Boston-Area Investment Advisers Charged with Fraud

BOSTON – Two Boston-area investment advisors were charged today in federal court in Boston with using their clients’ funds to make their own investments and to pay personal expenses.

James Polese, 51, of Wenham, and Cornelius Peterson, 28, of Newton, were each charged with one count of conspiracy and investment adviser fraud and thee counts of bank fraud. Polese was also charged with an additional five counts of bank fraud and one count of aggravated identity theft.  Both men have agree to plead guilty.  

As alleged in court documents, from approximately 2014 to June 2017, Polese and Peterson misappropriated approximately half a million dollars from their clients by transferring funds out of their clients’ accounts without their knowledge or consent. Specifically, On Aug. 20, 2014, Polese and Peterson used $100,000 from a client’s account to invest in a wind farm project although it was not an investment opportunity authorized by their company. On May 15, 2015, Polese and Peterson used $400,000 from another client’s account to back a letter of credit in support of the wind farm project. On multiple occasions in 2017, Polese caused funds to be transfered from a client’s account to pay personal expenses, including college tuition payments and credit card bills. Polese and Peterson were both terminated from the company in June 2017.

The charges of conspiracy and investment adviser fraud each provide for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,00 or twice the gross gain or loss, whichever is greater. The charge of bank fraud provides for a sentence of no greater than 30 years in prison, five years of supervised release and a fine of $250,00 or twice the gross gain or loss, whichever is greater. The charge of aggravated identity theft provides for a mandatory consecutive term of two years in prison. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Securities & Exchange Commission also provided valuable assistance with the investigation. Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Economic Crimes Unit is prosecuting the case.

The details contained in the charging document are allegations.  The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.