Former monk's sentence extended over stockbroking fraud

The company, one of Cork's oldest stockbroking firms, later collapsed with losses of €7m after he used client's money to trade on the stock market.

Pearson pleaded guilty to 31 charges of fraudulently converting clients' funds, 11 charges of forgery and five counts of obtaining funds under false pretences between November 1995 and April 2001 .

Last October, Judge Desmond Hogan sentenced him to three years at the Dublin Circuit Criminal Court, but suspended the final year, saying he had regard for the affect prison would have on him, his wife and his family.

The DPP appealed against the leniency of the sentence and today the Court of Criminal Appeal increased the sentence to five years imprisonment.

Mr Justice Nicholas Kearns, presiding at the three judge court, said that the court was satisfied that the sentence was unduly lenient.

"The word must go out to the public that white collar crime of this nature will attract serious sentences," he said.

The judge said that the trial judge had erred in suspending a portion of the original sentence which brought the sentence down to two years.

He said that Pearson had very considerable responsibilities and had taken part in a series of frauds over five years.

The judge said that Pearson's victims had been widows and elderly people, among others, and in many cases they had entrusted their life savings to him. He said that as a result of Pearson's actions the long standing Cork firm had collapsed and his partner in the firm Mr Alec Morrogh was reduced to penury in attempting to use his assets to recompense the victims of the fraud.

Mr Justice Kearns said that Pearson was not a hardened criminal but had engaged in gambling with futures and options out of a weakness of character.

The sentence hearing last year was told that W&R Morrogh was established in 1887 and was one of the most reputable stockbrokers in Cork. It had 9,000 clients and was registered with both the Irish and London Stock Exchange.

Alec Morrogh, the grandson of the company founder was a 60% partner of W&R Morrogh since 1992, along with his cousin, Pearson, who owned 40% of the company. Pearson was also made financial controller of the firm in that year.

In 2001 the Central Bank contacted the Bureau after W&R Morrogh failed to make its annual return that had been due on April 2 that year.

Mr Morrogh investigated the delay in submitting the return along with other staff members which led to them discovering financial irregularities in how the firm had been managed.

W&R Morrogh went into receivership with a total loss of an estimated €7,000,000. The garda investigation focused on 25 clients of W&R Morrogh, which represented a cross section of their 9,000 clients.

The probe also revealed that Pearson had used the funds of clients and obtained funds under false pretences from 20 of these clients. Pearson used the pseudonym of "Gerard Stevens" to trade in options and futures in the stock market.

He also set up a number of bogus accounts to allow him to transfer the stolen monies into. They had names such as, in one case, "Bear Bull".

The court heard that Pearson would transfer funds from client's accounts into the "Bear Bull" and his other bogus accounts in order to cover losses he had incurred from trading.

He would then use another client's funds to move back to the first client's account, so as to "cover his tracks". He would then trade again in an attempt to make money to cover the losses in the second account.

Pearson had also sold clients' share certificates without their permission.

The third method Pearson used was to agree to purchase shares on a client's behalf. He would then issue a forged contract.