Former Morgan Stanley advisor James Polese was sentenced to five years in prison for stealing $500,000 from clients to pay off credit card bills and his children's college tuition.
Some of the funds also were purportedly used for a wind farm investment, "despite the fact that it was not an investment opportunity authorized by" Morgan Stanley, according to the Department of Justice.
From 2014 to June 2017, Polese and a colleague misappropriated client funds by transferring them out of their clients’ accounts, the Justice Department says. At one point, in August 2014, the two brokers used $100,000 from a client’s account to invest in a wind farm project — an investment not authorized by their employer.
Judge Mark L. Wolf, of the U.S. District Court in Massachusetts, sentenced Polese, 52, to three years of supervised release following his prison term, the department says. Wolf also ordered Polese to pay $462,000 in restitution and a fine of $30,000.
In April, Polese pleaded guilty to one count of conspiracy and investment adviser fraud, eight counts of bank fraud and one count of aggravated identity theft.
Two months later, Polese's former colleague, ex-Morgan Stanley advisor Cornelius Peterson, 29, of Newton, Massachusetts, was sentenced to 20 months in prison and two years of supervised release for his role in the case. Peterson was also ordered to pay $462,000 in restitution.
Neither attorneys for the former advisors responded to interview requests.
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The stolen funds allegedly went to pay for college expenses and credit card bills, according to federal prosecutors.
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Morgan Stanley fired both men in June, 2017, according to FINRA BrokerCheck records.
“Through our internal supervision of the employees, the firm uncovered the fraudulent conduct by the former employees, immediately terminated their employment and referred the misconduct to regulatory and law enforcement agencies,” a Morgan Stanley spokeswoman
FINRA barred them six months later, in December, for failing to respond to the regulator’s requests for information, according to notes contained in their BrokerCheck records.
Peterson, who had a clean disciplinary record before his termination, joined Morgan Stanley in 2011, according to BrokerCheck records. Polese joined the firm in 2010 and was previously registered with UBS and Wachovia Securities, per BrokerCheck.
The SEC assisted the Justice Department in the investigating the case, according to the department.
