A former Bank of America Merrill Lynch financial adviser was sentenced to 10 years in prison for running a Ponzi scheme that defrauded at least six investors of $2.7 million, according to the U.S. Attorney's Office for the District of Nevada.
From 2005 to 2011, Gary H. Lane, 60, allegedly persuaded several elderly or inexperienced investors to put several million dollars into an account outside BofA.
He promised that the funds would be invested in U.S. Treasury bonds, which would pay better than 6% interest and would mature in two years, according to a statement by Daniel G. Bogden, the U.S. attorney for the District of Nevada.
In fact, the bonds never existed, and the funds were placed in Mr. Lane's wife's E*Trade account, Mr. Bogden said.
The funds where then used to pay "interest" to other investors or applied to personal expenses, according to the indictment.
Mr. Lane pleaded guilty last September to 12 counts of mail fraud and 17 counts of attempting to evade taxes.
The Financial Industry Regulatory Authority Inc. barred him in September 2011 from associating with any member firm.
Merrill Lynch fired Mr. Lane in March 2011 upon learning of the outside activity.
The firm was not named in any of the lawsuits.
“We notified law enforcement and have cooperated fully since then,” said William Halldin, a spokesman for the firm.
The firm since has provided restitution to the investors.
The attorney who represented Mr. Lane, Laurence P. Digesti, said that he planned to appeal the sentence and noted that, in addition to the restitution, the investors were allowed to keep the supposed interest payments that Mr. Lane had paid out over the course of the scheme.
Mr. Digesti also said that Mr. Lane had apologized and accepted responsibility for his actions.
He declined to comment further.
With almost three decades of experience, Mr. Lane was an adviser with Banc of America Investment Services Inc. and joined Merrill Lynch following BofA's 2009 purchase of the iconic brokerage firm.
“Beware of persons who offer better interest rates than traditional sources,” Mr. Bogden said.
“They prey on the elderly and unsophisticated and will use numerous methods to steal your money," he said. "If you do not know if an investment opportunity is legitimate, it is always better to investigate the person or company first before turning over any money to them.”