A former Morgan Stanley investment advisor was sentenced to 20 months in prison for stealing clients’ money, in part to make his own investment, the U.S. Attorney’s Office for the District of Massachusetts announced Thursday.
In addition to the time in prison, Cornelius Peterson, 29, is subject to two years of supervised release and was ordered to pay $462,000 in restitution to clients by a federal court judge in Boston. He pled guilty earlier to conspiracy, investment advisor fraud and bank fraud.
Another former Morgan Stanley advisor, James Polese, 51, of Wenham, Mass., also pled guilty to conspiracy, investment advisor fraud, bank fraud and aggravated identity theft in the same scheme and is scheduled for sentencing in August.
From 2014 to June 2017, Polese and Peterson misappropriated approximately $500,000 from their clients by transferring funds out of their clients’ accounts without their knowledge, the U.S. attorney said.
The offenses included transferring $500,000 from two clients’ accounts to invest in a wind farm project, despite the fact that it was not authorized by their company. The money was also used to back a letter of credit for the wind farm.
Polese also used some of the clients’ money to pay college tuition payments and credit card bills. Both men were fired from Morgan Stanley in 2017. The Securities and Exchange Commission has filed civil complaints against both men.