Stockbroker Embezzles from Client in Wire Fraud Scheme

A former stockbroker in Washington recently pled guilty to criminal wire fraud and filing false tax returns, and has now been sentenced to federal prison.  The criminal wire fraud scheme to which he pled is believed to have included stealing significant money from a brokerage client whose money he was entrusted to manage.

At sentencing in December 2012, a Federal Judge in Tacoma, Washington sentenced Michael Montgomery to 60 months in federal prison, after which he must serve a three year term of supervised release.

A restitution hearing has been scheduled for later in January 2013 to determine how much money Montgomery must repay the victims of his wire fraud crime.  This would indicate there may not be clarity on the exact amount of theft, or there may be some dispute on how much was actual theft, and how much was legitimately earned commissions.

It is believed that one of the defenses to be argued by his white collar criminal attorneys was that the money in question was earned through services performed for the client.  Investigators and prosecutors were suspicious of this claim as Montgomery failed to produce sufficient records to support his client billings.  The Federal Sentencing Guidelines enhance punishment for professionals such as stockbrokers, attorneys and accountants who violate a position of trust with their clients.  Sentences can also be enhanced in a case, such as this, where the victim is elderly or easily victimized due to their condition.

According to Federal Court records, Montgomery agreed that he stole more than $1,000,000 from an elderly client.  The theft apparently occurred through numerous unauthorized wire transfers of money from the client’s brokerage account, which were ultimately used for Montgomery’s personal benefit.

Not only did Montgomery admit to stealing from his client, but he also pled guilty to tax evasion in admitting he failed to report the stolen funds in his annual tax returns.  This further strengthened the prosecutions argument that the funds were from ill gotten gains and not from legitimate work.  Their argument was that Montgomery didn’t list it on his federal tax returns not only in an attempt to evade taxes, but also to hide the fact that he had stolen the funds in question.   It is likely that these convictions will prevent Montgomery from working in the securities industry once he is released from prison.  It is unclear whether Montgomery worked at an investment firm, or whether he was self-employed.

If you find yourself facing federal fraud charges, it is important to find an experienced wire fraud attorney to represent you.  The criminal attorneys of Parkman & White, LLC have a history of success in the court room and are ready to represent clients nationwide.



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