Ex-Morgan Stanley FA Gets Two Years in Prison
A federal judge in Oregon has sentenced a former Morgan Stanley financial advisor to two years in federal prison and three years of supervised release for his role in defrauding a recently widowed client, according to a statement from the U.S. Attorney’s Office for the District of Oregon.
In February 2011, Gregory Walsh, then an assistant vice president at Morgan Stanley, conspired with his brother Geoffrey Walsh, an executive at the Bank of Oswego, to convince one of his Morgan Stanley clients to invest $1.1 million in real estate in California, according to court documents cited by the Attorney’s Office.
Contrary to what they had promised the client, Geoffrey Walsh put the properties in the name of his business, failed to furnish her with loan or title papers and then sold off some of the properties without her authorization to cover his own personal expenses, according to the statement.
Gregory Walsh, upon finding out about the sale, failed to tell his client, the Attorney’s Office says. In 2013, Gregory Walsh convinced the same client to loan another $2 million for a real estate deal in Oregon; this time, Geoffrey Walsh put it in a trust account controlled by his lawyer and then used the bulk of the money to cover a line of credit at the Bank of Oswego for his own benefit and the rest of the funds to settle other financial obligations, according to the statement. During the whole period, Gregory Walsh apparently lied to his client about the loans, his brother’s financial and legal predicaments and his own role in the transactions, the Attorney’s Office says.
Walsh also apparently used $2 million of the same client’s money to invest in a cannabis company, which she never authorized, according to the statement. The company eventually returned the money following a meeting with the Federal Bureau of Investigation, but Walsh walked away with $18,000 in commissions on this and another transaction, the Attorney’s Office says.
Last month Geoffrey Walsh pleaded guilty to conspiracy and wire fraud and received a 30-month federal prison sentence followed by a three-year supervised release, according to the statement.
Morgan Stanley let Gregory Walsh voluntarily resign in 2013 over allegations of undisclosed outside investments he recommended to a client and for failing to be available for an internal review, and Finra barred him the same year for failing to respond to its request for information about his termination, according to his BrokerCheck profile.
Walsh had spent his entire financial services career with Morgan Stanley, which he had joined in 2000, according to BrokerCheck. And while his record is clear of customer disputes other than the one related to the 2011 to 2013 period, Walsh has a felony charge dating back to 1993, when he was attending the University of Arizona, involving one count of forgery and one count of theft by misrepresentation of an amount greater than $750 and less than $1500, according to BrokerCheck. All counts were dismissed with prejudice after Walsh successfully completed an adult diversion program, according to his profile.
“I successfully completed the program short of the time provided and was able to begin my life over,” Walsh says in his comment on the criminal disposition on BrokerCheck. “The event drastically changed my views and how I approach life.”