BOSTON - A Peabody investment advisor was arrested today after being charged with defrauding several Boston-area residents out of their retirement savings.
John Michael Babiarz, 39, was charged in a six-count indictment unsealed today with wire fraud, mail fraud, money laundering and aggravated identity theft. Babiarz was previously charged in an administrative complaint brought by the Massachusetts Securities Division with engaging in unregistered and fraudulent activities in violation of the Massachusetts Uniform Securities Act and applicable regulations.
The indictment alleges that, following his termination in September 2011 from Bishop, Rosen & Co., a retail brokerage firm headquartered in New York, Babiarz falsely told certain former clients that he had taken a job at Fidelity Investments, the Boston-based asset management firm. Babiarz told other clients that he was working as an independent financial advisor. In fact, Babiarz did not work at Fidelity, and has never been employed by that firm. Babiarz told his clients that he could continue to manage their money if they opened brokerage accounts at Fidelity. Babiarz assisted the individuals in opening such accounts online, and in so doing, set up the user names and passwords for those accounts. Unbeknownst to his clients, Babiarz then caused their funds – or money he borrowed in their names on margin – to be diverted to accounts that he controlled at several other banks and brokerage firms. Babiarz used the money to buy a new home and to pay other personal expenses. As part of the case the government is seeking the forfeiture of a single-family home Babiarz recently purchased in Peabody.
If convicted on the charge of wire and mail fraud, Babiarz faces a maximum sentence of 20 years in prison, three years of supervised release and a fine of the greater of $250,000 or twice the gain or loss from the offense; on the charge of money laundering, Babiarz faces a maximum sentence of 10 years in prison, three years of supervised release and a $250,000 fine; and on the charge of aggravated identity theft Babiarz faces a mandatory consecutive term of two years in prison.
United States Attorney Carmen M. Ortiz and Kevin Niland, Inspector in Charge of the U.S. Postal Inspection Service, made the announcement today. Assistance was also provided by the Massachusetts Securities Division and the Essex County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Stephen E. Frank of Ortiz’s Economic Crimes Unit.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.