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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
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