Former Morgan Stanley Broker Guilty Of Special Needs Fraud
A New York financial adviser pled guilty Monday to defrauding children with disabilities and now faces prison time and potential fines.
Charles Winitch was tasked with managing investments for several children who had obtained medical malpractice settlements as a result of birth injuries that led to serious disabilities.
The courts required that all of the money be invested conservatively in U.S. Treasury Bonds or New York Municipal Bonds to ensure long-term financial stability for the children. But federal investigators found that between 2004 and 2005 Winitch and other unnamed co-conspirators placed the money in other, riskier funds without authorization from the children’s guardians and in violation of the court orders.
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By doing so, Winitch and others pocketed $198,784 through commissions while the children’s accounts incurred losses or lower growth than could have been expected by the court ordered investments.
“Charles Winitch abused his position as a trusted financial adviser in a way that affected some of the most truly vulnerable among us — mentally and physically disabled children — to line his own pockets,” said U.S. Attorney Preet Bharara.
Winitch is expected to be sentenced in March.