Investment broker accused of bilking clients out of $1.3 million In a post-Bernard Madoff world, a $1.3 million dollar Ponzi scheme doesn't sound like a big deal. But according to New Jersey Attorney General Anne Milgram, the investors in her state that were allegedly swindled out of their life savings see it as a very big deal indeed.
Milgram and Criminal Justice Director Deborah Gramiccioni announced the arrest of a Salem County, New Jersey investment broker on money laundering and theft charges. He's accused of defrauding South Jersey investors out of $1.3 million.
According to Gramiccioni, Jeffrey Joseph Southard, 44, of Pittsgrove, was arrested 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.
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, at the staggering rate of between six and 11 percent annual return.
The complaint says 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," 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.
