the north face uk broker charged with swindling North Shore philanthropist
WENHAM A Wenham investment adviser has agreed to plead guilty to charges that he swindled three clients, including a well known North Shore philanthropist, prosecutors announced on Wednesday.
James S. Polese, 51, was charged criminally by federal prosecutors Wednesday with conspiracy,investment adviser fraud, aggravated identity theft and eight counts of bank fraud. He is also being sued civilly by the Securities and Exchange Commission in a separate complaint, which was also filed on Wednesday.
The charges were filed in what is known as an “information,” a mechanism used when defendants have agreed to plead guilty in a case and waive indictment.
The scheme allegedly netted Polese about $457,000, according to court papers. Prosecutors are seeking forfeiture of that amount. FINRA has now barred both men from working as brokers.
That’s where Manchester by the Sea’s Ralph Bates had kept his investment income since the 1980s. Polese became involved in managing Bates’ investments after joining the firm in 2010.
Bates, now 86, had informed Polese he wanted “to give away substantially all of his assets tocharity,” according to the SEC complaint. Bates is identified in court papers as “Client B.”
“They’re going after him,” Bates said on Wednesday. “He’s guilty as hell. He should be in jail.”
Bates has donated an estimated $6 million to various North Shore and Massachusetts charities, including the Greater Beverly YMCA, Beverly Bootstraps, River House, Northeast Senior Health, Wellspring House, The Open Door, the Grace Center in Gloucester, and Curt’s Pitch for ALS, among other programs.
“I’m helping a lot of people,” said Bates.
In at least one photo commemorating a donation, Polese was with Bates and a giant mock check.
Bates said he considered Polese a friend at the time, even once loaning him $50,000 money he says Polese has not repaid.
That no interest loan, regulators say, was never disclosed to his employer; in fact, they allege that Polese took steps to hide the transaction by insisting Bates make the check out to cash. Polese then cashed the check and used the funds to buy a treasurer’s check, which he then put into his own account, court papers say.
But Bates did not know Polese and Peterson were also allegedly using his funds in other ways.
In 2015, prosecutors allege that the pair used $400,000 from one of Bates’ accounts as collateral for a line of credit to finance investments of their own. While the collateral was not touched, Bates unknowingly incurred $12,000 in fees.
Then in 2016, prosecutors and regulators say, the two men transferred $350,000 from a Bates account, by forging his signature, with a plan to each take $50,000 to invest in a real estate venture.
Polese allegedly misled a Morgan Stanley bookkeeper into believing that the investment was for Bates.
Polese then blamed the additional $250,000 on a “clerical error” and had it transferred to his own account.
In 2017, Polese allegedly made a series of withdrawals from Bates’ account, totaling more than $93,000, to pay bills, including tuition for his children and credit card payments.
The SEC alleges that in one instance, he overpaid one of the tuition bills by $20,000 and then had the college refund the $20,000 to an account he controlled.
Two other victims, who were not identified in court papers, suffered losses attributed to the pair.
“Client A” had $100,000 taken from an account that Polese and Peterson allegedly used to finance an investment in a wind farm. “Client C” was charged a higher fee than she was told she would pay on each transaction.
After the thefts came to light last May, Polese was suspended from Morgan Stanley and later fired.
Regulators say that after he was suspended, Polese went to Bates’ home and tried to “cajole” him into signing a statement claiming that Bates had verbally approved all of the payments.