Newsletter Signup

Search Our Blog

San Diego Securities Lawyers: Merrill Lynch Veteran Pleads Guilty to $8.7M Bank Fraud

By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Thursday, June 1, 2017.

Erwin J. Shustak, Esq.
619.696.9500 ex. 109
[email protected]

Jeffrey Kluge, a 25 year veteran of Merrill Lynch based in St. Paul, Minneapolis, plead guilty to two counts of bank fraud for his part in an elaborate, long-running scheme that stole $8.7 million from two banks.

Kluge, while working at Merrill Lynch, created false Merrill Lynch account statements in connection with a fraud that pledged phony collateral to the banks to establish multi-million dollar lines of credit from those banks.  He also created a phony Internet domain name, www.mymerrillonline.com, and a phony Merrill email address from which he sent the fabricated account statements and he created the false identify of a Merrill Lynch employee, whose fabricated name he used with the fictitious email addresses in communicating with the banks.

Mr. Kluge’s scheme started in 2001 and ran through November, 2016, a fifteen year period.  In 2001, Kluge first obtained a $150,000.00 line of credit with Alliance Bank, providing phony statements showing a municipal bond portfolio sufficient to secure the line of credit.  He provided phony, falsified account statements to substantiate the non-existent municipal bond holdings.  Those bonds already were pledged to Merrill Lynch to cover other loans he had with the firm.  In 2007, he obtained a $1 million line of credit from Platinum Bank using the same scheme, pledging assets to Platinum that already were pledged to Merrill Lynch.

Mr. Kluge is awaiting sentencing and has been suspended from the securities industry.

Shustak Reynolds & Partners, P.C. focuses in the areas of securities, financial services and complex business disputes. For more information, contact our managing partner, Erwin Shustak. More information is available at www.shufirm.com.

Share This Article linkedin