By Lisa Redmond
WOBURN -- A former personal banker at Bank of America pleaded not guilty Tuesday to more than two dozen larceny counts charging her with stealing more than $6 million from 31 clients to buy expensive cars, take luxury vacations, make extensive home improvements and pay for her children's tuition to college and private school.
In Middlesex Superior Court, Elaina Patterson, 53, of Wilmington, pleaded not guilty to 15 counts of larceny over $250 from a person over 60 and 16 counts of larceny over $250.
Attorney General Martha Coakley's Office alleges Patterson conducted fraudulent transactions worth about $6 million and made payments back to investors and customers of nearly $3.8 million, leaving more than $2 million still owed.
"We allege that this defendant used her position as a banker to garner trust from friends and family, and then pushed fake investment opportunities that promised high rates of interest," 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."
Prosecutors allege she also funded her own lavish lifestyle.
Patterson allegedly bought a variety of luxury cars -- a Cadillac Escalade, a Mercedes SUV and a Lexus -- along with making extensive upgrades to her Wilmington home.
She also allegedly paid for expensive vacations to California, Aruba
More than $100,000 was allegedly used to pay for college and private-school tuition for her children, as well as paying for her children's apartments in California.
She also allegedly made payments on multiple loans and credit cards.
Although she initially denied the thefts, Patterson eventually cooperated with the bank's investigation and provided a written statement describing her conduct, according to court documents.
Coakley began an investigation in November 2011 after the matter was referred by Bank of America during its initial internal investigation. Patterson worked as a personal banker at a bank branch in Reading, which was initially Bank of Boston, and later became Fleet Bank and then Bank of America.
Authorities allege that between July 1999 and September 2011, Patterson made approximately $6 million in fraudulent transactions involving 31 investors and customers.
At the beginning of the scheme, Patterson allegedly persuaded family and friends to invest their money in accounts that she characterized as offering high interest rates, normally between 10 percent and 15 percent. Authorities allege that she regularly portrayed these accounts as being exclusively for high-level investors and corporations, but said that due to her position at the bank, she was able to set up these accounts for family and friends.
The investigation allegedly revealed that Patterson convinced 15 family members and friends to invest nearly $4.5 million as a part of this scheme, and that she issued fake certificate of deposit receipts and Form 1099s on bank forms to make the investments appear legitimate.
Authorities allege that, in a number of instances, Patterson set up accounts in the investors' names without their knowledge, put her own address on the accounts, deposited the investors' funds, and used the money both to fund payments to other investors and to funnel money into her personal accounts.
Further investigation allegedly revealed that beginning in 2009, Patterson began stealing money from the accounts of customers, many of them elderly, to conceal her previous theft from investors.
Seven of the victims were 60 or older at the time they provided funds. Victims included Patterson' cousins, some of her aunts and uncles, one cousin's wife's parents, her sister-in-law's parents and several people she met through her father-in-law.
To come up with the cash, the victims withdrew funds from legitimate savings and investment accounts, cashed in savings bonds and diverted funds that included tax refunds and lottery winnings.
Two victims, with Patterson's encouragement, took out six-figure mortgages on their homes to invest the money with Patterson.