AO 9l (Rev.

I l/1

l)

Crimtnal Complainr

Uxlrpo Srarss DmrrucT CouRT

for the

District of Connecticut
United States of America
v.

--__
Case No.

DAVID MILLER

Defendantk)

CRIMINAL COMPLAINT
I, the complainant in this case, state that the following is true to the best of my knowledge and beiief. On or about the date(s)

of

October 25i 2012 Connecticut

in the county
, the defendant(s)

of

FairFeld

in the

Dist c10f

violated:

Code Section

afense Description
Wire fraud

Title 18, United States Code, Section '1343

This criminal complaint is based on these facts:

See attached Affidavit of Special Agent Jason M. Breen

Continued on the attached sheet.

JasonM.Btu@
Prinled name and title

and signed in my presence' Swom to before me

12 03/2012

Ciq urd

state:

STATE OF

CONNECTttCUT ss: BridgepOrt connecticut

December 3 20 2
AFFTDAVIT

COUNTY OF FAIRFIELD

I, .fason M. Breen, being duly sworn, hereby depose

staLe:

and

a Special Agent of the Federal Bureau of Investigation (FBf), and have been so employed for approximat.ely
am

1. f

four years. r

am

currentl-y assigned to the sguad in the FBI, s

Bridgeport Resident Agency that is responsible for investigating and prosecuLing various t.}T)es of white colrar crime. rn my role
as a Special Agent of the FBI, I have received training in
conducting criminal investigations, and r am familiar with the procedures of the FBr. As a speciar Agent of the FBr, f have

partlcipated in numerous criminal- investigations involving violations of federar criminal Iaw, including investigations invorving mail fraud and wire fraud, securities fraud,
launderj-ng, and other financial frauds.
money

2. f make this affidaviE in support of a criminal complaint seeking an arrest warranL for DAvrD MTTJLER (hereafter, "MrrrrJER")
on one counL of wire fraud, i-n violation of Titie 18, united
St.ates Code, Section 1343.

3. The informat.ion contained in this affidavit is based upon my personal- knowledge developed during the investigation, -;t.. incLuding through witness int.erviews and my revi_ew of documents,

as we}l as upon information supplied to me by other investigators

and law enforcement agents and offj-cers, records and police

report.s, as welf as other documentation such as emails and other electronic messages involving UIIJLER. Because this affidavit
included each and every fact known to me concerning this

is

being submitted for the limited purpose risted above, r have not

I have set forth only those facts I believe to be necessary t.o establish probable cause for the criminal complaint against
Due
MILLER and

investigat.ion.

for an arresL warrant to be issued thereon.

as well as the criminaL complaint

to the ongoing nature of the investigation, I respectfully

and

request Ehat this affidavit

any arresE warrant issued by the Court in t.his maEter, be

seal_ed

until further Order of this Court or oEher Court. 4.

Section 1343 of Title 18 provides in pertinent part:

scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmlts or causes to be transmitt.ed by means of wire, radio, or television communication in intersEate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shal1 be fined under this t.it1e or imprj-soned not. more t.han 20 years, or both.
Summary

Whoever, having devised or inEending to devise any

of the Fraud
an
(

5.

am

working with other law enforcement personnel on

*MfLLER,, ) and others

inwestigation

of DAVID MILLER

relating

to

fraud on MIIJLER's f ormer employer, Rochd.ale SecuriE.ies

(

LLC

"Rochda1e" )

, and on another broker-dealer in an attempL to property in connect.ion with the purchase

and

obtain

money and

sale of shares of st.ock of Apple Inc. ('.App1e"). In summary, on or about October 25, 20].2, MfLtER made material
misrepresentations t.o Rochdare and its principals and employees
Lo the effect that a Rochdale customer whose account he covered ("customer #1") had placed an order for Rochdale to buy a tot.al-

of 1,625,000 shares of App1e. representation was false.

MILLER knew

that. that

Rochdale, rather than Customer #1,

bore the risk of loss on the trade. The scheme was designed to
generate profits by trading out of the position aft.er Apple
announced

it.s earnings later that day. BuL after Apple,s

Customer #1

earnings announcement, the stock price fel-I. stock purchase,

disavowed knowledge of all but about 1,625 shares of the Apple

MIIJIJER

claimed he had made a mistake, and

Rochdale was reft hoLding over 1.G million shares of Apple stock. Rochdale ultimately traded out of that posiEion at. a loss

reported to be about $5 million. 6. Also on October 25, 20L2,

scheme whereby he made MfLLER engaged

in a separate

part of the

materiaLly false statements to

another broker-dealer ("Broker #1") causing it t.o selr 5oo,ooo shares of Appre stock. MTLLER purported Lo be a representative

of yet another entity

"Fj-rm A"

) for whose account he faIse1y

claimed to be trading. Contrary to his representations to Broker

#1,

MfLLER

did noL work for Firm A, had no relationship wit.h the

MILLER

firm, and was not authorized to trade on iEs behalf. purportedly on behalf of Firm A. Specifically,
201-2, !{ILLER f alsely represent.ed

nevertheless was able to convince Broker #1 to engage in trades on October

25,

to Broker #1 that Firm A want.ed

to self 500,000 shares of Apple stock, and he caused Broker #1 to

execuEe such

a sale order. After executing the trade, Broker

#1

realized that. I'fiLLER had no connection with Firm A, was not

authori-zed to trade on its behalf, and thus did not have 500,000

shares of Apple tro trade.

As a result, Broker #1 was left

holding a short posiEion of approximately 500,000 shares of Apple stock, which it was required to cover, and thus was placed at risk of loss depending on the direction the stock price took. fn the end, Broker #1 was abLe Lo trade out of the position at profit. 7.
scheme, MILLER caused numerous
a

In Lhe course of and in furt.herance of this fraudulent wire transmissions to be sent in

int.erstate
I.

commerce.

The Defendant The FBI' s investigation reveals that MIITLER \^ras an

insEit.ut.i-ona1 sales trader for Rochdale si-nce in or about

February 2009, working out of it.s offices in Stamford,

Connecticut. lle was regisEered with Ehe Financial Industry

Regulatory AuEhority ("FINRA") and held several }icenses to work

in the securities industry. I and other FBI agents have had occasion to speak with representatives of Rochdale, including some of its principals, as well as persons responsibre for supervising
MTLLER, and other
MTLLER.

9.

current and former Rochdale traders who worked with

Information received from these witnesses ind.icates that. Rochdale provj-des various financial services, j-ncluding engaging in agency trading on behalf of institut.ional clients, and that it does not Lrade for its own account. As a sal-es trader, Mrr-rLER was
responsible for covering the accounts of certain institutional

crients who placed trades in securities through

DocumenLs show

Rochd.are.

that

MILLER,

s compensation was based on

commissions generated by Erades he executed for crients whose

accounts he covered.

10.

MTILER

has been described by several persons at

Rochdale as someone who was a marginally profitabre trader.

witnesses have advised t.he FBr that t.hey learned that

MrtrJER

recently has been havi-ng serious personal financial difficuLties.

The Scheme to Defraud

Establishing a Trading Relationship with Broker #1 L1. The FBI has interviewed several individuals who work at Broker #1, including an employee who has known MILLER for
approximat.ely 10 years and who wilr be referred to as@".ra

Lhe principal of Broker #1, who will be referred to herein as

gknowsMII,I,ERprofessiona11yandhassocia].izedwithhim

in the past.
L2. According to the inf ormation provided
MILIJER

Uy
14

@,

, 2Ol2 and advised Ehat he would be ]eaving Rochdale to joj-n Firm a. Swas
aware of Firm A because of a mutual acquaintance he and MILLER

conEacteaffiauring the week of October

have who currently works there.

MTLLER

toldfltit.t

he wanted to

establish a trading relationship with Broker #1 on behalf of Fj-rm A, as Firm A intended to do some rebafancing of its portfoli-o at
monLh's end. Eadvised
MILLER Lo

contact Broker #1's

back

office to arrange Lo open the account on behalf of Firm e.

MILIJER

Lold$tfrat in it.s first

Firm A would open the account at the time it

engaged

trade, which he said was Firm A's typical

practice. 13. several d.ays later, according IoSMTLTJER cal-Ied and ga.refla
new phone number and

falsely Lold$ttrat

he could

no

longrer reach MTLIER at his old phone number. According tory

when MILLER showed

called from his

new phone number,

When asked

the calfer

ID

the

name

of a woman.

about this,

MfLLER

falsely advisedflthat
woman

t.he phone had previously belonged to the

IIITLLER

for

whom

he was t,aking over.

then LoIdEto

expect

Lo lrear f rom MILTER the next week.

The Apple Trade

at

Rochdale

;-.4. Public reporting shows that Apple was scheduled to release it.s quart.erly earnings on October 25, 2Ol2 af ter the
markets cfosed at 4:00 p.m.

l-5. I have reviewed instant messaging

between
MTTJTJER

communicaLions

and various other persons on october 25, 20L2.

a

They reflect

that, at, approximately 9:31 a.m. that morning, representative of Customer #1, who wil1 be referred to as
"Customer Rep. #1, " sent an instanL message to MILLER to buy

Appre stock every harf hour. specificalry,

125 ok (per 1,/2 hr) .,'
MILIJER

Lhe message read:

.,b

confirmed t.hat he would do so.

15. Records reflect that short.ly afLer receiving this order, UfLLER began trading in Apple. Over the course of the day,
MTLLER

entered muItip1e, separate orders in Rochdale, s order

in the amount of 125,000 shares. Each such order was executed over a period of time through various Lrading
management system

platforms to which Rochdale had access, includ.ing, but not limited to, a sysLem Lhat gave Rochdale direct el-ectronic access to the
New

York stock Exchange. once !{rr,LER fulry executed^

one

order for l-25,000 shares, he wouLd close out, the order and promptly enLer a new order inLo Rochdale's order management, system. The records show that. on several occasions,
MTLLER

entered orders to buy 55,000 shares of App1e, but canceLed t,hose orders a few minuEes rater and substituted an order for ]-25,000

shares. over the course of the day,

MrtrJER executed

multiple

orders to buy 125,000 shares of Appre, closing out the last order just before the market closed at 4:00 p.m.

. i{iLnesses report that during t.he eourse of the day october 25, 2012, MTLLER made certain farse and misleading
L7

on

represenEat,ions about the nature of t.he trade.

specifically,

he was

advised these persons words to the effect t.hat his customer

doing a "cover, " falsely implying that his customer was covering a short position in the stock when he knew that was not true. rn

addit,ion, a f ormer co-worker of Mrr,r,ER's reported Ehat

requested assist.ance wit.h bypassing the process that

MrLr:ER

compounded

his orders in Rochdale's trading system. This former co-worker advised that turning off Ehis feat.ure in Rochd.ale,s system wourd
have prevented others from easily seeing t.he totar number of

shares MILITER had entered into the syst.em over the course of the

day.

MfLLER

also falsely implied to certain co-workers that his

well capit.alized to take on a position of the magnitude of this trade in Apple stock. 18.
MIIJIJER

client was sufficientry

represent.ed t.hat all of the buy orders he

executed over the course of october 25, 2oL2 were done for the

account of customer #1. This was materially false because, as

MTLLER

knew, the scheme was designed so that Rochdare, rather

than customer #J-, would bear the risk of loss if Apple,s stock price dropped as a resurt of its upcoming earnings announcement.

19. The investigat.ion reveals Ehat

af

ter the cl-ose of

trading that day, further trading in Apple stock was suspended

pending Apple's earnings announcement.. The earnings announcement
showed that. Apple had not. met earnings expectations

for the

quarter.

Once

trading resumed in the aft.er-hours market, records

Eo

reflect t.hat. Apple's stock price began to decline. According the large order UILLER had executed, the customer disavowed

Rochdale personnel, when t.hey contacLed Customer #1 to confi-rm

any

knowledge of all but a smaIl portion of the trade (approximatel-y

1,625 shares). As a result, Rochdale was 1eft. holding a position o.f approximat.ely 1,523,3'75 shares of Apple stock.
Rochdale
Lhe

personnel have advised that it thereafter traded ouL of

position as quickly as possible, resulLing in losses of

approximately $5 mi1Iion.
The Apple Trade

at Broker

#1

20. While he was orchestraEj-ng the

October 25, 20L2,
MIIJIJER

scheme

at Rochdale sel-l

on

also was executing a separate part of

#J500,000

the

scheme

to short Apple stock by having Broker

shares of Apple. The investigation reveals that MILLER did this

as a partial hedge againsE the risk present.ed by the buy order

executed at Rochdale.

2l-. According Lo information supplied by wit.nesses at

Broker #1,
MIIJIJER

conLacted Broker #L's tradj-ng desk the

afternoon of October 25, 20L2, and placed an order to seII

of Apple stock. At this time, MIITIJER continued wiLh his bogus story that he was working for Fj-rm A and t.rading for its account ryand the trader at Broker #1, who will be
500,000 shares

referred Lo asE
MIIJITER

confirmed with

MTLLTER

the size of t,he order.

also falsely advised them thaE he was selling a long

aE

position, rat.her than shorting the stock. The witnesses

Broker #1 have advised that, they repeatedly asked MILLER for

contact information within Firm A's back office so t.hat the

necessary paperwork to open the account could be complet.ed.
MILLER made numerous

materially false staE,ements to Broker #1's

Among

personnel t.hat. were designed t.o a11ay t.heir growing concerns

about the need to open Ehe account wit.h Flrm A.

other

things,

MILLER

supplied Broker #1 with names of non-existent

persons at Firm A who, according to him, would be sett.ing up the

accounts.

22. According toryafter

Broker #1 had executed Lhe safe

order on behalf of MILLER, believing it to be for t.he accounE of

Fi-rm

A, MftLER instructed Broker #1's personnel to leave the 23. As noted above, publicly available documents
show

trrade ti-cket open as he might wanE to trade further.

that

after App1e announced its earnings on October 25, 2012, and trading sEarted again, the stock price began fal-Iing. to@atthispoint,Broker#].ca11edMILLERagain,and he instructed Broker #1 to sLart buyi-ng back t.he st.ock with
10

According

timit of $600 per share. Broker #1 personnel then insisted conLact informatj-on for Firm A's back office personnel.
According to Broker #1's personnel,
names
MILIJER

on

ultimat.ely provided
back
no

of two persons who supposedly worked in Firm A's

office, but when Broker #1 contacted Firm A, it learned that

one by those names worked there.

As Broker #1 became more and

more suspicious, !{ILLER contj-nued to represenE fa}seIy EhaE he

worked for Firm A.

24. According to Broker #1 personnel, Broker #1 eventually

confirmed that IfiLL,ER had no connection with Firm A and was
noE

authorized to trade in its behalf.

MILIJER

stopped communicat.ing

with groker #1 the evening of october 25, 20a2, and Broker #1 was left holding a short position in Apple stock of approximately
500, OOO

shares (1ess the relatively

smaIl number of shares it

As a result of

was

able Lo buy back in after-hours trading).

UfLLER's actions, Broker #l- was at risk of losing a substantial

amount should t.he stock price increase before it covered the

position. actually

Ultimately, Broker #1 was able Eo trade out of the

made

posiLion the next day, and because the stock price dropped, iE a profit.
MILITER

25. The FBI has interviewed the Chief Financial Officer of

Firm A, who has confirmed that

did not. work for Firm A,

did not have a job offer with Firm A, and was never authorized to trade on its behalf. The FBI has also confirmed with the CFO of

Firm A t.haL the contacL names

who supposedly worked

MIIJIJER

gave to Broker #1 as persons

in Firm A,s back office were phony.

The Execution of the Seheme

25. In the course of and in furtherance of the scheme identified above, MTLLER sent and caused to be sent numerous wire
t.ransmissi-ons in interstate commerce.

27. On or about October 25, 20L2, for the purpose of

executing the above scheme and artifice
and attempting to do so,

in the District

of connecEicut and ersewhere, DAvrD Mrr.LER, Lhe

defendant. herein, caused to be t,ransmitted, by means of wire communications in interstate and foreign commerce, writings,

signs, signals, pictures and sounds in furtherance of such

and artifice,

scheme

namely, mulLiple trade execution orders sent

New

elect,ronically from Stamford, Connecticut, to

york,

New york,
Lhe

for the purpose of buying Apple stock, purporLedly for

loss.

account of Cust.omer #1, but wit.h Rochdale bearing the risk of

28. Based on the forgoing, there is probabl_e cause Eo believe, and f do believe, that
DAVID MILLER

has commit.ted wire

fraud, in violation of 18 U.S.C. S 1343. Accordingly, I request that an arrest warrant issue for the arrest of
such charges.
DAVID MTLLER on

29. As noted above, the cri-minal investigation is ongoing. Accordingly, t.Lre undersigned requests that this Affidavit and the
12

accompanying Complaint, as welJ as any Arrest Warrant, be sealed

in t.he interest of avoiding compromising the ongoing investigation, until furEher order of t.he Court.

ASON M. BREEN BUREAU OF INVESTIGATION

Subscribed and sworn Lo before me on the 3rd day of 2012, at Bridgeport, Connecti ut.

December

UNITED

ISTRATE

13