An ex-Morgan Stanley assistant vice president who stole $3 million from a widowed client in Arizona in a sham real-estate scheme has been sentenced to 24 months in prison and three years parole, according to federal prosecutors.
Gregory Walsh pleaded guilty in 2016 to conspiracy to commit mail and wire fraud, according to the U.S. Attorney’s Office for Oregon.
The Tuscon, Arizona-based broker and his brother, Geoffrey, a former vice president at the Bank of Oswego in Oregon, conned Sybil Pearce, an elderly, widowed client, out of millions of dollars. Her wealthy husband, an oil executive, died in an accident in 2010, according to court documents.
Pearce was left with no one to help manage her assets except her financial professionals, prosecutors say, including Walsh.
“Throughout the duration of the conspiracy, Walsh repeatedly lied to his client about the status of her loans, his brother’s financial and legal problems and his own lies in initiating both transactions,” according to a statement from the U.S. Attorney’s office.
In 2011, Walsh convinced Pearce to invest $1.1 million in three other real estate projects in Palm Springs, California, according to court documents. Walsh told Pearce that she would be repaid her principal plus 10% interest and half of any additional profits from the sale, according to federal prosecutors.
In fact, the projects were titled to the broker’s brother, Geoffrey, prosecutors say. Later, Geoffrey sold two properties, without the client’s knowledge or permission, to pay off financial obligations, according to prosecutors.
In 2013, Walsh’s brother contacted him to inquire if the client would loan another $2 million for a real estate development project in Oregon, according to prosecutors. Walsh did not inform Pearce that his brother was involved in the deal, and transferred the funds from Pearce’s Morgan Stanley account to an account of Geoffrey’s lawyer without her approval, prosecutors say. Over $1.7 million was used to pay a line of credit at the Bank of Oswego for Geoffrey’s own benefit, according to prosecutors.
“I know this is asking a lot of faith in me,” Walsh wrote in an email to Pearce in 2013, according to court documents. “Please trust me on this and you will not be let down.”
As the scheme began to unravel, however, Pearce became concerned about the “shady deal” according to emails she sent Walsh made available in court documents.
“I do not want a call from your private mobile phone,” she wrote. “This is a very serious matter to me and I need clarification."
The Walsh brothers also transferred $2 million from Pearce to a cannabis company in Colorado, without her permission, according to prosecutors, although the money was later returned after the cannabis company met with the FBI.
“Greg deeply regrets the harm that he caused his client and the losses that she suffered,” says Matthew Schindler, Walsh’s attorney. “The consequences for Greg have been extreme, including financial responsibilities, restitution and damage to his family — all for a crime where he didn’t personally gain.”
Last month, Geoffrey Walsh was sentenced to 30 months in federal prison and three years parole for his part in the scheme, according to prosecutors.
Gregory Walsh began working with Morgan Stanley in 2000, according to FINRA BrokerCheck records, and was barred from the industry by the regulator in 2013. Morgan Stanley declined to comment on the sentencing.
A criminal disclosure registered with FINRA shows felony charges on Walsh's record, including forgery and theft, from 1993 that were eventually dismissed after the completion of an adult diversion program, per BrokerCheck.
“I committed a grave error and extreme lapse of judgement which had an extreme affect upon my life,” Walsh said in comments left on the disclosure. “The event drastically changed my views and how I approach life.”