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19 April 2017 - Ex-Merrill Lynch broker pleads guilty to US$8.7m fraud
Platinum Bank
Source - http://www.investmentnews.com/article/20170419/FREE/170419910/ex-merrill-lynch-broker-pleads-guilty-to-8-7-million-bank-fraud
Where - United States of America
Cost - 8,700,000 USD
Business line - Retail Banking

An ex-Merrill Lynch broker has pleaded guilty to bank fraud in a scheme that went undiscovered for almost 15 years.

Jeffrey Kluge, an investments and wealth management advisor from Minnesota, created false account statements from Merrill Lynch in order to establish millions of dollars’ worth of credit, cheating two banks out of US$8.7m.

He also established a false internet domain name, “www.mymerrillonline.com”, and email account, “pledgecontrol@mymerrillonline.com,” which he used to send the falsified Merrill Lynch account statements to Platinum Bank, one of the two banks that fell victim to the scheme. Kluge also fabricated a false identity of a supposed Merrill Lynch employee, who he pretended was the author of the emails.

The scheme went on for 15 years, beginning in 2001 and lasting through to November 2016.

In April 2001, Kluge obtained a line of credit for US$150,000 with Alliance Bank, claiming he held shares in municipal bond funds as collateral and provided false documentation as evidence. Kluge had already pledged assets in the Merrill Lynch accounts for loans he had obtained from the firm. By November, the outstanding balance on the line of credit had reached US$6m.

In May 2007, Kluge took out another line of credit with Platinum Bank for US$1m, using the same fraudulent scheme he used with Alliance Bank. The second line of credit had a balance of US$2.7m by November.

Kluge had worked at Merrill Lynch for almost 25 years when he was dismissed the US Financial Industry Regulatory Authority last month. Broker Jeffrey Rathmanner, who had worked with Kluge for 21 years, also recently left the firm.