A Nevada man who operated a $2.7 million Ponzi scheme while employed as a financial advisor at Merrill Lynch learned he will spend the next 10 years in federal prison. Gary H. Lane, 60, received the sentence from U.S. District Judge Robert C. Jones after previously pleading guilty in September 2013 to twelve counts of mail fraud and seventeen counts of attempted tax evasion. Lane's attorney has indicated he plans to appeal the sentence.
Lane was a long-time financial advisor at Bank of America Investment Services, which later merged with Merrill Lynch. There, beginning in at least May 2002, Lane targeted inexperienced elderly investors with the promise of steady annual returns of six percent through investments in United States treasury bonds with maturities of two years or less. Based on these representations, Lane convinced at least eleven elderly investors to entrust him with over $2 million. After he received the money, Lane would then send each investor written documentation purportedly confirming the purchase of the promised treasury bond(s).
However, according to authorities, a treasury bond with a maturity of two years or less never had an annual return of anywhere close to six percent during the relevant time period. Additionally, there was no record of Lane purchasing the investments through his employer. Instead, Lane is alleged to have diverted investor funds to his wife, who would then in turn deposit the funds into an E*Trade owned by her. Lane never purchased any treasury bonds as promised, said authorities; instead, the purported "confirmations" were fictitious and investor funds were used for Lane's personal expenses or to make Ponzi-style payments to existing investors.
Lane was fired from Merrill Lynch after the firm learned of his outside business activities, which presumably were never disclosed to the firm despite strict disclsure obligations. Lane was subsequently barred by the Financial Industry Regulatory Authority from associating with any member firms. Merrill Lynch has since paid restitution to the defrauded investors, who were also permitted to keep the fictitious interest payments made by Lane.