NEW YORK (Reuters) - The former chief compliance officer of broker dealer WG Trading Co pleaded guilty on Tuesday to criminal charges of illegally transferring more than $100 million to the firm’s partners.
Deborah Duffy, 54, worked for 18 years for the Greenwich, Connecticut, company, whose two general partners were arrested in February on charges of running an estimated $554 million, decade-long swindle.
Duffy told U.S. District Judge Naomi Reice Buchwald in Manhattan federal court that she approved the money being transferred “to my bosses’ benefit as loans” and “caused investors to receive false information, which I knew was against the law.”
The executives, Paul Greenwood and Stephen Walsh, were charged with bilking large institutional investors, including pension funds and educational institutions. The U.S. Securities and Exchange Commission said they used client money as “their personal piggy-bank” to fund lavish lifestyles.
On Tuesday, the SEC also filed civil charges against Duffy, accusing her of having taken as much as $292,000 of investors’ money for herself, according to a court document. She worked for WG Trading from March 1991 to February this year.
“Duffy was highly compensated for her role in assisting Greenwood and Walsh misappropriate investors’ assets,” the SEC complaint said. “Greenwood and Walsh paid her an annual salary and bonus of several hundred thousand dollars. For 2008 ... as much as $800,000.”
In court, she pleaded guilty to criminal charges of conspiracy to commit securities fraud and wire fraud, securities fraud and money laundering. She waived her right to the government’s charges being considered by a grand jury or to go to trial.
Under the terms of a plea agreement, Duffy will be required to cooperate with prosecutors and give back her ill-gotten gains.
Duffy was released on a personal recognizance bond of $500,000 and her travel restricted to New York and New Jersey, where she lives. The judge scheduled January 21, 2010, for her sentencing, when she faces up to 20 years on the securities fraud count.
The case is USA v Duffy 09-00709 in U.S. District Court for the Southern District of New York (Manhattan)
Reporting by Grant McCool; Editing by Steve Orlofsky