Morgan Stanley sues convicted ex-broker for legal fees

Firm wants payback because “he intentionally defrauded Morgan Stanley and concealed his fraud” while working at the brokerage.

May 28, 2014 @ 9:22 am

Morgan Stanley sued to recover more than $3.6 million it paid to defend a former broker who was imprisoned for his role in a kickback scheme.

The firm said in its complaint against ex-broker Darin DeMizio that he should repay legal costs because “he intentionally defrauded Morgan Stanley and concealed his fraud” while working at the New York-based brokerage.

Mr. DeMizio was convicted in 2009 of scheming to pay $1.7 million in kickbacks to his father and brother for virtually no work, according to the complaint filed in Manhattan federal court. Mr. DeMizio, who joined Morgan Stanley in 1991, was sentenced to 38 months in prison and ordered to pay the firm $1.2 million in restitution.

Morgan Stanley has sued other ex-employees who it claims deceived the bank. In 2012, it filed a fraud suit against Joseph “Chip” Skowron, a former hedge fund manager sentenced to five years in prison for insider trading. In January, the bank said it would drop its suit after a judge ordered Mr. Skowron to repay $31 million in compensation.

In its complaint against Mr. DeMizio, Morgan Stanley cited evidence from his trial in federal court in Brooklyn, N.Y., that showed he'd hid his scheme from the bank.

That included testimony from an employee who worked for Mr. DeMizio that he not tell the firm's attorneys about the plot, his use of coded language and his request that trading records be destroyed, according to the complaint.

A federal appeals court in Manhattan this year upheld Mr. DeMizio's conspiracy conviction. David Spears, the lawyer who represented Mr. DeMizio in his criminal case, didn't immediately respond to a voice-mail message seeking comment on the lawsuit.

Mr. DeMizio is now in a “residential reentry” facility, according to the U.S. Bureau of Prisons website.

The case is Morgan Stanley v. DeMizio, 14-cv-03764, U.S. District Court, Southern District of New York (Manhattan).

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Dave O'Brien: Choosing the right tech for a growing practice

When your practice reaches a certain inflection point, technology becomes even more critical. What do you need to take you and your practice to the next level?

Latest news & opinion

10 fastest-growing IBDs

These independent broker-dealers saw the biggest percentage gains in their revenue in 2017.

The unique nature of working with celebrity clients

Athletes and entertainers are just like everyone else — aside from complex tax issues, a lack of financial savvy and a need for prenups

Top 10 IBDs ranked by revenue

These independent broker dealers generated the most revenues in 2017.

8 podcasts advisers listen to when they aren't working

Listening to podcasts for the fun of it.

UBS continues to cut loans to recruits, while increasing compensation to brokers

The wirehouse reduced recruitment loans 20% and increased bonus loans 68% in the first quarter.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print