MERRILL BROKER INDICTED FOR FRAUD
A former broker at the Red Bank office of Merrill Lynch was indicted by a Monmouth County grand jury yesterday on charges that he swindled $500,000 from more than two dozen clients.
Forty-year-old Steven Severio of Fair Haven is alleged to have persuaded investors to cash out of some holdings and roll over the proceeds into new investments, for which he promised returns to 15 to 20 percent, according to a statment issued by Monmouth County Prosecutor Luis Valentin.
Instead, Severio desposited the funds into his own account, without making any investments. In some cases, he cashed the checks at a local check-cashing service, Valentin said.
Severio faces up to 10 years in prison if convicted on the charges, which include theft by deception, misapplication of funds and commercial bribery.
From the announcement:
The investigation, which was conducted by the Monmouth County Prosecutors Office,
enced in October 2008 following a referral from Merrill Lynchs Internal Fraud
Investigation Unit. It was initially reported that Severio had persuaded a number of his clients at Merrill Lynch to withdraw funds from their Merrill Lynch accounts and to then reinvest the withdrawn funds in investment opportunities outside of Merrill Lynch. This scheme, commonly known in the financial industry as selling away, is a violation of industry standards as well as Merrill Lynch company policy.
The investigation revealed that beginning in the Summer of 2007 Severio directed
solicitations at some of his Merrill Lynch clients. In his solicitations, Severio routinely
represented that the investment vehicles which he was offering would yield annual returns of
between 15-20%. Twenty six individuals, many of whom had been Severios clients during his
five years at Merrill Lynch as well as when he had previously worked at Morgan Stanley,
tendered checks to Severio in varying amounts totaling more than $500,000 in the aggregate.
Most of those investor checks were then cashed by Severio at a local Monmouth County check
cashing establishment. None of the monies entrusted to Severio in this manner were ever
invested in any legitimate financial portfolio or account.
A Stepehn Severio of Fair Haven has had two run-ins with Red Bank police in recent months, according to blotter reports in the redbankgreen archive.
In July, 2008, he was arrested on East Front Street and charged with cocaine possession. And in June of this year, he was arrested on McLaren Street for theft by deception and forgery. The disposition of those cases could not be learned immediately.
At the time of the more recent arrest, Severio was out on $100,000 bail for an arrest last March on charges leading up to the indictment, the prosecutor’s office says. He remains out on that bond.
Here’s the full announcement: 091009