BOSTON - A former Merrill Lynch and Smith Barney investment adviser was indicted yesterday in connection with a nearly two-decade scheme to drain clients’ accounts.
Jane E. O'Brien, 61, of Needham, was charged in an eight-count indictment with mail fraud, wire fraud and investment adviser fraud. The indictment charges that between 1995 and 2013, O’Brien defrauded several clients for whom she provided investment advisory services. As part of the scheme, O’Brien misappropriated funds entrusted to her through a variety of means, including persuading clients to withdraw money from their bank and brokerage accounts and give the money to her personally to invest on their behalf. After gaining control of her clients’ money, however, O’Brien made no such investments. Instead, she used the misappropriated client funds for a variety of improper purposes, including paying personal expenses, and paying purported investment returns or repaying personal loans to other clients. Finally, in order both to perpetuate her fraud and conceal it from her clients, O’Brien made false statements and misrepresentations to clients, including making lulling payments to clients and otherwise providing them with false assurances of their financial security.
With respect to one client, the indictment charges that O’Brien caused the client first to empty her Smith Barney brokerage account and give the proceeds to O’Brien, and then to borrow an additional $1 million on her home and give much of that money to O’Brien to invest. With respect to a second client, the indictment charges that O’Brien caused the client to empty her Merrill Lynch brokerage account and give the proceeds to O’Brien to invest in a Hollywood movie called "Crooked Arrows." With respect to a third client, the indictment alleges that O’Brien caused the client to withdraw $190,000 from her bank account and give the proceeds to O’Brien to invest. The indictment alleges that O’Brien made none of the investments she promised.
In December 2012, O’Brien was convicted in a separate matter of securities fraud after pleading guilty to a scheme to defraud yet another client of $240,000 by selling her a security that did not, in fact, exist. In May 2013, U.S. District Judge Nathaniel M. Gorton sentenced O’Brien to 33 months in prison. She is currently serving that sentence.
If convicted of the pending charges, O'Brien faces up to 20 years in prison on each count of mail and wire fraud, a fine of $250,000 or twice the gross gain or loss. If convicted of investment advisor fraud, she faces up to 5 years in prison and a $10,000 fine.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Stephen E. Frank of Ortiz’s Economic Crimes Unit.
The details contained in the Indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.