James Polese and Cornelius Peterson Allegedly stole $500 K from 2 clients
Two former Morgan Stanley brokers in Boston have purportedly agreed to plead guilty on fraud charges, according to the U.S. Attorney’s Office in Massachusetts. This comes after the pair was fired in June for allegations of misappropriating client funds.
Between 2014 and 2017, James Polese and Cornelius Peterson allegedly transferred $500,000 out of two client accounts without the clients’ knowledge or consent. Prosecutors allege that they used the money for a wind farm project, other investments and personal expenses.
Polese and Peterson were each charged with one count of conspiracy and investment advisor fraud and three counts of bank fraud. Polese was charged with an additional five counts of bank fraud and aggravated identity theft, according to the press release.
According to the prosecutor, the brokers allegedly withdrew $100,000 from a client account in August 2014 to invest in the wind farm project without authorization by Morgan Stanley, and in May 2015 withdrew $400,000 from another client’s account to support a letter of credit for the project, prosecutors said.
In 2017, Polese allegedly made multiples withdrawals and transfers from a client account to pay college tuition and credit card bills, among other personal items, according to the announcement.
Morgan Stanley fired Polese and Peterson in June after it reportedly discovered the fraud.
According toFINRA Brokercheck, Polese worked at Morgan Stanley since May 2010. Peterson has reportedly been with Morgan Stanley since he began his career in the financial industry in 2011.
Charges of conspiracy and investment adviser fraud each reportedly carry a possible sentence of five years in prison and a fine of $250,000 or twice the losses, according to the U.S. Attorney’s announcement.
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When brokers squander client funds, the brokerage firm that employs them may be liable for failure to supervise and responsible for investment losses.
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