AMonmouth County grand jury returned a four-count indictment Sept. 10 charging Stephen Severio, 40, of Fair Haven, with theft by deception. Charges also include misappropriation of entrusted funds and commercial bribery, all second-degree crimes, and third-degree attempted theft by deception.

The indictment follows an investigation into allegations that Severio stole money from his clients while he was employed as a financial adviser by Merrill Lynch in Red Bank, according to the Monmouth County Prosecutor's Office.

The investigation conducted by the prosecutor's office began in October 2008 following a referral from Merrill Lynch's Internal Fraud Investigation Unit.

According to a press release from the prosecutor's office, it was initially reported that Severio had persuaded a number of his clients at Merrill Lynch to withdraw funds from their Merrill Lynch accounts and to then reinvest the withdrawn funds in investment opportunities outside of Merrill Lynch. This scheme, commonly known in the financial industry as "selling away," is a violation of industry standards as well as Merrill Lynch company policy, according to a press release from the prosecutor's office.

The investigation revealed that beginning in the summer of 2007, Severio directed solicitations at some of his Merrill Lynch clients, the press release states. In his solicitations, Severio routinely represented that the investment vehicles that he was offering would yield annual returns of between 15 and 20 percent, the prosecutor's office said.

Twenty-six individuals, many of whom had been Severio's clients during his five years at Merrill Lynch as well as when he had previously worked at Morgan Stanley, tendered checks to Severio in varying amounts totaling more than $500,000 in the aggregate, according to the prosecutor's office. Most of those investor checks were then allegedly cashed by Severio at a local Monmouth County check-cashing establishment. None of the money entrusted to Severio in this manner were ever invested in any legitimate financial portfolio or account, according to the press release.

Three of the four crimes contained in the indictment — theft by deception, misappropriation of entrusted funds and commercial bribery — relate to funds that Severio's clients actually entrusted to him. The fourth crime, attempted theft by deception, relates to Severio's alleged repeated unsuccessful attempts to encourage another of his regular clients to invest with him outside of Merrill Lynch as the others had done. The client declined to do so, and thereafter contacted Merrill Lynch, according to the press release.

If convicted of any of the second-degree crimes, Severio faces a maximum potential custodial sentence of a state prison term of up to 10 years. If convicted of the third-degree crime, Severio faces a maximum potential custodial sentence of a state prison term of up to five years.

Severio was arrested on the charges contained in the indictment on March 20 and was released later that day after posting $100,000 bail.

Despite these pending charges, this and every defendant is presumed innocent until proven guilty following a trial during which the defendant is afforded all the rights guaranteed him by the U.S. Constitution and the laws of the state of New Jersey.