Apple trader arrested in $1 billion wire fraud

Apple trader arrested in $1 billion wire fraud

Summary: A trader for Rochdale Securities has been arrested over allegations of fraudulent schemes relating to purchases of Apple stock.

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David Miller, a trader for Rochdale Securities, Stamford, has been arrested today based on a federal criminal complaint charging him with wire fraud.

apple trader 1 billion wire fraud allegations fbi wire stock broker

The Federal Bureau of Investigation (FBI) claims that the 40-year-old trader was part of a fraudulent scheme when employed as a trader for Rochdale Securities. In a "get-rich-quick" scheme, Miller allegedly orchestrated an unauthorized purchase of roughly $1 billion in Apple stock, which left his employer with severe financial losses.

Within the criminal complaint, the FBI say that Miller cooked up a quick way to make money by purchasing 1.625 million Apple shares Apple with the brokerage's money on October 25 this year, the same day that the iPad and iPhone maker was due to release their quarterly earnings. The pinnacle point of this transaction was simple; expecting stocks to rise, Miller would make a nice chunk of change.

However, the purchase backfired, as Apple stocks fell, leaving Rochdale Securities with a serious problem.

Miller did not use his own cash reserves -- naturally -- to fund the purchase, and told his employers it was an honest mistake, as he meant to purchase 1,625 Apple shares, rather than 1,625,000 -- which was a result of multiple copies of the same order. As the shares were bought with the brokerage's money, Rochdale bore the financial loss.

As a result, Rochdale Securities was left with over 1.6 million shares of Apple stock. Even thought the firm rapidly traded out, it still suffered financial losses of approximately $5 million.

The Feds also say that the trader may have defrauded another broker-dealer at the same time. Through "misrepresentations" it is alleged that Miller convinced an unrelated company to sell 500,000 Apple shares in order to conduct the larger get-rich-quick scheme at Rochdales.

"As alleged, this defendant orchestrated the unauthorized purchase of approximately $1 billion of Apple stock in a fraudulent get-rich-quick scheme that backfired, causing massive losses for his employer," stated U.S. Attorney Fein. "I commend the FBI, with the substantial assistance of the SEC and FINRA, for its rapid response and for bringing this defendant to justice. The U.S. Attorney’s Office and our many partners on the Connecticut Securities, Commodities and Investor Fraud Task Force are committed to protecting investors and the integrity of American capital markets."

Miller surrendered himself to the FBI today in Bridgeport, and has been released on a $300,000 bond. The allegations are being investigated by the FBI, and if found guilty of wire fraud, Miller could face a maximum term of 20 years behind bars.

The investigation is ongoing.

Topics: Apple, Legal, Tech Industry

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49 comments
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  • place your

    bets. Oh sorry we are talking about the stock market.Oh like i said place your bets.
    sarai1313@...
  • An Honesr Mistake

    Seems like an honest mistake.
    The crime is those who made the Apple stock go down when, rightly so, it should have risen.
    Ashtonian
    • Hope that's sarcasm

      "The crime is those who made the Apple stock go down when, rightly so, it should have risen."

      Sure hope this is sarcasm.
      larissaj
    • In my opinion Apple is worth Zero

      I wouldn't ever buy any Apple stock. In my opinion, Apple is worth Zero. I could buy the same hardware they sell for a $1000 dollars at around $150. A MacBook is produced by little kids in China under inhuman conditions. The operating system, MacOS, is just an illegal copy of AT&T's (40-year old) Unix with a Linux-like graphical user interface. The only "added-value" you get is an Apple logo. No, Thanks.
      usnames
      • awww

        Oh but Foxconn is looking to build a factory in the United States so Apple can stamp Made in the U.S.A on their stuff and stop looking like they are exploiting labor.

        there's a sad, tragic commentary about the state of labor in the US if Foxconn thinks the US is a good market for them

        anyway... golly gee, won't that make you change your mind about Apple? Nah, me neither.
        larissaj
        • Foxconn ... state of labor in the US...

          Foxconn already has factories (plural) in the US..
          Foxconn has had them in the US for many years... (~10,000 employees in Texas alone?)
          The issues of labor content in electronics products is much more complex than the simple reportings on Foxconn , China and Apple presently in the media.

          I am not a Fan boy of Apple, but would like to see more constructive/informed observations on the issues.
          jrlambert
          • oh please

            Right yet Apple products continued to be produced in China. I wonder why? Oh, I know, the manufacturing process would never have met with OSHA approval nor would they have been able to require workers to be on call 24 hours in the dorms and/or work 60 hour weeks on the line.

            Tell it to someone who hasn't been over there and seen factories like Foxconn. I've been complaining about this sort of exploitative labor long before Apple released their first iPod. Motorola and HP were actually the first to take advantage, Apple is just the biggest offender at the moment.
            larissaj
          • It's simpler than that

            Like, as Steve Jobs himself explained to Obama - you just can't produce this kind of things, at that rate, with that costs and flexibility in the US. Plus, since significant business of electronic sales in outside the US anyways, it makes more sense to not produce the products in the US (hint: higher costs to ship, higher taxes etc).

            Ideally, since electronics is already so ubiquitous, their production will be distributed all around the world -- just like food and anything else.
            danbi
      • Sigh

        The sheer amount of FUD and lies here are just stagering... and amazingly sad really. Let's address 2 of the major points:

        "A MacBook is produced by little kids in China under inhuman conditions."

        Oh? So the MacBook is NOT made in a Foxconn factory? Oh wait, it is. Then maybe I was wrong in that Apple paid for an independent thrid party audit of the Foxconn factories they used to manufacture their products and then publicly release those findings? No, I was right. Then I guess Apple did nothing about it? Whoops, wrong again - Apple did do something and Foxconn straightened up their act so no child labor is being used to make Apple products. Too bad we can't say the same thing about Samsung's products, right? O and those same Foxconn plants that make the MacBooks... they also make Dell, HP, and Toshiba products. So what are YOU using?

        "The operating system, MacOS, is just an illegal copy of AT&T's (40-year old) Unix with a Linux-like graphical user interface."

        Actually old boy the current version of the MacOS is a unix-based system that incorprates elements of the unix-based NextOS that was developed by Next Computers that was owned by Steve Jobs and elements of the prior versions of the Apple Mac OS that was based on work that Apple licensed from Xerox. Now if XEROX illegally used AT&T's tech then that is a separate issue.

        What other FUD and lies do you have?
        athynz
        • "...Apple licensed from Xerox ..."

          ... Still trying to sell the that one Pete?
          We're not talking about the UI stuff that Xerox allowed Jobs to LOOK AT, in return for Xerox being allowed to purchase some Apple stock, are we?
          No payment, no license.

          Any more Apple cheerleading?
          radleym
          • Not cheerleading

            Just the facts.

            http://en.wikipedia.org/wiki/History_of_Apple

            http://www.zurb.com/article/801/steve-jobs-and-xerox-the-truth-about-inno

            Interestin that you could not refute anything else I wrote - why is that?

            What else you got radleym?
            athynz
        • A note on AT&T UNIX "copyrighted work"

          Let me share some history, as I know it (I know most of these people personally).

          In 1992 there was this company BSDI (Berkeley Software Design, Inc), that was created by members of Berkley's CSRG group. (more: http://en.wikipedia.org/wiki/Berkeley_Software_Design -- a bit dense).

          At that time, typical AT&T UNIX license for microcomputers was around $5000 and this price did not even include compilers or any GUI. A source-code license would cost upwards of $100,000 and only if you were lucky to be "approved" by AT&T. Plus, at the time AT&T UNIX had no networking of the kind we understand today. TCP/IP was available as (yet more expensive) add-on packages and didn't really integrate with the OS, but rather applications. You would pay for the number of users accessing the system, too.

          BSDI was selling full BSD UNIX 4.3 with all the source code, GUI etc and unlimited users for $1000.

          Compare $1000 with way over $100,000 and you get the picture. AT&T got mad and tried to sue BSDI to death. They later tried to involve the UC Berkeley and finally it was found out that AT&T originated code comprises less than 10% of the BSD UNIX code and that the remaining 90% of the then current AT&T UNIX was... coming from the Berkeley's BSD project. At that time AT&T decided they would be better to negotiate (undisclosed) court case termination and withdraw all their allegations -- in return, BSDI should ship their new version based on BSD 4.4 (which they were waiting for and going to ship anyway, by that time).

          By the way, at that time Sun had their Solaris OS based on BSD. But, scared by these AT&T tactics, they decided to switch to AT&T's System V, which was an huge step back, especially in networking architecture and was dragging Sun down for years.

          Funny thing is history. Most people have no clue of it and yet other people create all sorts of legends that suits their agenda.
          danbi
      • crApple

        Apple is also destroying the patent system with frivolous suits. They even sued Piet Mondrian's descendants, claiming Apple invented the black rectangle, so all Mondrian's work must be destroyed: http://twitpic.com/a957p0
        James Mooney
      • Slow down.

        Im sure you have your opinions about being an Apple hater, but dont you think people would find your opinions a little more credible if you talked like a sane person?

        Why is it you have to talk like a loony tune. Same quality hardware as a $1000 Macbook for $150? Seriously man. Thats trash talk.

        You should get a job with Apple then, they would make you rich. You get them the same hardware at 15% of whats now their sale price, they set their profit margin to 300% on top of hardware cost and they can sell their products at only 80% of what they now charge, their profit margin increases and they no doubt improve on market share at their new lower prices.

        Somehow...I think your a liar. Or the greatest bargain hunter of all time in history.
        Cayble
        • Actual Cost .....

          If there's $100 worth of parts in any mass produced electronic device I'd like to see it. When your dealing with production runs that go into the millions, fully populated circuit boards come off the production line for pennies. Case in point and I know this to be true. Back in the day when 21 inch television sets were the thing. Walmart bought Sharp 21 color TV's in for $29 and sold them for $199, and people were falling all over themselves buying them.
          svfiat
          • And while I'm on a roll .....

            The most expensive part of anything produced is the R&D that goes into producing it. Let's say they put $10,000,000 into the R&D end. Sounds like a lot of money don't it? But amortize that over 10,000,000 units. It's what? A buck a unit, mere peanuts. Spend forty years in the manufacturing industry and then come back and tell me what you've learned about costs. Just because you read it on the net doesn't mean it's etched in stone. I saw the break down for parts costs for the iPhone and nearly fell out of my chair laughing. Yes those numbers are probably correct if you were building JUST ONE !!!!!!!!!
            svfiat
          • The price is about salary and buildings and heating and A/C...

            If you really think that any device is sold based on it's price to manufacture, you are nuts. Look in an Apple store. Look around at any company selling their own product in a retail environment (restaurants, Bose sound, clothing etc). All of them employ people, and the product profit has to cover the cost of those people earning a living and being happy.

            Overhead is the total cost of any product you buy today. Manufacturing and parts costs only start to dominate when you are using CNC machining and other robotics which are also sold with similar costs involving overhead.

            You get what you pay for. Pay for a device via mail order and you get the device. Buy something from a company with a storefront and you have lots more opportunity for support. Any Apple product you buy, with Apple Care support (and the initial warranty) will give you no more than a two day turn around on any service you need in my experience.

            If your HP, Dell, Toshiba, WuHok or some other brand laptop needs service, where do you take it? Do the people there have training on all aspects of repair? Do they have a vested interest in doing the right thing for you?

            Think about what you are paying for when you buy the $150.00 computer.
            greggwon@...
      • @ usnames Re: In my opinion Apple is worth Zero

        Regardless of what you, or I, or anyone thinks of Apple products, isn't what you wrote the point of Apple's worth? If they can sell their products for more than their actual value, that makes the company/stock value greater (tho your numbers are obviously pure hyperbole).

        Actual numbers of change in value: (1) 1 year 12/5/11 to 12/5/12 +37.09%. (2) 2 years +68.29%. (3) 5 years +177.30%.

        Disclaimer: I am not an Apple fanboy. I have never owned any Apple product or stock.
        DougFlav
      • Thanks

        Haven't read more clueless post in a while. Thanks for the laughs.

        By the way, Apple indeed seems to want to be worth zero (stocks wise), as they sit on a huge pile of (operational) cash. In reality, Apple does not need any stockholders and their stock price is highly irrelevant (for the company). But, since it fluctuates reasonably well, it's great for those Wall Street "businessmen".
        danbi
      • Pobre Apple

        One of the things I find interesting is most people don't even know what they like about Apple. They only buy Apple products because they think they are supposed to, because the media told them to. Nice comment usnames, I totally agree with you!
        DJMullen