Former Merrill Lynch and Smith Barney Investment Adviser Receives Second Conviction for Defrauding Clients
BOSTON—A former Merrill Lynch and Smith Barney investment adviser already serving a federal prison term for investment fraud pleaded guilty on Tuesday, April 28, 2015 to additional fraud charges in connection with a nearly two-decade-long scheme to defraud clients of hundreds of thousands of dollars.
Jane E. O’Brien, 62, of Needham, pleaded guilty to three counts of mail fraud, two counts of wire fraud, and two counts of investment adviser fraud. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for Aug. 6, 2015.
As alleged in the indictment, between 1995 and 2013, O’Brien defrauded several clients for whom she provided investment advisory services. As part of the scheme, O’Brien misappropriated funds entrusted to her through a variety of means, including persuading clients to withdraw money from their bank and brokerage accounts and give the money to her to invest on their behalf. After gaining control of her clients’ money, however, O’Brien made no such investments. Instead, she used the misappropriated client funds for a variety of improper purposes, including paying personal expenses, paying purported investment returns, or repaying personal loans to other clients. Finally, in order to perpetuate her fraud and conceal it from her clients, O’Brien made false statements and misrepresentations to clients, including by making lulling payments to clients and otherwise providing them with false assurances of their financial security.
Specifically, O’Brien caused one client to empty her Smith Barney brokerage account, then to borrow an additional $1 million on her home and give much of that money to O’Brien to invest. With respect to a second client, O’Brien caused the client to empty her Merrill Lynch brokerage account and give the proceeds to O’Brien, purportedly to invest in a Hollywood movie called “Crooked Arrows.” With respect to a third client, O’Brien caused the client to withdraw $190,000 from her bank account and give the proceeds to O’Brien to invest. O’Brien made none of the investments she promised.
O’Brien was previously convicted of securities fraud after pleading guilty in December 2012 to a scheme to defraud yet another client of $240,000 by selling her a security that did not exist. She is currently serving a sentence of 33 months in prison.
The charges of mail and wire fraud provide for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of investment adviser fraud provides for a sentence of no greater than five years in prison, three years of supervised release, and a $10,000 fine. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Stephen E. Frank, Deputy Chief of Ortiz’s Economic Crimes Unit.