N.J. Bureau of Securities Revokes Registrations of
Two Agents Who Defrauded Elderly Investors
NEWARK – In two separate actions, the New Jersey Bureau of Securities (NJBOS) today revoked the registrations of two agents who defrauded elderly investors of approximately $1.4 million by offering them fictitious investments and then used the invested funds to pay for personal expenses.
The BOS ordered agents Hudson Etienne Sr. of Union, N.J. and Jeffrey Southard of Pittsgrove, N.J. to pay restitution to their victims and also assessed civil monetary penalties against each. The revocation orders effectively bar both Etienne and Southard from working, in any capacity, in the New Jersey securities industry.
“These financial agents robbed trusting, elderly investors for their own personal gain. We will search out white-collar criminals who attempt to violate our securities laws and regulations and hold them accountable.” Attorney General Anne Milgram said.
“Elderly residents are increasingly being targeted for investment fraud because they have built up funds over the years and have monies to invest,” said Amy Kopleton, Acting Chief of the NJBOS. “Especially in these difficult financial times, the promise of high rates of return may be alluring, but investors should always contact the Bureau to check whether the person and investment they are offering are registered in New Jersey.”
Etienne, while employed by New England Securities, offered a widow a guaranteed 20 to 23 percent annual return rate through an investment in a Real Estate Investment Trust that did not exist. The widow invested $100,000 with Etienne, with the intention of using the investment to pay for her great-grandchildren’s college education.
New England Securities was unaware of and not involved with Etienne’s fraud. Etienne voluntarily resigned from New England Securities in 2005 and was registered as an agent employed by another financial firm.
The widow invested $100,000 with Etienne in mid-2003 and was supposed to receive $24,000 in an annual payment representing the proceeds from her investment. Etienne paid her $22,000 at the end of 2004, but a $26,000 check sent at the beginning of 2005 bounced because of insufficient funds.
Attorney General Milgram thanked the Roselle Park Police Department for sending the complaint it received from the widow to the NJBOS for its investigation.
Southard offered investors an “Ohio bond,” which did not exist. Southard claimed his brother-in-law in Ohio would purchase the bond, thus making the investment tax-free for investors. He claimed the bond guaranteed an annual return rate between 6 and 11 percent.
Southard offered the bond through his own company, JDBAC Financial. He perpetrated the fraud by personally visiting his clients on a regular basis. The clients stated that they wanted a conservative investment to fund their retirements, supplement their social security and provide money to their grandchildren.
Southard instead used the invested funds for his personal expenses, including $236,678 in private school tuitions for his five children; $270,142 toward his mortgage; $58,334 in car payments; 87,002 in ATM withdrawals, and $36,175 in debit card purchases.
Southard was an agent with GunnAllen Financial from 2003 to 2008 and was discharged while under internal investigation. He worked as an agent for Ameriprise Financial Services from 1997 to 2003 and resigned while under internal investigation.
Southard’s victims were clients of his while he was employed at these two financial firms. He fraudulently used Ameriprise letterhead to deceive investors into believing the non-existent “Ohio bond” was a legitimate investment.
Southard defrauded at least 16 clients of approximately $1.3 million during a six year period.
Investigator William Hoefling led the Bureau's investigation of Etienne. If anyone has any additional information regarding Etienne’s sale of unregistered securities, please contact Investigator Hoefling at 973-504-3613.
Rudy Bassman, Supervising Investigator, led the Southard investigation, with assistance from Attorney-Investigator Pamela M. Geraghty and Legal Intern Sean Wilke.
The NJBOS can be contacted toll-free within New Jersey at 1-877-I-INVEST (1-877-446-8378) or from outside New Jersey at 973-504-3600. The Bureau's web site is located at: www.njsecurities.gov