Investment Adviser Pleads Guilty To Stealing $620,000 From Clients
Attorney General Spitzer today announced that a Brooklyn woman has pleaded guilty to two felony counts in connection with the theft of more than $620,000 from clients of the brokerage firm Gilbert, Doniger & Co. Inc. She used the stolen funds to fund her day trading activities.
Katarzyna Jeglinska, 28, who was an investment advisor and licensed broker, pleaded guilty to one count of Grand Larceny in the Second Degree and one count of Scheme to Defraud in the First Degree. As part of the plea, the defendant agreed to file a sworn financial disclosure form, to pay restitution and cooperate in the ongoing investigation. She faces up to nine years in prison and will be sentenced by State Supreme Court Justice Arlene Goldberg of the New York Supreme Court on June 23, 2001.
Jeglinska admitted diverting client funds and securities into two fictitious brokerage accounts she established and controlled, and then used the proceeds to day trade. Ultimately, she lost over $620,000 of investors' monies.
"This defendant unlawfully stole hundreds of thousands of dollars in cash and securities in a get rich scheme," Spitzer said. "She also brazenly violated her fiduciary duty to her clients as an investment advisor by using her position to manipulate investors and further her illicit activity."
The fraud began shortly after the defendant sustained high losses from day trading in her own brokerage account. To cover the losses Jeglinska initially stole $456 from a customer's inactive account in November of 2000. When she realized that the theft went undetected, the defendant proceeded to steal tens of thousands of dollars of cash and securities from various customer accounts. The theft was not discovered because she found a way to cover the transfer of customer monies and securities without the having them appear on a customer's monthly statement. Ultimately, investigators found that Jeglinska fraudulently obtained more that $1 million in customer funds.
Jeglinska used customer monies to pursue a highly speculative day trading strategy that included buying and selling options and margin transactions in an effort to increase her personal wealth. The scheme came to an end when the defendant was fired by the brokerage company and arrested by investigators of the Attorney General's Office on February 20, 2001.
The Attorney General acknowledged the referral of the case by the New York City office of NASD Regulation, Inc. The firm of Gilbert, Doniger & Co., Inc. fully cooperated with the investigation and voluntarily repaid customers who lost monies from the defendant's theft.
The case was handled for Attorney General Spitzer by Assistant Attorneys General Scott M. Andersen and Michael Jones of the Securities Prosecution Unit.