Former Employee Of Shuttered Financial Services Firm, Barbara Jean Kelsey, Sentenced To 78 Months In Prison For Fraud And Money Laundering
Investigators Recover and Return Over $1 million to Victims
GRAND RAPIDS, MICHIGAN —U.S. Attorney Patrick A. Miles, Jr. announced today that Barbara Jean Kelsey of Elkhart, Indiana was sentenced by U.S. District Judge Janet T. Neff to a total of 78 months in prison for conspiracy to commit mail fraud and wire fraud and substantive money laundering crimes. Kelsey pled no contest to the charges on November 13, 2015.
U.S. Attorney Miles stated: “Financial fraud is a crime of greed and opportunity. When a person uses fraud to decimate another individual’s financial security, they deserve to face a significant prison term.”
Kelsey was an employee of the financial services firm Fabian & Associates, LLC located in Kalamazoo. Along with Joseph Stephen Fabian, the principal of Fabian & Associates, Kelsey defrauded more than 30 clients of the firm causing losses of over $3.8 million between 2007 and 2010. Fabian and Kelsey used a variety of ruses to induce clients and prospective clients to withdraw money from their existing retirement accounts, investment accounts, bank accounts, and other sources to place into investment products that the firm recommended. But Fabian fabricated many of the investment products that were recommended. Or, when the recommendation was for a legitimate investment, Fabian and Kelsey failed to deposit the money on their clients’ behalf. Kelsey assisted Fabian by creating shell corporations and opening bank accounts to divert client monies intended for investment. She represented herself to clients as a Certified Public Accountant even though she had no more than a high school education. She moved client monies between various accounts without any regard for accounting. Investigators traced nearly $1 million to Kelsey’s personal bank accounts, which Kelsey spent on herself, including the purchase of a house.
Judge Neff labeled Kelsey’s crimes as “egregious,” “immoral,” and “unconscionable.” Many of Fabian’s and Kelsey’s victims were of retirement age or near-retirement age and also included individuals and families looking for safe investment opportunities to provide income to support special-needs children or to deal with health problems and attendant medical expenses.
Fabian is currently serving a 92 month prison sentence issued by Judge Neff in 2012. Since that time, the United States has recovered through forfeiture proceedings over $1 million and applied the recoveries to victim restitution.
“Ms. Kelsey portrayed herself as a competent, trustworthy accountant, and she was neither,” said David P. Gelios, Special Agent in Charge, FBI Detroit Division. “She preyed upon individuals that were taking steps to financially secure their families’ futures. Rather than grow their investments, Kelsey misappropriated funds provided to Fabian & Associates, LLC for her own personal use, and irreparably damaged the financial futures of the victims in this case. Today, Ms. Kelsey is being held to account for her crimes.”
The case was prosecuted by Assistant U.S. Attorney Joel S. Fauson and investigated by the Federal Bureau of Investigation’s Kalamazoo Resident Agency.