Newton Investment Adviser Embezzled Half A Million Dollars: Court

NEWTON, MA — A Newton investment adviser has agreed to plead guilty in federal court in Boston on charges he used clients’ funds to make his own investments and to pay personal expenses, the U.S. Attorney’s Massachusetts District office announced today.

Cornelius Peterson, 28, of Newton and James Polese, 51, of Wenham, were each charged today 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 agreed to plead guilty but could still face more than 30 years in prison.

Between 2014 and 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, according to court documents.

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 transferred from a client’s account to pay personal expenses, including college tuition payments and credit card bills.

Polese and Peterson were both fired from Morgan Stanley Wealth Management in June 2017, according to . Peterson started working at Morgan Stanley in 2011.

The Financial Industry Regulatory Authority listed both as barred from acting as a broker or otherwise associating with a broker-dealer firm.

The men face up to five years in prison for conspiracy and investment adviser fraud, three years of supervised release and a fine of $250,00 or twice the gross gain or loss, whichever is more. For bank fraud they face up to 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. And the charge of aggravated identity theft comes with a mandatory consecutive term of two years in prison.

In 2010 Peterson co-founded Intellivest, a Boston based company currently developing an analytics platform for use by hedge funds that makes use of artificial intelligence. It was accepted into MIT’s Venture Mentoring Service to aid in implementing its initiatives.

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.

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Photo by Jenna Fisher