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.
#
# # |