Former Morgan Stanley advisor pleads guilty to ripping off own mother

A former Morgan Stanley financial advisor charged with stealing from elderly relatives, including his own mother, pleaded guilty Tuesday to federal violations in the Eastern District of Texas, according to the U.S. Attorney’s Office for the Eastern District of Texas.

Doug McKelvey pleaded guilty to money laundering charges before Magistrate Judge Kimberly C. Priest Johnson.

McKelvey was a vice president with Morgan Stanley in South Lake, Texas, from 2009 to April 2022, when he was terminated for allegedly misappropriating funds from client accounts. In August 2022, he was barred by the Financial Industry Regulatory Authority Inc. for refusing to provide information and documents Finra requested.

According to the U.S. Attorney’s Office, McKelvey misused at least $1.5 million of investor funds held in brokerage accounts belonging to clients that included his mother and another elderly family member. Instead of investing the money on behalf of his clients, McKelvey used the funds to pay for vacations, restaurants, salons, and other personal expenses.

"Morgan Stanley detected McKelvey’s unauthorized activity and misappropriation of funds from a limited number of client accounts held by his relatives," a spokesperson said in an emailed statement. "Morgan Stanley terminated McKelvey and amicably resolved the matter with his relatives.”

McKelvey faces up to a decade in federal prison. A sentencing hearing will be scheduled after the completion of a presentence investigation by the Probation Office.

In a parallel complaint, the Securities and Exchange Commission charged McKelvey with fraud on Wednesday for the same abuses.

The SEC said in a statement that McKelvey “initiated over 300 fraudulent and unauthorized disbursements of funds from the two customers' accounts to make payments on credit cards used by McKelvey and his wife to pay their personal expenses.”

The SEC also alleged that McKelvey sold securities from the customers' accounts to generate some of the funds he misappropriated and “took steps attempting to conceal his misconduct.”