Ex-Morgan Stanley Advisor Gets 20 Months in the Slammer
A federal judge in Boston sentenced a former Morgan Stanley advisor accused of misusing hundreds of thousands of dollars of client money to 20 months in prison, Reuters writes.
Cornelius Peterson pleaded guilty in February to fraud and conspiracy related to unauthorized investments in a wind farm. Prosecutors say that along with his Morgan Stanley boss James Polese, Peterson did an unauthorized transfer of $100,000 from one client’s account into a wind farm project in 2014, and in 2015 used $400,000 from another client’s account to back a letter of credit supporting the project, according to Reuters.
In 2016, the pair transferred a further $350,000 from the same client’s account for a real estate investment and to cover Polese’s and his family’s personal expenses, according to court papers cited by Reuters.
Polese pleaded guilty to related charges in April and is scheduled for sentencing in August.
Peterson remained silent during his sentencing on Thursday, says Reuters. In a letter to U.S. District Judge Nathaniel Gorton, he wrote he was “ashamed and remorseful,” according to the news wire.
“You were someone who didn’t need the money,” Gorton said, according to Reuters’ account. “Well, today you find that fraud and financial crimes that hurt people don’t go unpunished.”
Peterson’s lawyer has argued that it was Polese who orchestrated the fraud in which Peterson only had a minor role, according to Reuters. In addition to serving time, Peterson and Polese must pay back $462,000 in restitution, Reuters writes.
Morgan Stanley has said that it fired Polese and Peterson in June 2017, as soon as it discovered their fraud, says Reuters. In April, a Finra panel ordered Polese to pay Morgan Stanley $372,000.