A 46-year-old Long Beach man convicted in 2015 of defrauding investors was sentenced to eight more years in prison this week after pleading guilty to running a $1.4 million Ponzi scheme while behind bars, according to the United States Attorney’s Office for the Northern District of Texas.
In 2017, Michael David Carroll was in the middle of a nearly six-year sentence for the prior fraud conviction when he began pitching new ideas to investors, promising he would put their money into legitimate business ventures, according to prosecutors.
Instead, Carroll used the funds from new investors to pay off older ones, giving those investors the illusion that they were making a profit, prosecutors said.
“The defendant deceived dozens of investors to preserve his complex financial scheme and fund a lavish lifestyle. Many Ponzi scheme victims do not recover their investment and are often left financially devastated,” said FBI Dallas Special Agent in Charge Matthew DeSarno.
Just a few years prior to his 2014 conviction, Carroll was living a lavish lifestyle in Irving, Texas, while working as the agent, director and incorporator of a business called The Salad Bowl Franchise Corporation, according to the U.S. Attorney’s Office. Using the corporation as a guise, Carroll would persuade investors—under false pretenses—to purchase a Salad Bowl franchise from his chain of restaurants, prosecutors said.
He would then use that money to fund his personal use of private jet services, luxury vehicles, expensive dinners and suites at NFL games, according to the U.S. Attorney’s Office. When Carroll was caught, he pleaded guilty and was sentenced to 70-months in a Texas prison and ordered to pay $1.4 million in restitution to his victims, prosecutors said. He also faced an additional 10 years in prison and a $250,000 fine for failing to report to federal prison to serve his 70-month sentence, although he willingly surrendered soon after being made aware that the FBI had issued a warrant for his arrest.
While incarcerated at a federal correctional institution in Seagoville, Texas, Carroll once again began reaching out to investors with promises of loans with return rates of up to 40 to 50%, claiming each short-term loan was backed by a bank, and therefore, was a promising investment, prosecutors said.
“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,” the U.S. Attorney’s Office said in a statement.
Through his efforts, he obtained at least $1.4 million from investors who transferred money into accounts associated with Carroll’s businesses, prosecutors said. He pleaded guilty in November 2021 to wire fraud and was sentenced to eight more years in prison Tuesday by U.S. District Judge David C. Godbey, who also ordered Carroll to once again pay roughly $1.4 million to the victims he defrauded, according to the U.S. Attorney’s office.
“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,” said U.S. Attorney Chad Meacham. “The U.S. Attorney’s Office and the FBI are determined to hold accountable those who defraud honest investors.”
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