Former Morgan Stanley Exec Sentenced In Fraud

PORTLAND, Oregon, Feb. 6 -- The Assistant U.S. Attorney for the District of Oregon, Quinn P. Harrington, issued the following news release:

On Tuesday, February 6, 2018, U.S. District Court Judge Michael H. Simon sentenced Gregory Walsh, to 24 months in federal prison followed by a three-year term of supervised release. Walsh had previously pleaded guilty to one count of conspiracy to commit mail and wire fraud in violation of 18 U.S.C. Section1349 on April 16, 2016.

According to court documents, beginning in February 2011, Walsh, an Assistant Vice President at Morgan Stanley, worked with his brother Geoffrey Walsh, a former Vice President at the Bank of Oswego, to persuade an Arizona woman into loaning his brother more than $1.1 million for a real estate investment scheme. Walsh told the woman, a client of his at Morgan Stanley and recent widow, that the money would be used to purchase three condominiums in the Palm Springs, California area that would be titled in her name and sold within one year.

Contrary to the promises made, Geoffrey Walsh titled all three properties in the name of his business and did not provide loan or title documentation to his brother's client. Between May and July 2012, Geoffrey Walsh sold two of the properties without the knowledge or permission of the client and used the proceeds to satisfy personal financial obligations. Later, in November 2012, after learning that his brother had sold the two properties without repaying his client, Walsh failed to reveal this information to the client.

In January 2013, Walsh was again contacted by his brother to gauge the same client's interest in loaning him an additional $2 million for a real estate development project in Oregon. When discussing the potential loan, the client asked Walsh if his brother was involved in the transaction. Walsh lied to her saying that he was not. Soon thereafter, Walsh transferred the money from his client's Morgan Stanley account to the client trust account of Geoffrey Walsh's lawyer without the investor's knowledge or approval. On March 5, 2013, the majority of these funds - over $1.7 million - were used to pay the balance of a line of credit at the Bank of Oswego for the benefit of Geoffrey Walsh. Geoffrey Walsh spent the remainder of the funds on other financial obligations.

Throughout the duration of the conspiracy, Walsh repeatedly lied to his client about the status her loans, his brother's financial and legal problems and his own lies in initiating both transactions.

During this same two-year period, Walsh initiated two other transactions that purportedly occurred on behalf of his client. In December 2011, a $100,000 wire was sent from his client's Morgan Stanley account to a close friend of Geoffrey Walsh's. Later, in January and February 2012, a transfer of $2 million was sent from the client's account for an investment in a Colorado-based cannabis company. The investment was discussed with, but never approved by, Walsh's client. The cannabis company later returned the $2 million loan after meeting with the FBI. The $100,000 transfer was never returned. Walsh made over $18,000 in commissions on these transactions before leaving Morgan Stanley.

Geoffrey Walsh pleaded guilty to one count each of conspiracy to make false bank records, conspiracy to commit mail and wire fraud, and wire fraud and was sentenced to 30 months in federal prison and three years' supervised release on January 24, 2018.

This case was investigated by the FBI and the FDIC Office of Inspector General (OIG-FDIC) and prosecuted by Claire M. Fay, Michelle Holman Kerin, and Quinn P. Harrington, Assistant U.S. Attorneys for the District of Oregon.