A Georgia man was charged with wire fraud and theft of public money after opening a Morgan Stanley brokerage account and attempting to deposit two U.S. government checks totaling $32.5 million, according to federal prosecutors.
A Morgan Stanley executive director alerted the U.S. Secret Service and Internal Revenue Service Criminal Investigation division six days after Christopher Dowtin, 48, of Jonesboro, Georgia, allegedly took the checks to a Morgan Stanley office in Beavercreek, Ohio, in February to fund a new brokerage account in a trust in his name, the Justice Department announced after IRS special agents arrested Dowtin last week.
Prosecutors allege that Dowtin fraudulently converted two businesses’ IRS accounts to his name and address and received tax refund checks — including one for over $32 million — that were to be paid out to these two businesses, said the U.S. Attorney's office for the Southern District of Ohio. He appeared in federal court in Atlanta on April 8, was released on $10,000 bail with conditions, and is scheduled for a court appearance in Ohio later this month.
Dowtin fraudulently submitted IRS forms claiming to be the responsible party for two separate companies, according to charging documents. On Feb. 13, he met with a Morgan Stanley financial advisor in Ohio, opened a brokerage account in the trust's name and "attempted to fund the account with two U.S. Treasury checks," including one for nearly $32.5 million, according to an affidavit from an IRS special agent filed in U.S. District Court in that state.
The financial advisor "accessed the Treasury Check Verification System and verified both checks presented by Dowtin were valid U.S. Treasury checks. (The advisor) knew Morgan Stanley’s internal systems would review Dowtin's account, and thus (the advisor) informed Dowtin the checks
would be reviewed with a 'fine tooth comb' due to the high dollar amount," the affidavit states.
Dowtin told the advisor that the two companies had illegally used his “personhood,” that the checks were payment for that, and that the IRS transferred to him the payments the companies owed, the affidavit says.
On Feb. 19, a Morgan Stanley executive director notified authorities that the two checks that Dowtin presented "were deemed suspicious," the affidavit says.
In December, the IRS processed eight change-of-address or responsible party-business forms associated with Dowtin, whose requests for changes were completed and accepted, prosecutors said.
Once Dowtin "successfully and fraudulently" converted the two businesses’ IRS accounts to his name and address, he received U.S. Treasury checks for tax refunds that were to be paid to these two businesses, according to the affidavit. He then took the two checks to the Morgan Stanley office and "attempted to negotiate them into a brokerage account to benefit from the fraudulently obtained funds," the affidavit alleges.
To further the scheme, Dowtin transmitted via wire several fraudulent documents to Morgan Stanley to support his access to the fraudulently obtained funds, the affidavit alleges.
“Morgan Stanley takes these matters very seriously and in this instance quickly contacted law enforcement, who took the appropriate action to hold the perpetrator accountable," a Morgan Stanley spokeswoman told ThinkAdvisor on Thursday.
The federal public defender identified as Dowtin's attorney on a court document didn't immediately respond to an emailed request for comment.
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