Former Stockbroker Charged in Fraud Scheme
BOSTON – A previously convicted former stockbroker was charged yesterday in U.S. District Court in Springfield in connection with an investment scheme which defrauded victims of more than $600,000.
Jeffrey Eldred Gallagher, 72, of Bradenton Beach, Fla., was charged in an Information with one count of wire fraud, three counts of engaging in an illegal monetary transaction and two counts of tax evasion. As alleged in the Information, in 1989, Gallagher was convicted of one count of mail fraud and three counts of interstate transportation of stolen property in connection with illegal options trading while he was a stockbroker at Paine Webber, Inc. Gallagher is scheduled to plead guilty to the current charges on Dec. 14, 2015 before U.S. District Court Judge Mark G. Mastroianni.
According to court documents, it is alleged that from at least 2008 through approximately early 2012, Gallagher persuaded friends and associates to pay him money to invest on their behalf, and made promises that the investments would yield guaranteed returns of 10 to 15 percent. Gallagher then commingled investor funds with his own personal funds, and paid some investors with monies given to him by other investors. When investors asked Gallagher for the return of their investments, Gallagher allegedly provided numerous false explanations concerning his attempts to repay them. In a similar effort to stall for time, Gallagher wrote investors more than 40bad checks totaling $1,783,375. In sum, 23 investors lost a total of approximately $617,475.
As part of the scheme, in 2009 and 2010, Gallagher allegedly used approximately $249,703 of investor monies for his personal benefit, but did not report any of this income on his federal income tax returns for those years.
The charges of wire fraud and engaging in an illegal monetary transaction provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000. The charge of tax evasion provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 on each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz's Springfield Branch Office.