DEBRA W. YANG
United States Attorney
Central District of California
Thom Mrozek, Public Affairs Officer
February 11, 2005
FORMER ORANGE COUNTY STOCKBROKER PLEADS GUILTY
TO BILKING CLIENTS IN INVESTMENT FRAUD SCHEME
A Newport Beach resident who formerly worked at several brokerage houses pleaded guilty this morning to three felony wire fraud counts that accused him of bilking his clients out of an estimated $3 million.
Richard O'Leary, 56, pleaded guilty before United States District Judge James V. Selna in Santa Ana.
In a plea agreement filed with the court, O'Leary admitted that for more than eight years he used his long-held position as a licensed stockbroker at several financial institutions to fraudulently obtain funds from numerous clients. O'Leary used the money for his and his family's personal use.
Starting as early as 1993, O'Leary began placing client funds into "investment accounts," which in reality were accounts controlled by O'Leary. O'Leary either misled the investors into believing that the investments were legitimate or simply transferred the money without the investors' knowledge or consent.
As part of his scheme to mislead investors, O'Leary often informed them that they would double their money in three years by placing their funds in his "investments." In an effort to mask his scheme, O'Leary provided some investors with fabricated financial statements, supposedly showing the investors' existing investment account and dividends posted to the account. O'Leary also caused fictitious letters to be sent to some investors, supposedly from the president of their investment fund, discussing the benefits of the investment. The president's signature was forged and the address listed on the letterhead was bogus. In response to numerous investor complaints about these "investments," O'Leary made payments that he described to investors as "dividends."
As a result of O'Leary's scheme, he fraudulently placed more than 40 of his clients into his "investments" with the intent to defraud them of their money. Many individual investors were swindled out of more than $100,000.
O'Leary's fraudulent conduct initially was discovered through an internal investigation at Wachovia Securities Financial Network, which terminated its relationship with O'Leary as a broker and referred the matter to the Federal Bureau of Investigation, which began an investigation resulting in today's guilty pleas.
As a result of his guilty pleas, O'Leary faces a maximum statutory sentence of 15 years in federal prison. The plea agreement contemplates a prison sentence in the range of four to five years, although that estimate is not binding on Judge Selna. Under the terms of the plea agreement, O'Leary also is required to pay full restitution to the victims of his offenses. Judge Selna is scheduled to sentence O'Leary on July 25.
Release No. 05-027
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