Manhattan District Attorney Cyrus Vance, Jr. announced the arrest and indictment of Steven Mandala, a former stockbroker with the Maxim Group and Merrill Lynch. According to the District Attorney’s Office, Mr. Mandala stole $780,000 from Merill Lynch after he allegedly told Merrill Lynch that he was not only a partner at Maxim Group (he was merely an employee stockbroker making $100,000), but that he was in charge of managing $300 million of clients’ assets. As a result of his work with Maxim Group, prosecutors allege that Mr. Mandala claimed he generated $1.5 million in revenue. Due to Mr. Mandala’s claims, alleged “improvements” to his resume, and his assertion he was compensated in the neighborhood of $765,000 a year by Maxim Group, Merrill Lynch hired the stockbroker and advanced Mr. Mandala $780,000. As a result of his chicanery, which was somewhat less successful, Mr. Mandala was charged with Grand Larceny in the Second Degree, Money Laundering in the Second Degree, Identity Theft in the First Degree, Criminal Possession of a Forged Instrument in the Second Degree and Falsifying Business Records in the First Degree.
Despite Mr. Mandala’s alleged claims that he managed $300 million and generated $1.5 million in revenue, it is alleged that Mr. Mandala not only rarely went to work, but that he brought in only $20,000 in new business. During he approximately two months as an employee at Merrill Lynch, it is alleged by prosecutors that Mr. Mandala deposited the $780,000 into his parents’ account and purchased a Ferrari under his father’s name. Mr. Mandala’s employment came to an end when he allegedly sent an email to Merrill Lynch indicating that he was not only resigning, but that all his personal effects should be discarded.
Unfortunately for Mr. Mandala, Merrill Lynch employees did not toss all of his “stuff” and an investigation revealed numerous credit cards in the name of Mr. Mandala’s girlfriend in the office. Digging further, prosecutors ascertained that tens of thousands of dollars were allegedly billed to these credit cards without the true owner’s knowledge.
Although Mr. Mandala faces up to fifteen years in state prison on the counts relating to Grand Larceny and Money Laundering, seven years in state prison on the counts relating to Identity Theft and Criminal Possession of a Forged Instrument, and four years in state prison on the count relating to Falsifying Business Records, one thing truly stands out. Beyond the alleged magnitude of the theft, were was Merrill Lynch’s due diligence? Who failed to verify or confirm Mr. Mandala’s history and experience? How does anyone – especially a firm entrusted with clients’ hard earned money – fail to contact the prior employer or spend a few dollars on a background check? Where is the oversight? Stop me before I get on a roll…
Crotty Saland PC is a criminal defense firm representing clients in white collar criminal cases ranging from alleged embezzlement in the tens of thousands of dollars to multi-million dollar tax fraud schemes. Prior to starting Crotty Saland PC, both founding partners served in the Manhattan District Attorney’s Office’s Trial Division as well as the Special Prosecutions Bureau and Identity Theft Units.