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Press Release

Former Stockbroker Sentenced for Fraud and Tax Evasion

For Immediate Release
U.S. Attorney's Office, District of Massachusetts

BOSTON – A previously convicted former stockbroker was sentenced 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, 73, of Bradenton Beach, Fla., was sentenced by U.S. District Court Judge Mark G. Mastroianni to three years in prison.  In December 2015, Gallagher pleaded guilty to one count of wire fraud, three counts of engaging in a monetary transaction and two counts of tax evasion.  In 1989, Gallagher was convicted of one count of mail fraud and three counts of interstate transportation of stolen property in connection with his illegal and unauthorized options trading while he was a stockbroker. 

From at least 2008 through 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, he provided numerous false explanations concerning his attempts to repay them, such as by falsely claiming that his mother, who is still alive, had died on several different dates.  In a similar effort to stall for time, Gallagher wrote investors more than 40 bad 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 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.

During the hearing, Judge Mastroianni described Gallagher’s crimes as “very serious offenses” and stated that they involved a “betrayal of friendships and a breach of trust among friends.”       

United States Attorney Carmen M. Ortiz; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Manny J. Muriel, Acting 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.

Updated March 1, 2016

Financial Fraud