Two former Morgan Stanley brokers from the Boston area, James Polese and Cornelius Peterson, are facing federal fraud charges for using client money for personal investments and expenses. In a parallel action, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against the pair in the same court.
Advisors Charged with Bank Fraud, Conspiracy and Theft
James Polese, 51, of Wenham, and Cornelius Peterson, 28, of Newton, Massachusetts, each was charged with one count of conspiracy, one count of investment adviser fraud, and three counts of bank fraud. Polese was charged with another five counts of bank fraud and one count of aggravated identity theft. Both former brokers have agreed to plead guilty.
SEC Files Enforcement Action
The SEC also filed an enforcement action against Polese and Peterson. The complaint accuses the men of violating various sections of the Securities Exchange Act and the Advisers Act. The SEC seeks penalties and disgorgement from “ill-gotten gains”.
Advisors Terminated from Morgan Stanley
Records show that Polese and Peterson were terminated from Morgan Stanley the previous June over allegations that they misappropriated client assets. Between 2014 and 2017, they allegedly used close to a million dollars of client money without prior consent.
Of the misused funds, $100,000 from one client’s account went to fund personal investments in a wind farm project. The two also used $400,000 without consent from the account of a second client to back a letter of credit in support of the wind farm. From that same client, Polese and Peterson used $350,000 for a real estate investment. Polese used an additional $93,000 for credit card bills and his children’s college tuition.
Are You a Victim of Investment Fraud?
If you were a victim of James Polese or Cornelius Peterson or some other stockbroker fraud, contact a qualified investment fraud attorney today.
Call an Investment Fraud Attorney Today
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.