Federal prosecutors indicted former Merrill Lynch broker Jane O'Brien, alleging she misappropriated $1.3 million in client funds during the course of an 18-year Ponzi scheme that began in June 1995 and ran through April 2013.
The U.S. Attorney's Office for the District of Massachusetts charged O'Brien with multiple counts of wire fraud, mail fraud and investment adviser fraud related to the misappropriated funds, alleging that O'Brien perpetrated her scheme by making materially false statements and misrepresentations to multiple clients in order to convince them to invest in private placements.
However, prosecutors allege that instead of investing client funds in private placements, O'Brien used some of the money for personal expenses and effected her Ponzi scheme by using the remainder to pay back other investors in returns, interest or repayment of personal loans.
To illustrate O'Brien's alleged fraudulent ventures, prosecutors provided an example of a client O'Brien purportedly conned.
Attorneys state that O'Brien persuaded one client to invest in "Crooked Arrows," a 2012 Hollywood sports drama that grossed $1.8 million. O'Brien allegedly convinced her client to invest by promising a 25% return. In reality, prosecutors say, O'Brien used the funds for personal expenses and to pay out other, earlier investors.
O'Brien previously pleaded guilty to securities fraud charges related to soliciting investments for a security that never existed and is currently serving a 33-month sentence at a federal women's prison in West Virginia.
Merrill Lynch commented by stating that the firm has compensated an investor affected by O'Brien's alleged criminal misconduct.
In October 2013, Massachusetts fined Merrill Lynch $500,000 for failing to stop financial adviser O'Brien from "borrowing" over $2 million from client funds for unauthorized and inappropriate personal use.
At the time of that decision, Massachusetts discovered that Merrill Lynch failed to reach out to clients for nearly two years after it first became aware of O'Brien's activities. State regulators charged the firm with failure to supervise O'Brien.
FINRA, meanwhile, barred O'Brien from the securities industry in March 2013 for similar charges of "borrowing" $3 million from clients without permission and converting the millions for personal use.
If you have invested with Jane E. O'Brien or a rogue broker, financial adviser or firm whose improper "borrowing" practices—including tricking investors into loaning money or even stealing from clients—supervisory failures, or criminal misconduct, such as Ponzi schemes and other nefarious financial malfeasance, has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
News: Former Merrill Lynch broker accused of 18-year Ponzi scheme (InvestmentNews)