State Street executive defrauded customers out of billions with hidden fees.
A federal jury in Boston convicted a former State Street executive of hidden fee fraud. State Street is a financial services and bank holding company. The perpetraitor’s name is Ross McLellan. As a part of this scheme, he helped defraud account holders out of billions.
McLellan was the executive vice president for State Street when he ran the hidden fee scheme. The federal jury found him guilty of conspiracy, securities fraud, and wire fraud. His partners in crime were two other State Street executives. Their names are Edward Pennings and Richard Boomgaardt. Together they applied secret charges on customer trades. These customers soon became victims after putting their trust in the bank’s transition management program.
The purpose of this program in most banks is to limit the amount of transfer fees. The account holders at State Street, however, lost more by using this program. This is because the company’s executives took advantage of their own customers.
Between 2010 and 2011 the perpetraitors overcharged six different account holders. They targeted accounts that made transfers with large amounts of money. This was done in hopes of the hidden fees being undetected. One of the accounts affected was Kuwait Investment Authority. This company is one of the biggest sovereign wealth funds in the world.
Both Pennings and Boomgaardt pleaded guilty in 2017. The two even testified against their fellow criminal McLellan during their hearing. On October 10th of this year, McLellan will be sentenced. His lawyer, Martin Weinberg said that they were “disappointed in the verdict.” Does money manipulator McLellan feel disappointed about stealing billions from bank customers? Surely his victims feel more than just “disappointment”.