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TRENTON - Attorney General
Anne Milgram and Criminal Justice Director
Deborah Gramiccioni announced that a Salem
County investment broker was arrested this
morning on money laundering and theft charges,
accused of defrauding South Jersey investors
out of $1.3 million through a Ponzi scheme.
According to Director Gramiccioni,
Jeffrey Joseph Southard, 44, of Pittsgrove,
was arrested at his mother’s home
without incident this morning on charges
filed by the Division of Criminal Justice.
Southard was charged with first-degree money
laundering, second-degree misapplication
of entrusted property, second-degree theft
by deception, and second-degree securities
fraud.
Members of the Division
of Criminal Justice and the FBI made the
arrest. The New Jersey Bureau of Securities
initiated the investigation of Southard
and referred the matter to the Division
of Criminal Justice.
Between Jan. 1, 2002 and
May 31, 2008, Southard, an investment broker-dealer,
allegedly offered at least 16 mostly elderly
clients a fictitious “Ohio bond”
through his own company, JDBAC Financial.
He allegedly claimed that a family member
in Ohio would purchase the bond, thus making
the investment tax-free for investors. It
is charged that he claimed the bond guaranteed
an annual return rate between 6 and 11 percent.
It is charged that 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.
The rest of the money, approximately
$400,000, he used to pay investors monthly
interest payments, although he also gave
investors the option to reinvest their interest.
Southard allegedly generated phony statements
on a monthly basis to his investors.
“Robbing the elderly
of their life savings is a particularly
heinous crime,’’ Attorney General
Milgram said. “We charge Southard
with peddling a completely bogus product,
enriching his personal bankbook by exploiting
victims’ trust.”
Southard allegedly perpetrated
the fraud by personally visiting his clients,
many of whom were in their eighties and
nineties, 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’s victims
lived in several counties in South Jersey
including Burlington, Camden, Gloucester
and Salem.
Southard was an agent with
GunnAllen Financial, working out of his
home, from 2003 to 2008 and was discharged
while under internal investigation. He also
worked out of his home in Turnersville as
an agent for Ameriprise Financial Services
from 1997 to 2003 and resigned while under
internal investigation.
On Nov. 25, 2008, the New
Jersey Bureau of Securities revoked Southard’s
registration and ordered him to pay restitution
to their victims and also assessed civil
monetary penalties against him.
Superior Court Judge Patricia
Richmond LeBon in Burlington County set
bail at $300,000. Southard will be ordered
to appear to answer to the charges on a
date yet to be set by the court.
Southard was also arrested
on federal charges to which he will be ordered
to appear in United States District Court.
The investigation was coordinated
by Detective Sergeant Louis Matirko, Lieutenant
John Jesperson, Detectives Eric Ludwick
and John Neggia and Deputy Attorney General
Francine Ehrenberg, all of the Division
of Criminal Justice – Major Crimes
Bureau. Attorney General Milgram also thanked
Acting Chief Amy Kopleton, Investigators
Rudolph Bassman and Pamela Geraghty of the
New Jersey Bureau of Securities, the FBI
Atlantic City Resident Agency, the Internal
Revenue Service, Assistant United States
Attorney Allen Harberg, and the U.S. Department
of Labor, Marjorie Franzman, Special Agent
in Charge, New York City, for their assistance
in the investigation.
The charges against Southard
are merely accusations and the defendant
is innocent until proven guilty. First-degree
charges carry a maximum sentence of 20 years
in state prison and a fine of up to $200,000,
while second-degree charges carry a maximum
sentence of 10 years in state prison and
a fine of up to $10,000.
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