A former Morgan Stanley advisor and broker who misappropriated more than $1.5 million from two older clients who are his close relatives pleaded guilty to money laundering charges on Tuesday, according to court documents and Damien M. Diggs, U.S. attorney for the Eastern District of Texas.
Doug McKelvey, 58, who had also been a vice president for Morgan Stanley, pleaded guilty to the federal violations before U.S. Magistrate Judge Kimberly C. Priest Johnson in U.S. District Court for the Eastern District of Texas, Sherman Division.
According to information presented in court, from 2009 to 2022, McKelvey "misappropriated at least $1.5 million" of investor funds held in brokerage accounts. "The funds were supposed to be invested on behalf of his clients," according to Diggs. McKelvey instead "used the funds to pay for personal trips, cruises, restaurants, salons, and other personal expenses," Diggs said.
McKelvey faces up to 10 years in federal prison, according to Diggs. "A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office," Diggs added in a press release on Wednesday.
Barred From The Industry
McKelvey entered the securities industry in 2002, when he joined UBS Financial Services and became a registered broker, according to his report on the Financial Industry Regulatory Authority's BrokerCheck.org website. He went on to join Citigroup Global Markets as a broker in 2008 but left one year later to join Morgan Stanley.
On May 5, 2022, Morgan Stanley filed a Form 5 Uniform Termination Notice stating he was discharged one month earlier over "allegations regarding representative's unauthorized activity and misappropriation of funds from client accounts, which were held by relatives of the representative," according to his report on BrokerCheck.org and the FINRA letter of acceptance, waiver and consent he signed on Aug. 19, 2022.
In signing the AWC letter, he consented to be barred from associating with any FINRA member firm in all capacities.
