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Everybody Hates Ross | Institutional Investor

Ross McLellan was hungover the morning he was arrested for securities fraud.

It was April 5, 2016. The night before, Villanova had beaten North Carolina in the NCAA basketball title game. McLellan “had a few cocktails watching it” before going to bed at 1:00 a.m. Up early the next morning, he donned jeans and a Vineyard Vines long-sleeve before driving his twins to their preschool in Hingham, Massachusetts, a commuter town about ten miles southeast of the city of Boston. He then proceeded to the office of Harbor Analytics, the company he had founded after being fired from financial giant State Street in 2011. McLellan parked his SUV behind the office, located in a converted house, and went inside.

“It’s a typical Boston morning,” he remembers. “It’s 34 degrees, and my office is right near the water in Hingham Harbor, so it’s whipping 30 knots, freezing.” He had a 9:00 a.m. meeting at a coffee shop only a quarter-mile away, but decided to drive, given the weather. He exited the building. 

McLellan does not believe they had their guns drawn. He is certain that as he stepped into the parking lot, eight FBI agents moved toward him. At least one was wearing an FBI pullover. “They grab me. They’re like, ‘Do you have any sharp objects in your pockets?’” 

He snickered. “I’m like, ‘I think I’ve got a fucking pen in there.’” Agents handcuffed him, put him in a car, and began the traffic-snarled drive to Boston’s John Joseph Moakley United States Courthouse.

That was four years ago. McLellan has since been tried and convicted, lost an appeal, and, on July 7, said goodbye to his wife and four young children to report to federal prison in Ayers, Massachusetts, to serve out an 18-month sentence. The crimes he was convicted of — overcharging clients by millions as a young executive at State Street and conspiracy to do so — occurred nearly a decade ago. McLellan is inmate no. 99476-038.

He did not testify at trial. However, in the weeks preceding his incarceration, McLellan agreed to a series of extensive interviews with Institutional Investor. By turns boisterous, despondent, humorous, abrasive, charming, and frustrated, he does not deny that he made mistakes, and that his crimes are no longer alleged. Yet McLellan still vehemently believes that despite all evidence to the contrary, he was railroaded by the government and by a corporation intent on protecting its own, a corporation he thinks is hiding an email that would exonerate him — if not legally, then morally. 

And moral exoneration seems to be exactly what Ross McLellan is looking for. 


But first, the crime.

According to the U.S. federal government and 12 Suffolk County jurors, McLellan is guilty of conspiracy, securities fraud, and wire fraud. The government alleged, and the jury found credible, that McLellan and a small group of accomplices tacked “secret commissions” onto trades and then “took steps to conceal the scheme” while working in Boston-based State Street’s transition management business in the years immediately following the global financial crisis. 

As is so often the case with financial crimes, the details are tediously complex. Transition management, at its core, is a transaction business: Like a family trying to move houses, investors frequently sell large pools of assets in order to buy others. To do so they hire State Street or one of its competitors to buy and sell on their behalf. It may seem mundane, but when the things being bought and sold are valued in billions, there is money to be made. According to the government, McLellan and his conspirators made immense amounts of money for State Street by charging overseas clients fees that were not disclosed. “The issue here is you can’t lie,” U.S. District Judge Leo Sorokin, who oversaw the trial, said at sentencing. “Truth matters. You can’t tell people you’re going to charge them one thing and charge another.”

McLellan, along with U.K.-based subordinates Edward Pennings and Richard Boomgaardt, defrauded six European and Middle Eastern investors in the scheme. Both underlings would eventually plead guilty and testify against their former boss.


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