A 23-year-old stockbroker for Merrill Lynch, Pierce, Fenner & Smith Inc. was arrested early Friday for allegedly misappropriating $47 million from the firm`s Boca Raton, Fla., office.
The FBI said it arrested the broker, Leslie Howard Roberts, on mail-fraud charges. Roberts was taken into custody at his Boca Raton home after an audit late Thursday by Merrill Lynch and the Florida comptroller`s office showed a shortfall of $47 million in accounts the broker was handling.
Roberts, who had been working for Merrill Lynch for 11 weeks, was sending false confirmation slips to a customer of Merrill Lynch indicating that there had been trades in his account when in fact the transactions hadn`t take place, the FBI said.
The customer, identified by Merrill Lynch only as a relative of Roberts,
”thinks he has $55 million in the account and he has only $8 million,”
according to an FBI spokesman in Miami.
At the request of Gerald Lewis, the Florida comptroller, a Circuit Court judge Friday issued an order freezing the assets and preventing the destruction of any records of Roberts and three other Merrill Lynch employees. The three, who worked as Roberts` sales assistants, are his half-brothers, Michael Steven Roberts, 24, and Jeffrey Lee Roberts, no age given, and Sandra Piligian, 24. They have not been accused of any wrongdoing.
A spokesman for Merrill Lynch in New York said, ”There has been no misappropriation of funds at Merrill Lynch. Rather, the allegations concern misrepresentation of the profitability of the accounts.” The spokesman said the investigation involves two accounts of a relative of Roberts.
The problem came to light after E.F. Hutton & Co., where Roberts worked for a year before he moved to Merrill Lynch, ”became suspicious,” said Larry Fuchs, deputy comptroller. Fuchs said Hutton told Merrill Lynch of its concerns and Merrill Lynch notified state authorities on Thursday.
Investigators for the comptroller`s office, working through the night in Merrill Lynch`s office, found that false confirmation slips were being mailed to the customer. ”Records were falsified so that the actual notifications went to dummy addresses,” said a spokesman for Lewis.
Roberts was arrested at 6:30 a.m. Friday and taken to Palm Beach County Jail, pending an appearance later in the day before a U.S. magistrate.
Fuchs wouldn`t comment on the possible role of the other three Merrill Lynch employees in the alleged scheme. However, ”customers were delivered false statements and probably false confirmation slips. In order for that to be accomplished, it possibly involved other people,” Fuchs said.
Both Merrill Lynch and Hutton are cooperating with the investigation, Fuchs said. He added that the comptroller`s office has suspended Roberts`
stockbrokers` license.
