A former personal banker with Bank of America’s Reading branch was indicted Monday on charges of running a Ponzi-like scheme, luring friends and family into investing millions into fake accounts by promising high returns and eventually stealing from elderly bank customers to pay the investors, according to Attorney General Martha Coakley.
The scheme, allegedly conducted over the course of 12 years, involved 31 people and some $6 million, and led to the indictment by a Middlesex County grand jury Monday, Coakley said. Elaina Patterson, 53, of Wilmington, was charged with 15 counts of larceny over $250 from a person over 60 years old and 16 counts of larceny over $250, according to Coakley’s office.
If convicted, Patterson, who was fired by Bank of America in late 2011, could face up to 10 years in prison and a fine of up to $50,000 for each count of stealing from somebody over 60. The other larceny charges each carry a prison term of up to five years and a maximum fine of $25,000.
Neither Patterson nor her lawyer returned calls for comment.
Patterson “used her position as a banker to garner trust from friends and family, and then pushed fake investment opportunities that promised high rates of interests,” Coakley said in a statement.
“Once this scheme began to unravel, we allege that she began to steal from customers in order to fund withdrawals from investors and cover her illegal activity.”
Patterson allegedly launched her scheme in 1999, when the branch was still owned by BankBoston and then continued it until July 2011, through the merger that created FleetBoston Financial Corp. and the takeover of Fleet by Bank of America in 2004, according to the attorney general.
‘We are confident that it is contained. Safeguarding [accounts] is a top priority for us.’
When Bank of America became aware of the potential fraud, it notified Coakley’s office after doing its own initial internal investigation, said T.J. Crawford, bank spokesman. The bank has been working with investigators and the affected customers, he said, although he declined to provide further details.
“We are confident that it is contained,” said Crawford, who also declined to comment on specific measures the bank has taken to secure customer accounts. He added, “Safeguarding is a top priority for us and will continue to be.”
Patterson initially told friends and family that she could set them up with accounts that were usually reserved for corporate and high-level clients with 10 to 15 percent interest rates, according to Coakley’s office. The bank offered no such account.
Patterson was siphoning off a share of the money for herself, but to make the investment appear legitimate, she issued fake certificate of deposit receipts and bogus tax information, authorities alleged. Fifteen relatives and friends invested nearly $4.5 million with Patterson.
Over the years, she managed to pay interest and cover withdrawals with money from other investors, according to Coakley. But in 2009, Patterson began taking money from the accounts of mostly elderly Bank of America customers to make supposed interest payments to the investors, authorities say. Patterson forged signatures on the withdrawal slips of 16 customers and stole $1.5 million from their accounts, they say.
Patterson made $3.8 million in payments to investors and customers with money she had taken from the other investors, according to the attorney general. She is also accused of stealing $2.1 million.
No one else has been charged. Patterson’s arraignment in Middlesex Superior Court has not been scheduled.