On June 3, 2010, former Bank of America Merrill Lynch stockbroker Steven Mandala was sentenced to two to six years in prison for stealing $780,000 from Merrill Lynch & Co., some of which he used to buy a $250,000 Ferrari for himself. Mandala had pleaded guilty to the charges of grand larceny and identity theft and was sentenced in New York Supreme Court to the prison term.
Mandala had negotiated with Merrill Lynch for a nearly $800,000 hiring bonus and then promptly resigned from the firm and made off with the money. The New York court has ordered Mandala to repay $360,000 in restitution. Mandala also previously forfeited the Ferrari that he had purchased with the ill-gotten money.
Mandala had been a stockbroker with Maxim Group before joining Merrill Lynch in 2009. As part of his application process for a job at Merrill Lynch, a unit of Bank of America Corp., the 29-year-old Mandala misrepresented that he was a partner at Maxim. He also used bogus documents - including false pay stubs, tax returns and W-2 forms - to convince Merrill Lynch that he was a top producer at the firm and could bring in business worth more than $1 million a year. Mandala also told Merrill Lynch that he managed $300 million in client assets and generated $1.5 million for Maxim.
As is customary in the brokerage industry, in order to entice Mandala to join Merrill Lynch, Merrill Lynch offered Mandala a large forgivable loan. Such loans are forgiven over time and essentially amount to a hiring bonus. The amounts of such bonuses generally are based on the commissions and revenue that a stockbroker generated at their prior brokerage firm. As such, Mandala had the incentive to lie to Merrill Lynch in order to increase the size of his bonus.
In truth, Mandala was nothing close to a stellar performer at Maxim Group. He frequently did not show up for work and ultimately brought only a small number of clients and limited assets to Merrill Lynch. After only two months at Merrill Lynch, Mandala sent an e-mail resignation to Merrill Lynch and failed to repay the unforgiven portion of the nearly million dollar forgivable loan that Merrill Lynch had given to him.
