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Associated PressA former Merrill Lynch worker is suspected of laundering $43-million.
TORONTO - Canadian police are investigating a former Merrill Lynch energy trader on allegations of laundering $43-million in an operation involving a Canadian company.
Jason Chance, a spokesman for the Alberta provincial justice department, said Monday that the Royal Canadian Mounted Police was investigating Daniel L. Gordon, as well as an Edmonton man, Michael Ritter, and his securities company, Newport Pacific Financial Group.
Chance said his department assisted the RCMP in seeking search warrants for the investigation. He confirmed that the alleged money laundering involved $43-million but declined to provide further details.
"We're only involved in the periphery at this point because no charges have been laid," Chance said. A U.S. Justice Department spokesman declined to comment.
If true, the embezzlement would be the largest employee theft from a financial institution in modern times, said John Coffee, Adolf A. Berle professor of law at Columbia Law School in New York, where he directs the Center on Corporate Governance.
In a statement late Monday, Merrill Lynch spokesman Bill Halldin said the company was working with law enforcement authorities investigating Gordon.
"We've taken steps to strengthen our controls as a result of our review of this matter," Halldin said.
Merrill Lynch sold its energy-trading division Global Energy Markets, which Gordon headed, to Allegheny Energy Inc. for $489-million in early 2001. Allegheny hoped to emulate Enron Corp.'s apparent success in energy trading, but after Enron collapsed, so did the energy trading market, sending Allegheny into a tailspin.
Allegheny Energy fired Gordon in September. At that time, the Associated Press reported, quoting an unnamed source familiar with Allegheny Energy's investigation, that Gordon had conflicts of interest involving financial interests in software and real estate firms that did business with Allegheny, and that Gordon had lied about his age and education.
Allegheny Energy of Hagerstown, Md., has 1.5-million electricity customers and 230,000 natural gas customers in Maryland, Ohio, Pennsylvania, Virginia and West Virginia.
Gordon, now chairman of Daticon Inc., a legal document storage company in Norwich, Conn., didn't return phone calls requesting comment. His attorney, Alan Levine, managing partner of Kronish Lieb Weiner & Hellman LLP in New York, declined to comment.
- Information from Bloomberg News Service was used in this report.