Broker in alleged scam used secret computer system

CLEVELAND -- A stockbroker suspected of stealing millions of dollars over 15 years kept the scam going by sending his clients phony financial statements, according to the FBI.

Frank Gruttadauria, 44, kept false accounts for about 110 customers and inflated the value of their accounts by $277 million, the FBI said in court papers. He disappeared Jan. 11 -- leaving behind an incriminating letter -- but surrendered Saturday to the FBI in Cleveland.

While investigators tried to determine exactly how much was stolen, Gruttadauria appeared in federal court Monday on a charge of making false statements to a financial institution in relation to a $6 million line of credit he received. He is being held without bail.

Additional charges are possible, said Bill Edwards, spokesman for the U.S. attorney's office.

Gruttadauria, who lived in suburban Gates Mills, is suspected of conducting a 15-year scam while working as a broker for various firms, including SG Cowen Corp. and Lehman Brothers Inc.

The FBI said in court papers that Gruttadauria had a secret computer system in his office to generate false reports for his clients.

Gruttadauria's computer records showed the accounts for the 110 clients were worth a total of $289 million while Lehman Brothers' official records showed they were worth $12 million, the FBI said.

FBI agents said that during Gruttadauria's time on the run he had been in Colorado Springs, Colo.; Buffalo, N.Y., and Cleveland. Agents found his car three days ago in the Cleveland area. The FBI said the stockbroker got an Ohio driver's license under an alias, bought a 2000 Chevy Tahoe for $33,000 in cash and rented a home in Colorado Springs.