James Polese Sentenced to 5 Years

On Tuesday, an ex-Morgan Stanley adviser was sentenced to jail for five years after he confessed to misappropriating client funds to invest in a wind farm project. He also admitted to paying his children’s tuition fees and taking care of other personal expenses with the funds.


52-year-old James Polese was given the sentence in Boston by Mark Wolf who is a U.S. District Judge. Judge Wolf said he couldn’t fathom why the investment adviser would be so greedy and selfish to engage in such fraud despite his successful life.

In the U.S. v. Polese case, No. 18-cr-10028 in U.S. District Court, District of Massachusetts, Wolf chided the accused of his “dumb” attitude which had “inflicted harm on the people” he cared for.

This recent development came at a time when Cornelius Peterson who previously worked at the US financial firm and with Polese at a point in time was jailed for 20 months in June for partaking in the same program.

While pleading guilty to the various charges of investment and bank fraud labeled against him, Polese apologized to his victims and Morgan Stanley, which employed him as a Boston-based adviser.

He said he was sorry for “tarnishing their name” through his illicit behaviors.

The judge also ordered both Polese and Peterson to pay a combined fine of $30,000 and $462,000 in restitution in addition to their prison sentence.

In 2014, the court confirmed that both accused persons were alleged to have illegally transferred $100,000 from a Morgan Stanley client’s account without his permission for the purpose of investing in a private equity fund generated to execute a wind farm project.

According to prosecutors, while Peterson was part of the board of directors for the equity fund, Polese personally invested in the wind farm project, which required extra funding at the time.

In 2015, the two men diverted $400,000 from the bank account of Ralph Bates, an 87-year-old client of Morgan Stanley to back a credit letter for the project and as a result, Bates incurred about $12,000 in fees according to the prosecuting counsel.

Lars Soreide Highest Ethical Standard Award 2018

Lars Soreide Highest Ethical Standard Award 2018

They further went ahead to transfer $350,000 from Bates’ account without his approval in 2016 which the court claimed was spent on Polese’s personal expenses and another real estate investment. While in 2017, prosecutors said that Polese used another $93,000 from Bates’ account to pay for the college tuition of his two kids’ and offset his personal credit card bills.

On Tuesday, Bates who is a philanthropist said in court that Polese had ripped him off big time. After Morgan Stanley discovered the gross misconduct perpetrated by Polese and Peterson, their appointments were terminated immediately in June 2017.