Financial advisor Charles Winitch pled guilty on Monday in White Plains federal court to wire fraud for executing unauthorized transactions in a trust held for disabled children.

United States Attorney for the Southern District of New York Preet Bharara wrote in Winitch’s plea agreement that he conspired to commit fraud from March 2004 to July 2005 while employed as a financial advisor in New York. Although Bharara and federal prosecutors did not name the firm The New York Daily News identified Winitch as a Morgan Stanley stockbroker in a 2008 story. He was employed by Morgan Stanley from November 1998 through August 2005.

Fifty-one-year old Winitch of Scarsdale took $198,784 from the Guardian Accounts, a trust held by guardians of disabled children, which was only supposed to be invested in U.S. Treasury Bonds or New York Municipal Bonds in order to be low-risk and to provide reliable, long-term income for the children. The money in the trust was from medical malpractice settlements for disabled youth between 10 and 18 years of age. The U.S. attorney’s office said Winitch made unauthorized trades in eleven accounts in order to receive higher commissions, juggling millions of dollars knowing that he did not have the authority or the consent to do so. Winitch’s plea agreement shows that the fund’s loss was between $400,000 and $1 million.

“Charles Winitch abused his position as a trusted financial adviser in a way that affected some of the most truly vulnerable among us—mentally and physically disabled children—to line his own pockets,” said Bharara. “We will do everything within our power to ensure that the punishment fits the crime.”

FBI Assistant Director in Charge Janice K. Fedarcyk agreed. “This was a clear-cut case of self-dealing, to the detriment of a very vulnerable group to whom Winitch had a fiduciary responsibility. Very specific investment restrictions were disregarded in order to maximize personal profit.”

Winitch is scheduled to be sentenced on March 18, 2011 by U.S. District Judge Cathy Seibel. He could be sentenced to up to 63 months in prison, fines of up to $250,000 or twice the gross gain or loss resulting from that offense, restitution, and forfeiture of ill-gotten gains.

Winitch's defense attorney, Ira Sorkin, said that his client was unaware that the accounts held disabled children's money. 

“He admitted that he was involved in a conspiracy to commit wire fraud,” said Sorkin. “Nobody could have rationally done these trades knowing that the [settlement funds were] for disabled children.”