like payments to earlier investors with new investors’ money and falsely valued shares in the RAM fund to make it seem as if their value was rising.
According to BrokerCheck, Ruiz has led Carter Bain since 2004. Before that, he was with Morgan Stanley for two years. Carter Bain had 488 clients, including 62 high-net-worth individuals, as well as two institutional government clients, according to its latest form ADV. The form said the firm had $61.6 million in discretionary assets under management.
According to the SEC complaint, Ruiz appropriated the vast majority of the monies in the RAM Fund and shuttled them to other businesses he controls. These include two businesses in Las Vegas—the Rothschild Magnus Fund and ISG Capital—and to Mister Farms, a New Mexico limited liability company located in Deming that acquires and improves commercial farmland, the SEC said.
“During the Relevant Period, Ruiz transferred approximately $9.2 million of the $10.6 million raised to the relief defendants—[Rothschild Magnus Funds], ISG, and Mister Farms. Then … in a waterfall fashion, Ruiz used his sole control over the relief defendants and their bank accounts to make a variety of payments that personally benefited him.