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For Immediate Release:  
For Further Information:
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June 15, 2009  

Peter Aseltine
609-292-4791

Office of The Attorney General
- Anne Milgram, Attorney General
Division of Criminal Justice
- Deborah L. Gramiccioni, Director

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Salem County Investment Broker Pleads Guilty to Defrauding Elderly Clients Out of $1.8 Million

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TRENTON - Attorney General Anne Milgram announced that a Salem County investment broker pleaded guilty today to state charges for defrauding South Jersey investors out of $1.8 million through a Ponzi scheme.

According to Criminal Justice Director Deborah L. Gramiccioni, Jeffrey J. Southard, 44, of Pittsgrove, pleaded guilty to charges of first-degree money laundering and second-degree securities fraud filed by the New Jersey Division of Criminal Justice Major Crimes Bureau. He entered the plea before Superior Court Judge Patricia Richmond LeBon in Burlington County.

Under the plea agreement, the state will recommend that Southard be sentenced to 15 years in state prison, including five years of parole ineligibility. Deputy Attorney General Francine Ehrenberg took the plea for the Division of Criminal Justice. Southard is scheduled to be sentenced on Sept. 25.

In a global resolution of the case, Southard pleaded guilty on June 12 to federal charges of mail fraud and signing a false tax return brought by the U.S. Attorney’s Office for the District of New Jersey. Southard must pay full restitution to his victims of $1,833,399, and faces a federal prison sentence to be determined by the judge. The state and federal sentences will run concurrently.

“This investment broker ruthlessly preyed on elderly clients, stealing their life savings,” said Attorney General Milgram. “In pleading guilty to these charges, Southard faces a lengthy prison sentence and must pay full restitution to his victims.”

The New Jersey Bureau of Securities initiated the investigation of Southard and referred the matter to the Division of Criminal Justice. Southard was arrested on Dec. 18, 2008 by members of the Division of Criminal Justice, FBI, Internal Revenue Service and U.S. Department of Labor.

Between Jan. 1, 2002 and May 31, 2008, Southard, an investment broker-dealer, offered at least 16 clients a fictitious “Ohio Bond” through his own company, JD BAC Financial. He claimed that a family member in Ohio would buy the bonds, making the investment tax-free for investors. He claimed the bonds guaranteed an annual rate of return of between 6 and 11 percent.

Instead of purchasing “Ohio Bonds,” Southard laundered and converted the funds through a series of financial transactions, using the funds to pay for 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 used approximately $480,000 to pay investors monthly interest payments, although he also gave investors the option to reinvest their interest. Southard generated phony statements on a monthly basis to his investors.

Southard perpetrated the fraud by personally visiting his clients on a regular basis. Many of the clients were in their eighties or nineties. 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 a registered agent and investment representative with GunnAllen Financial Inc. from 2003 to 2008. He was discharged while under internal investigation. From 1997 to 2003, he worked as a registered agent and investment representative for American Express Financial Services. He resigned from that position while under internal investigation.

On Nov. 25, 2008, the New Jersey Bureau of Securities revoked Southard’s registration and ordered him to pay restitution. It also assessed civil monetary penalties against him.
The investigation was coordinated by Detective Sgt. Louis Matirko, Lt. John Jesperson, Detective Eric Ludwick, Lt. Stephanie Stenzel and Deputy Attorney General Francine Ehrenberg of the Division of Criminal Justice Major Crimes Bureau.

Attorney General Milgram also thanked the following individuals and agencies for their assistance in the investigation: Deputy Bureau Chief Amy Kopleton, Investigator Rudolph Bassman and Investigator Pamela Geraghty of the New Jersey Bureau of Securities; the FBI Atlantic City Resident Agency; Assistant U.S. Attorneys Allen Harberg Jr. and R. Stephen Stigall; the Internal Revenue Service; and the U.S. Department of Labor, Marjorie Franzman, Special Agent in Charge, New York City.

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