Potomac Investment Advisors of McLean should be shut down and its president Willard J. Miller barred from the investment business, a Securities and Exchange Commission administrative law judge has recommended.
Miller used $135,000 of his customers' money to buy stock for himself, SEC hearing office Max O. Regensteiner decided. He said the Potomac customers got their money back but "only after Miller was caught redhanded."
Regensteiner recommended revoking the firm's registration as an investment advisor and permanently prohibiting Miller from association with an investment firm.
The SEC officials also recommended barring Miller's son, Scott Miller -- the only other officer of Potomac Investment -- from the securities business for six months, then allowing him to reapply for registration in a non-supervisory job.
The administrative law judge's recommendations for disciplining the Millers will go to the SEC commissioners for final action.
Last May the SEC was granted a permanent injunction prohibiting the Millers and their firm from violating record keeping and anti-fraud regulations.
The latest SEC decision said the elder Miller "used clients' funds over an extended period to finance his own securities transactions, in which he sustained substantial losses."
When profits were made on investments, "Miller siphoned them out," the SEC hearing examiner said.
Miller borrowed money from relatives and friends and repaid his customers after the misuse of the money was discovered, the SEC said.
Neither Miller could be reached for comment. Potomac Investment Advisors apparently has already gone out of business.