Ex-Merrill Martineau in wire and mail fraud

Donald Martineau, a former vice president and senior financial consultant for Merrill Lynch in Boston, has been convicted on six counts of wire and mail fraud relating to a scheme to steal US$6.3 million from the investment bank’s clients. In the period November 1989 to August 1998, Martineau persuaded customers to direct investments into supposedly safe securities while claiming to act for Merrill Lynch. He initially instructed them to wire and mail funds to designated accounts. Once the deposits were made he cut and pasted some customers’ signatures from the transfer documentation to other authorisations that led Merrill Lynch to wire the funds into an bank account that Martineau operated in the name of D&D Real Estate. In a second deception he encouraged some customers to invest directly in D&D Real Estate after falsely promoting it as a vehicle that had been set up to supply capital to a number of senior executives who had been awarded restricted stock options in a company. He falsely promised a personal guarantee of eleven per cent annual interest over a six-month interval. Subsequently he transferred the misappropriated sums into a brokerage account which he controlled, also in the name D&D Real Estate, and lost almost the entire amount through unsuccessful trading in stocks and options . He was dismissed by Merrill Lynch in August 1998. He will be sentenced at the end of May and faces up to five years in prison and a fine of US$250,000 for each count. He also faces charges of civil fraud which were filed by in January by the Securities and Exchange Commission.