A former partner at one of Cork's best known stockbroker firms who had trained for seven years at Glenstal Abbey to be a monk faces up to 14 years in prison after defrauding his clients of €4.6 million to trade on high risk futures and options financial markets.
Stephen Pearson (44), North Esk, Glanmire, Cork, has pleaded guilty to 47 counts in relation to the illegal activity which took place between 1995 and 2001 when he was a 40 per cent partner at W&R Morrogh Stockbrokers, South Mall. He has since sought help for a gambling addiction.
Yesterday at Dublin Circuit Criminal Court Judge Desmond Hogan heard that the case had closed a firm "which was regarded as an institution in Cork" and had left an "irreparable rupture" between the Morrogh and Pearson families, who are cousins.
The firm, which had been in both families since its inception, had incurred losses of €7 million.
Mr Donal O'Donnell SC, for Mr Pearson, said the events had devastated his client and his wife and their three children, aged four to nine, who had "lost everything". One daughter has severe Down's syndrome. Mr Pearson's elderly parents had suffered "incomprehensible and bewildering shame".
Mr Pearson had inherited his 40 per cent stake in the firm from his father on his retirement in 1997.
The court heard extensive testimony for Det Sgt Denis Heneghan of the Garda Bureau of Fraud Investigation. Det Sgt Heneghan who led the "complex" four-year investigation said Mr Pearson had been interviewed 22 times, 10 by himself and 12 times by Det Insp John McCann, Det Garda Michael McKenna and Det Garda Patrick Linehan.
While he had co-operated with gardaí he had answered queries "with certainty" only when documents had been produced to support specific lines of questioning.
Det Sgt Heneghan said Mr Pearson had sold some of his client's shares without their knowledge and used the proceeds to settle debts he had incurred from loss-making transactions on futures and options markets.
He accepted Mr Pearson had not done so to fund a lavish lifestyle but rather in an attempt to make the company more profitable.
He had studied French and theology at university but had no specific training relevant to his role at the company, which he joined after leaving Glenstal Abbey in 1987 after seven years.
In other cases clients had given him money to buy shares but he had kept this to settle his trading related debts. He had issued forged documents to clients confirming the purchase of these shares despite the transactions never having taken place.
He concealed all of his illicit activities with false entries into electronic ledger accounts which were kept for each of the company's 9,000 clients.
In many cases he moved money between clients' accounts to cover up shortfalls. One of the people he defrauded was an elderly woman suffering from Alzheimer's.
Two others were widows who had invested their husband's life assurance policies.
The 47 charges were in respect of activities on the accounts of 20 clients. Of these 32 charges related to fraudulently converting clients' funds, there were 11 charges of forgery and four counts of obtaining funds under false pretences.
The court was also told that Mr Pearson was a member of an investment club made up of 20 friends and associates. He had put €150,000 in defrauded funds into the club's kitty as an annual meeting approached. This was done to "make him look good".
He had also taken money from the accounts of the L'Arche charity, which had offices in Cork offering care to the disabled and of which he was treasurer. He always replaced this money.
When the fraud at W&R Morrogh came to light at the offices of his firm on the afternoon of April 24th, 2001, Mr Pearson left Cork and checked into Jury's Inn Hotel, Christchurch, Dublin. He made an attempt on his life by slitting his wrists and later needed surgery for his injuries.
Dr Margaret O'Rourke, a clinical psychologist told the court she believed Mr Pearson would make a poor candidate for a custodial sentence.
He had a personality disorder and suffered from anxiety and depression. Sentencing has been adjourned to October 12th.
