Peabody Investment Advisor Sentenced For Defrauding Clients
BOSTON – A Peabody investment advisor was sentenced today for defrauding several Boston-area residents out of their retirement savings.
John Michael Babiarz, 40, was sentenced by U.S. District Judge F. Dennis Saylor, IV to four years in prison, restitution of more than $645,000 to his victims, and forfeiture of his house, an automobile, and a brokerage account. In May 2014, Babiarz pleaded guilty to wire fraud and aggravated identity theft.
Following his September 2011 termination from Bishop, Rosen & Co., a retail brokerage firm headquartered in New York, Babiarz falsely told some of his 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. Babiarz told his clients that he could continue to manage their money if they opened online brokerage accounts at Fidelity, assisted them to open such accounts, 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 a car – assets that the Court ordered forfeited today – and to pay other personal expenses.
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.
United States Attorney Carmen M. Ortiz and Shelly A. Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, made the announcement today. The case was prosecuted by Assistant United States Attorney Stephen E. Frank of Ortiz’s Economic Crimes Unit.