Ex-Merrill Lynch Adviser, Already Jailed for Massachusetts Securities Fraud, Now Indicted Over Ponzi Scam

Even as she serves her 33-month sentence for securities fraud, Jane O’Brien, a former Merrill Lynch (MER) broker, has now been indicted for her alleged involvement in a Ponzi scam that purportedly ran for nearly two decades. The U.S. Attorney’s Office for the District of Massachusetts says that O’Brien is facing criminal charges for mail fraud, investment adviser fraud, and wire fraud involving the misappropriation of $1.3 million in client monies.

Per the indictment, between 1995 and 2013 and while she worked at Citigroup (C)’s Smith Barney and then later with Merrill, O’Brien persuaded a number of clients to withdraw money from brokerage accounts and their banks. She got their permission to invest the funds in private placements. However, instead, the 61-year-old allegedly used the money to repay other investors and cover her personal expenses.

O’Brien is also accused of making misrepresentations to clients, providing them with materially false statements, “making lulling payments,” and offering false assurances that their money was secure. She even in one instance, allegedly, got a client to invest in “Crooked Arrows,” a Hollywood film, in return for a promised 25% return, which did not happen.

In December 2012, O’Brien pleaded guilty to securities fraud over a separate case having to do with a $240,000 investment in a nonexistent security. According to the state, she also borrowed about $1.7 million from the client, which violates not just Merrill Lynch’s policies but also the rules of the securities industry. Late last year, Merrill settled with Massachusetts regulators over allegations that it did not properly supervise O’Brien. The firm paid $500,000, some of which went to investors who had been bilked.

Also, in August 2012, the Financial Industry Regulatory Authority barred O’Brien from the industry, contending that between 2004 and 2011 she borrowed over $2 million from clients even though she did not have permission.

Unfortunately, every year there are investors that get reeled in and robbed because they inadvertently became involved in a Ponzi scam or some other type of securities fraud. Please contact Shepherd Smith Edwards and Kantas, LTD LLP today if you suspect you maybe one of these investors, and we can help you explore your legal options.

Former Merrill Lynch broker accused of 18-year Ponzi scheme, InvestmentNews, March 4, 2014 Needham Financial Advisor Sentenced to 33 Months in Securities Fraud, Justice.gov

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Massachusetts Securities Regulators Fine Merrill Lynch $500,000 For Alleged Failure to Stop Rogue Broker, Stockbroker Fraud Blog, October 29, 2013

North American Securities Administrators Association Releases 2013 List of Top Threats to Investors, Stockbroker Fraud Blog, October 22, 2013
Detroit, MI to Pay UBS and Bank America $85M Over Interest Swaps Settlement, Institutional Investor Securities Blog, March 4, 2014