Former Morgan Stanley Broker Guilty - defrauding children with disabilities

[The Straight Story]

Former Morgan Stanley Broker Guilty Of Special Needs Fraud
By Michelle Diament
December 14, 2010 Text Size A A

A New York financial adviser pled guilty Monday to defrauding children with disabilities and now faces prison time and potential fines.

Charles Winitch was tasked with managing investments for several children who had obtained medical malpractice settlements as a result of birth injuries that led to serious disabilities.

The courts required that all of the money be invested conservatively in U.S. Treasury Bonds or New York Municipal Bonds to ensure long-term financial stability for the children. But federal investigators found that between 2004 and 2005 Winitch and other unnamed co-conspirators placed the money in other, riskier funds without authorization from the children’s guardians and in violation of the court orders.

By doing so, Winitch and others pocketed $198,784 through commissions while the children’s accounts incurred losses or lower growth than could have been expected by the court ordered investments.

“Charles Winitch abused his position as a trusted financial adviser in a way that affected some of the most truly vulnerable among us — mentally and physically disabled children — to line his own pockets,” said U.S. Attorney Preet Bharara.

http://www.disabilityscoop.com/2010/12/14/financial-guilty-fraud/11705/

[Jackpine Radical]

1. This is the kind of story that needs wide circulation.

It has as much power as Reagan's "welfare queen" fictions, but in a better cause and with the advantage of truth behind it.

[mmonk]

2. Sad.

Too bad some people have such cynical and opportunist minds. I'm glad he is facing jail time and/or fines.

[rurallib]

3. well, I'd like to say unbelievable, but anymore

fucking over the weak, the poor, the elderly is the norm.

[rucky]

4. Maybe we should keep Gitmo open

for occasions like this.

[alcibiades_mystery]

5. This kind of stuff is a no brainer even for most broker agreements

If the customer specifies a plan of action (which includes specific instructions related to risk), then the broker has a fiduciary and contractual duty to comply with that plan. In this case, it was even more explicit, since the instructions are so very simple (US Treasuries or highly rated munis) and the arrangement is specifically court ordered.

Winitch would be on the hook for this sort of behavior even in a standard broker arrangement. This is bizarre behavior, to say the least.

[Selatius]

6. He'll get a light sentence. If I robbed a bank and stole 198 grand, I'd be in prison for 20 yrs easy

This country is skewed towards the rich.

[corpseratemedia]

7. I'm sorry I didn't read the article but Charles, I hope you end up in a prison where there are

parents who have kids who have disabilities....

[Odin2005]

8. Evil. just fucking EVIL.

[City Lights]

9. The lowest of the low.

:argh:

[salinen]

10. Probably

a republican.