U.S. and Canadian authorities are investigating allegations that a former Merrill Lynch employee embezzled $43 million from the company in a fake energy trade and used the money to buy a computer data firm in Connecticut.

The investigation centers on Daniel L. Gordon, 27, who last year moved his firm, Daticon, from Ledyard to a $9 million corporate headquarters in Norwich and bought a $3.6 million home in Old Lyme.

A message seeking comment was left at the house in Old Lyme early Tuesday. A Daticon spokesman told the Norwich Bulletin on Monday that Gordon left the company in December but would not elaborate.

Authorities have not filed any charges against Gordon, who grew up in Norwich.

Assistant U.S. Attorney Jane Levine said in a letter obtained by The Day of New London that Gordon embezzled the money in 2000 while working as an energy trader for Merrill Lynch.

Levine alleged in the letter that Gordon directed Merrill Lynch to send $43 million to Falcon Energy Holdings, a shell company incorporated in Anguilla. The money was wired on or about Aug. 30, 2000, “to a bank account held in the name of Newport Pacific Financial Group at AIG Private Bank Ltd. in Zurich, Switzerland, for further credit to Falcon,” she wrote.

The prosecutor wrote that Gordon convinced his superiors at Merrill Lynch that Falcon was “an international energy firm with investments in power plants, oilfields and gas reserves.”

But in truth, Levine alleged, Gordon formed both Falcon and a second offshore company, Ostrich Capital Partners, which was incorporated in the Marshall Islands. Gordon then moved the $43 million through Newport’s accounts in the AIG Swiss bank, according to the prosecutor’s letter.

“Falcon was not a legitimate company, but rather an offshore shell corporation controlled by Gordon and used as a vehicle to receive and launder the $43 million Merrill Lynch wired to Falcon under the terms of the fraudulent contract,” Levine alleged.

Gordon remains listed as chairman of Daticon, a legal-document storage company.

His father, Glenn Gordon, who was a well-known and politically active attorney in Norwich for years, serves as chief executive officer of Daticon. Glenn Gordon would not comment Monday.

Meanwhile, Canadian police are investigating the same allegations against Daniel Gordon. The Newport Pacific Financial Group is based in Canada.

Jason Chance, a spokesman for the Alberta provincial justice department, said Monday that the Royal Canadian Mounted Police were investigating Gordon, Michael Ritter of Edmonton and Newport Pacific Financial Group.

Chance said his department assisted the RCMP in seeking search warrants for the investigation.

“We’re only involved in the periphery at this point because no charges have been laid,” Chance said.

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 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. When Gordon was fired, a source familiar with Allegheny Energy’s investigation told The Associated Press 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, which is based in Hagerstown, Md., has 1.5 million electricity customers and 230,000 natural gas customers in Maryland, Ohio, Pennsylvania, Virginia and West Virginia.

Two Canadian newspapers, The Edmonton Sun and The Edmonton Journal, detailed the investigation into Gordon’s activities in March.

Daticon employs 250 to 300 people in the business of compiling and storing data for law firms. (AP)