- Though he faces serious charges, Craig Carton of Boomer and Carton appears to have no prior record and likely won't get a 45-year sentence.
Did WFAN morning co-host Craig Carton steal $5.6 million from would-be investors? Did the 48-year-old voice behind the Boomer and Carton Show moonlight as a fraudster, leading innocent persons into believing that they were investing in a concert ticker broker business that didn’t exist? And did Carton then divert ill-gotten money into a Ponzi scheme, which in turn helped him pay off gambling debts?
These and other questions follow Wednesday’s federal charging of Carton with securities fraud, wire fraud and conspiracy. Carton was arrested at his New York home. As reported by SI’s Jack Dickey, New York-based hedge fund Brigade Capital Management was a key target of Carton’s alleged scheme. The fund may have lost $4.6 million in transactions connected to Carton.
According to Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, Carton and two other men “induced investors” into believing that Carton’s industry access to concert tickets allowed him to organize a discount ticketing firm. The funds, prosecutors insist, were then used to “pay personal debts and repay prior investors as part of a Ponzi-like scheme.” As part of this alleged scheme, “phony contracts” were deployed as a ruse to give the pretense of legitimacy.
Federal authorities cite records of numerous bank transactions involving Carton, including wire transfers to a casino. These transactions would have been critical in a Ponzi scheme. Such a scheme typically involves the schemer persuading new investors to fund what seems like a legitimate enterprise. The schemer then retains those funds or uses them to replenish accounts of existing investors who were previously defrauded. When the scheme invariably ends, the most recent investors are often hurt the most. Their money is gone and no additional investors will be joining to replenish the lost funds.
Given law enforcement’s intimate knowledge of Carton’s financial dealings and the government’s possession of texts messages sent by Carton and other electronic evidence, it stands to reason that key witnesses may already be cooperating with the government. Some witnesses, in fact, may have cut deals with the government to avoid being charged. If so, Carton would have a great deal to worry about. Usually deals with the government require the cooperator to testify against the defendant. Notably, the Department of Justice’s press release refers to an unnamed “individual” who was allegedly part of Carton’s plot.
Carton isn’t the only defendant in the case. Alleged co-conspirator Michael Wright was also charged. It will bear watching whether the “prisoner’s dilemma” emerges as a factor. Carton and Wright may conclude that if each remains silent, the government would have a harder time convicting either. Yet each may also fear that if the other decides to “talk,” the silent one will face the harshest penalty. This sometimes leads to each co-conspirator unwittingly talking with the prosecutors and dooming the other.
Carton faces three very serious charges. Securities fraud refers generally to deceptive practices concerning the value of a company. It can consist of false statements and misleading representations about a company and its financial instruments. Wire fraud, in contrast, consists of using wire communications that cross state boundaries to unlawfully defraud others. Securities fraud and wire fraud each carry a maximum sentence of 20 years in prison. For its part, conspiracy centers on defendants who share a plan and who undertake overt acts to further a criminal enterprise. A conviction on conspiracy carries a maximum of 5 years in prison.
Given that Carton, who reportedly has been suspended by CBS Radio, appears to lack a criminal record, he would likely not be sentenced to anywhere near the maximum—45 years in prison if the sentences were run consecutively—if convicted on the three counts. Still, he would be looking at spending time in prison. The threat of a long prison sentence, and the prospect that other witnesses have already reached plea deals, could motivate Carton to weigh the possibility of cutting his own deal.
Along those lines, it remains to be seen how well Carton can formulate a defense. One factor on his side is that the government must prove each charge beyond a reasonable doubt. It will be a high burden. Carton might contend that he lacked the requisite intent to further a plot to defraud. He might also claim that he never possessed the necessary authority to authorize any questionable business dealings. These types of narratives may be able to weaken the government’s case.
Likewise, Carton might contend that he was duped himself. To that end, Carton could stress that he’s only a sports radio host, not a seasoned financial wheeler and dealer. Any wrongful conduct on his part, Carton might assert, reflected his ignorance in business rather than a mastermind in crime. We’ll see if these or any other defenses stick.
In addition to criminal charges, Carton also faces a civil lawsuit filed by the Securities and Exchange Commission in the U.S. District for the Southern District of New York. The SEC has sued Carton and seven other defendants for securities fraud.
SI.com will keep you updated on Carton’s case.
Michael McCann is SI’s legal analyst. He is also an attorney and the Associate Dean for Academic Affairs at the University of New Hampshire School of Law.