Former Morgan Stanley brokers James Polese and Cornelius Peterson Face Ongoing Charges of Fraud

On January 31, 2018, James Polese and Cornelius “Cory” Peterson pled guilty to criminal charges including advisor fraud, bank fraud, and conspiracy.  Attorneys for the Securities and Exchange Commission have also filed a civil regulatory complaint against the pair over the same conduct.  According to the regulators’ lawyers, Peterson and Polese were engaged in widespread fraud and theft from clients.  Specifically, Peterson and Polese purportedly started a private investment in a wind farm, which they were not permitted to sell to their clients at Morgan Stanley.  Despite that prohibition, at least one Morgan Stanley client was solicited to invest in the wind farm, and actually agreed to invest.  Not only was this recommendation prohibited because it was a private investment not vetted and approved by Morgan Stanley, but the investment was unsuitable for the client, representing a far higher risk investment than the client should have been making.  Peterson and Polese also allegedly used $400,000 of one of their elderly client’s money without his knowledge or permission.  The pair apparently needed the funds to be put up as collateral for a line of credit they wanted for the very same wind farm.  

Peterson and Polese are also alleged to have outright stolen hundreds of thousands of dollars from an elderly client.  They apparently authorized wire transfers from client accounts to third party financial institutions, then would claim that the wire was accidentally too much, and request the third party financial institution send back the “overpayment” to a personal account of either Peterson or Polese. 

Finally, the pair apparently overcharged at least one of their client’s in management fees.  The client had agreed to pay a 1% annual advisory fee, but Polese apparently charged the account 1.5% instead, charging the client effectively 50% more than she should have been charged.  

Unfortunately, bad brokers like these rarely only mistreat a few of their clients.  If this many people were being defrauded, stolen from, and otherwise mistreated, it is likely there are many other affected current and former clients.  If you are or were a client of James Polese or Cory Peterson, you can contact our law firm for a free, no obligation consultation about your situation and the options you may have available to you. All communications will be kept strictly confidential, and you will not be billed in any way for a consultation.  
Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and staff with more than 100 years of combined experience in the securities industry and in securities law. For more than two decades, our firm has represented thousands of investors nationwide to recover losses.

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