Ex-Morgan Stanley Broker in Boston Sentenced to Five Years for Client Theft
A federal judge on Tuesday sentenced former Morgan Stanley Boston broker James Polese to prison for fraud and identity theft, satisfying a longtime client who he had victimized.
“He got five years, and that’s good enough for me,” said Ralph Bates, an octogenarian philanthropist who noted that Morgan Stanley had reimbursed him hundreds of thousands of dollars.
Judge Mark L. Wolf also ordered Polese, 52, to pay $462,000 in restitution to the two victims the government accused him of defrauding between 2014 and 2017, as well as a $30,000 fine.
Bates, who lives in Beverly, Mass., and remains a Morgan Stanley client, said he also has been told by his accountant that he will soon receive a check for $50,000 from Polese for money he had lent directly to the former broker.
Polese has sufficient assets to make restitution, according to a sentencing memorandum he submitted.
Morgan Stanley won an arbitration award of $841,380 from Polese in June for balances on promissory notes. Another arbitrator in April ordered him to pay the firm $372,000, subject to offset by any amount he agreed to pay to customers in court pleadings.
Polese, who faced a maximum sentence of 30 years in prison, did not return a call for comment left on his voicemail as to whether he has repaid Morgan Stanley or has the resources to do so.
Mark D. Smith, a lawyer who represented Polese in the criminal case in U.S. District Court of Massachusetts, did not return a call for comment.
Morgan Stanley fired Polese and his junior partner, Cornelius Peterson, from its 53 State Street branch in Boston in June 2017. Peterson was sentenced to 20 months in prison in June.
A spokeswoman for Morgan Stanley declined comment on Polese’s sentencing, but repeated a statement the firm issued in January expressing its strong commitment to protecting client assets and acting “quickly when fraudulent activity is uncovered.”
The Securities and Exchange Commission in January filed a civil fraud suit against Polese and Peterson, accusing them of stealing nearly $450,000 from one client and using it for investments to support a wind farm project they were backing. Polese also used client money to pay credit card and college tuition expenses for his children, charged advisory fees to a client that were 50% higher than he had promised and borrowed money from a client on unfavorable terms to the lender, according to the SEC complaint.
The Financial Industry Regulatory Authority last December barred Polese from working in the securities industry. Similar bars have been imposed against Peterson by Finra and the SEC.
Polese worked at four firms over his 21-year career as a broker, beginning with Prudential Securities in 1995. He also worked at Pru successor firm Wachovia Securities before joining UBS in 2004 for an almost six-year stint. He left for Morgan Stanley in May 2010, according to his BrokerCheck history.