Michael David Carroll, Ponzi Scheme, Texas 2022

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Man Who Ran $1.4 Million Ponzi Scheme from Prison Sentenced to 8 More Years

A California man who ran a $1.4 million Ponzi scheme from behind bars while serving time on another fraud conviction was sentenced Tuesday to eight additional years in federal prison.

Michael David Carroll, 46, of Long Beach, California, pleaded guilty in November 2021 to wire fraud. He was sentenced yesterday by U.S. District Judge David C. Godbey, who also ordered him to pay $1,346,499.90 in restitution to his victims.

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, U.S. Attorney Chad Meacham said.

According to court documents, in September 2017, Mr. Carroll – already 36 months into a 70-month sentence for a prior fraud conviction – lied to investors about his intention to secure funding for their ventures and invest their funds into legitimate investment ventures.

He admitted that he pitched investors on bridge loans, short term loans used to buy assets or cover obligations until longer-term financing is found, promising 40 to 50 percent rates of return in just one to three months. He claimed that each bridge loan was backed by a bank and therefore guaranteed.

He concealed the fact that he was a convicted felon, and if asked about it, claimed he had been falsely accused and had the charges dismissed.

Instead of actually investing the money, however, he set up a Ponzi scheme, secretly using new investor funds to make payments to older investors. This gave them the false impression that their “investments” were yielding profits, thereby lulling them into a false sense of security and encouraging them to make more fraudulent investments.

He used excess money from his scheme to fund his lavish lifestyle, which included a private jet service, luxury vehicles, high-end dining, and suites at NFL games.

He preyed on more than two dozen victims and fraudulently obtained at least $1.4 million, inducing multiple fraudulent transfers from investor accounts into accounts associated with his businesses, MCC Holdings, SLJ Holdings, and STR America Holdings.

Mr. Carroll is currently incarcerated at the federal correctional institution in Seagoville, Texas.