Cornelius Peterson, Investment Adviser Fraud, Massachusetts 2018

Boston-Area Investment Adviser Sentenced for Using Client Funds for Personal Expenses

In a shocking case of financial deceit, a Boston-area investment adviser was sentenced to 20 months in prison for using his clients’ funds to make his own investments and to pay personal expenses.

Cornelius Peterson, 29, of Newton, was handed down the sentence by U.S. District Court Judge Nathaniel M. Gorton. Peterson was also ordered to pay restitution in the amount of $462,000 and serve two years of supervised release.

According to the U.S. Attorney’s office, Peterson and his co-defendant James Polese, 51, of Wenham, misappropriated approximately half a million dollars from their clients between 2014 and June 2017. The funds were transferred out of their clients’ accounts without their knowledge or consent.

The scam was uncovered when it was discovered that Peterson and Polese used $100,000 from a client’s account to invest in a wind farm project on August 20, 2014, despite it not being an authorized investment opportunity. On May 15, 2015, they used $400,000 from another client’s account to back a letter of credit in support of the wind farm project.

Peterson and Polese’s crimes continued into 2017, with Polese transferring funds from a client’s account to pay personal expenses, including college tuition payments and credit card bills. The duo was terminated from the company in June 2017.

United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Securities & Exchange Commission also provided valuable assistance with the investigation.

Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Economic Crimes Unit prosecuted the case.

Co-defendant James Polese, 51, of Wenham, pleaded guilty in April 2018 to one count of conspiracy and investment adviser fraud, eight counts of bank fraud, and one count of aggravated identity theft. He is scheduled to be sentenced on August 2, 2018.

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