The securities lawyers of Gana Weinstein LLP are following the case against broker Jeffrey Kluge (Kluge) who pleaded guilty to two counts of bank fraud in the state of Minnesota. A plead agreement was filed with the U.S. District Court in Minnesota on March 29, 2017. Kluge entered the securities industry in 1991 and remained with Merrill Lynch, Pierce, Fenner & Smith Inc. for the entirety of his career. Kluge started a scheme to create fraudulent Merrill Lynch account statements to falsely secure collateral for multi-million lines of credit. Kluge was able to carry out this scheme by creating a fake domain name, www.mymerrillonline.com, and fake email address, firstname.lastname@example.org, to send the falsified account statements to Platinum Bank. A false Merrill Lynch identity was used as a cover for the email address. Kluge ran this fraudulent scheme for 15 years, starting in 2001 to November 2016.
In 2001, Kluge received a line of credit for $150,000 from Alliance Bank by putting up municipal bond funds as collateral. These bond funds were substantiated by falsified account statements that hid the fact that the same bonds were already pledged to Merrill Lynch loans previously obtained by Kluge. The outstanding balance of Alliance Bank line of credit was at $6 million in November 2016.
Utilizing the same scheme for Alliance Bank, Kluge was able to secure a $1 million line of credit from Platinum Bank in Minnesota. He procured this line of credit by putting up the same assets used for Merrill Lynch and Alliance Bank. The Platinum Bank line of credit balance was at $2.7 million as of November 2016.