Investment adviser’s own dad among victims in $3 million Ponzi scheme, NC officials say
A dozen people — many of them retirees — lost more than $3 million to an investment adviser in North Carolina over the course of eight years, according to state officials.
Now he’ll spend much of the next two decades behind bars.
Russell Joseph Mutter, 52, was sentenced to between 16 and 22 years in prison on Feb. 8 in Forsyth County Superior Court, the North Carolina Secretary of State’s office said in a news release. Mutter faced 41 counts of fraud, financial exploitation of an older adult and obtaining property by false pretenses — all of which were consolidated into three felony charges for the purpose of sentencing.
He has been in custody at the Forsyth County jail since his arrest in 2018 and will receive credit for time served, according to the release.
“Mr. Mutter utterly disregarded his fiduciary responsibility to act in his clients’ best interests,” Secretary of State Elaine Marshall said in the release. “He targeted retirees — including his own father — and instead of protecting their finances he misled them, used their faith against them to gain their trust, and ultimately created a Ponzi scheme to cover up his losses with funds from new investors while converting clients’ money for his personal use.”
At sentencing, defense attorney Chris Beechler said Mutter “started off with good intentions” and “wanted to make money for his clients” while supporting his family, the Winston-Salem Journal reported.
“I never meant for any of this to happen,” Mutter told the court, according to the newspaper.
The scheme lasted from January 2009 to December 2017, the Secretary of State’s office said. Mutter was temporarily barred from operating his investment advisory business, RJM Financial, in February 2018, and his license to act as an investment adviser in North Carolina was permanently revoked in April 2018.
According to documents filed in support of the temporary suspension, Mutter solicited a client in 2010 who subsequently transferred $500,000 to RJM Financial for Mutter to manage.
Mutter told the client, identified in documents as Client A, that he invested $100,000 of the money into a Caterpillar bond and purchased four U.S. Treasury Inflation Protected Securities, or TIPS, with the remaining $400,000, the Secretary of State Securities Division said. TIPS are generally considered a low-risk investment because they are backed by the U.S. government.
Mutter reportedly promised to provide annual reports to his client regarding the status of his investments as well as monthly statements showing exactly where the money had been invested.
But Client A only received one such statement between 2010 and 2014, which investigators later determined was fraudulent, the Securities Division said.
Mutter returned $210,000 from the investments between 2014 and 2016, documents state, but at least $300,000 remained missing. Client A subsequently sued Mutter in civil court in 2017, at which point the Securities Division said Mutter admitted he never purchased the TIPS bonds.
Instead, Mutter reportedly invested in a series of S&P 500 put options that lost their value and he couldn’t repay the money.
Mutter later said that he was “attempting to raise money, through investments, to repay the plaintiff in full,” that he has “constantly tried, to no avail, to raise the necessary funds to repay the plaintiff to date,” and that he plans to “fully replace the lost funds,” documents state.
During the course of their investigation, the Securities Division said Mutter’s firm, RJM Investments, held $17 million in client assets as of December 2016. Investigators also uncovered other clients with similar investment losses to Client A.
According to the Secretary of State’s office, Mutter ultimately defrauded $3.3 million from 12 victims in Forsyth County and elsewhere in the U.S..
Many of those clients were described as “elderly” or “retirees.”
“Mutter removed funds from his clients’ accounts without their authorization, invested some of his clients’ funds in high risk securities without their knowledge, and misused client funds,” the news release states. “When these speculative investments failed, Mutter sought to hide the losses by fabricating fraudulent account statements.”
Forsyth County arrest records show Mutter was taken into custody on May 7, 2018.
Forsyth County District Attorney Jim O’Neill and Assistant District Attorney Jessica Spencer prosecuted the case, and Forsyth County Superior Court Judge David Hall presided over sentencing. He sentenced Mutter to a minimum of 65 months and a maximum of 90 months on each of the three criminal counts, totaling between 16 years and 3 months and 22 years and 5 months in prison.
