By Chris Villani

Law360 (March 5, 2021, 6:37 PM EST) -- A former Morgan Stanley financial adviser will not be allowed out of prison due to COVID-19 risks, a judge said Friday, citing the "irony" of the convicted man asking to care for his aging parents after swindling an elderly victim in a "despicable" fraud scheme.

James Polese, 54, had asked the court to let him serve the remainder of his five-year prison term in home confinement, arguing that he has been a model inmate and that he will not soon receive a coronavirus vaccine while incarcerated in a Massachusetts prison.

U.S. District Judge Mark L. Wolf denied the motion from the bench during a hearing Friday, suggesting it was not a particularly close call. The judge recalled Polese's 2018 sentencing which featured testimony from 87-year-old philanthropist Ralph Bates, from whom Polese stole almost $850,000 to spend on his own investments, credit card bills and his children's college tuition.

"I was struck when I picked this file up again about the irony of Mr. Polese seeking release to assist his elderly parents. I remember Mr. Bates," Judge Wolf said. "I've sentenced, in my almost 36 years as a judge, many people who committed fraud. In some there were larger sums of money. But Mr. Polese, you committed one of the most despicable crimes of fraud I have encountered."

Bates stood in Judge Wolf's Boston courtroom more than two years ago and said Polese was once a good friend of his, "and then I heard he ripped me off for big bucks."

Bates needed the help of an attorney that day, as he was not able to hear much of what was said in court.

"Mr. Bates couldn't hear when I sentenced you, but he could speak," Judge Wolf told Polese Friday. "He told me about how much he trusted you and how much he relied on you as he was trying to give millions of dollars he had somehow made to charities like the Boys and Girls Club and how you not only took his money and stole from those charities, but betrayed his trust."

Polese has served about 26 months of his 60-month term. His attorneys, Mark Smith and Jessica Conklin of Laredo & Smith LLP, told the judge their client suffers from hypertension and is therefore at risk of complications should he contract COVID-19.

He has also been a model inmate, they argued, serving as a driver shuttling other inmates from the Central Massachusetts prison camp to the airport in Boston, or as far as Cape Cod, without any supervision or GPS monitoring.

Assistant U.S. Attorney Sara Bloom, however, argued that about half the adult population has hypertension and Polese's seems to be reasonably well controlled through medication. Bloom said that Polese has three siblings who could assist their elderly parents, and that it is unlikely they would argue he should take time off from work to pitch in if he were still with Morgan Stanley.

Speaking more broadly about compassionate release motions during the pandemic, Bloom worried that there is a "disparate impact" favoring defendants whose crimes are financial in nature.

"White collar defendants are more likely to have a home to go to that is deemed appropriate, they are more likely to have excellent counsel to prepare the motion for them, they are more likely to be older and have medical conditions," Bloom said. "I think in this case, where I would argue it doesn't otherwise represent extraordinary circumstances, it is an argument for thinking carefully about allowing out white collar defendants when their circumstances may be more privileged than other inmates serving their sentences."

Judge Wolf agreed, noting that although Polese has not yet been vaccinated, he is at decreased risk given the fact the fact that most other inmates in the camp have received doses and the facility where he is housed has not reported any COVID-19 cases. Judge Wolf said the motion does not meet the high bar needed to warrant transferal to home confinement after serving less than half of his prison term.

"If I were to grant your motion, I'd have to grant almost every compassionate release motion I get, at least from a white collar offender," Judge Wolf said, adding that Polese's asserted grounds for release are "about the least I've seen in a year of dealing with these motions."

Polese's co-conspirator, 29-year-old Cornelius Peterson, also pled guilty and received a 20-month prison sentence in June 2018. Prosecutors said Polese roped Peterson into the conspiracy.

In addition to the prison term, Polese was ordered to pay $462,000 in restitution and a $30,000 fine. His lawyers said Friday he has paid all but about $23,000 in restitution owed to Morgan Stanley.

According to prosecutors, Polese and Peterson engaged in a range of illegal conduct from 2014 to 2017. They used $400,000 from Bates' Morgan Stanley account without consent to back a letter of credit in support of an investment in a wind farm project and transferred $350,000 of Bates' money into a real estate investment, prosecutors alleged.

The government also said Polese used about $93,000 of the elderly client's money without consent to pay for his children's college tuition and his own credit card bills. He and Peterson also admitted to using $100,000 from a different client's account to fund the wind farm investment.

The government is represented by Sara M. Bloom of the U.S. Attorney's Office for the District of Massachusetts.

Polese is represented by Mark D. Smith and Jessica Conklin of Laredo & Smith LLP.

The case is U.S. v. Polese, case number 1:18-cr-10028, in the U.S. District Court for the District of Massachusetts.

--Editing by Regan Estes.

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