Court documents say that for nearly a decade, Russell Joseph Mutter ran a Ponzi scheme that preyed on a dozen victims and led to more than $3.3 million being coerced out of their accounts and into his pockets.
Most of the victims were elderly, according to investigators. One of the victims was the man who helped bring him into the world.
Last week, a multi-year investigation into Mutter’s deception came to an end when the 52-year-old Clemmons, North Carolina man pleaded guilty to 41 counts of investment advisor fraud, financial exploitation of an older adult and obtaining property by false pretenses.
According to the
For sentencing purposes, Hall consolidated Mutter’s lengthy list of charges into three Class C felony counts. He was sentenced to a minimum of 65 months and a maximum of 90 months for each of those three counts, with those sentences to be served consecutively.
Mutter will get credit for the time he has served since his arrest, officials said.
“Mr. Mutter utterly disregarded his fiduciary responsibility to act in his clients’ best interests,” North Carolina Secretary of State Elaine Marshall said in a statement. “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.”
Investigators say Mutter targeted victims in Forsyth County and outside of North Carolina between January 2009 and December 2017. According to FINRA BrokerCheck, the con began as Mutter ended his second stint as a rep for Charles Schwab.
Records show that Mutter was associated with the firm from 1993 to 1997 and again from 2000 to 2009. He was permanently barred from the industry in April 2018.
Court documents said Mutter removed funds from his clients’ accounts without their authorization, invested their money in high risk securities without their knowledge and misused client funds for his own personal gain.
When these speculative investments failed, Mutter sought to hide the losses with fraudulent account statements.
The investigation into Mutter’s activity began in January 2018 when an agent with the North Carolina Secretary of State’s Securities Division got a call from a colleague with the State Bureau of Investigation about possible investor fraud.
Along with an official from the U.S. Postal Inspection Service, the investors contacted a man who invested $400,000 with Mutter.
When the investor tried to move his money to an Edward Jones account, he learned that he had very little left.
A search warrant executed on Mutter’s home led to an interview with the suspect. According to The Winston-Salem Journal, that was when Mutter admitted that he had defrauded the investor and another client.
As the investigation continued, officials were able to track down at least 12 different victims, including Mutter’s own father.
Another victim was a woman who retired in 2001 and suffered a stroke in 2005. She said Mutter knew she couldn’t work and still took advantage of her, defrauding her of most of the lump sum she received when she retired.
Court documents said Mutter used the stolen funds to pay for his children’s sports camps, hotels and other living expenses.
But the classic elements of affinity fraud are present throughout the ordeal, with Mutter preying on older individuals in the county he calls home by forging deep connections with them.
“We see this all the time. But the commonality, of course, is having a basis for the trust and confidence to be placed in the particular financial representative which can cause an investor to be blinded, question less and trust more, even to the point where they ignore red flags and don't react as timely as they typically would if there was something that smells fishy,” he said.
Chase said cases of affinity fraud, regardless of the form they take, are particularly effective and so vicious because of the combination of financial and emotional harm.
“What I found notable about this was the length of time in which he perpetrated this game,” he said. “Ponzi schemes are so dangerous because up until the end, investors get exactly what they bargained for. And interestingly enough, he used what sometimes the fraudsters do and can be very effective … he created phony account statements.”
Chase said this case and others like it are able to persist for years because the orchestrators of the con work to create layers of confidence lulling their targets, while also putting barriers between clients and the truth.
At Mutter’s sentencing, defense attorney Chris Beechler said his client “started off with good intentions” and “wanted to make money for his clients” while supporting his family, the
Attempts to reach Mutter’s attorney for comment were unsuccessful.
