After misappropriating the $350,000, the accused allegedly attempted to conceal their theft by telling the client’s representatives that the entire amount was in “a real estate investment.” According to the complaint, Polese and Peterson each received approximately $7,300 in distributions from their investments, whose principal remains in the private real estate funds.

The SEC further alleges that in the spring of 2017, Polese took just over $93,000 in unauthorized automated clearinghouse payments from the elderly client’s loan account. In at least one instance, the funds were used to overpay a college tuition bill by $20,000, according to the complaint, which Polese had refunded into his personal bank account.

Between October 2014 and May 2017, the accused allegedly defrauded a third client by misrepresenting their advisory fees. While the client was told that a 1 percent advisory fee would be withdrawn from her account, Polese arranged for 1.5 percent of advisory fees to be withdrawn from the account on a periodic basis, resulting in excessive fee payments of approximately $23,000.

Morgan Stanley discovered Polese and Peterson’s alleged behavior in May 2015 and placed both men on administrative leave. In an alleged attempt to cover up their behavior, the SEC claims that Polese and Peterson went to the elderly client’s house to convinve him to sign a false statement approving and authorizing payments from his accounts. Shortly after the client refused to sign the purportedly false statement, both Polese and Peterson were terminated.

In September 2017, as a result of the allegations that led to the criminal charges, Finra barred both Petersen and Polese from any association with its membership. 

Charging Polese and Peterson with fraud and violations of the Advisers Act, the SEC in its complaint seeks payment of disgorgement with interest and civil penalties.

First « 1 2 » Next