Secretary of State William Galvin’s office has filed a complaint against a Peabody man, alleging that he defrauded four senior citizens to the tune of nearly half a million dollars.
According to the complaint, filed yesterday, John Michael Babiarz previously worked as a broker-dealer for several Massachusetts firms, but in 2006, he received a 20-day suspension and paid a $5,000 fine for allegations that he had made unsuitable securities recommendations to his clients. In September 2011, he was fired from another firm after a customer alleged that he misrepresented the features of a certificate of deposit in violation of FINRA. He has not been registered as a broker-dealer in the commonwealth since that time.
In January of this year, Babiarz received a 90-day FINRA suspension and a $20,000 fine in a default decision from FINRA, which determined he had violated several rules by attempting to settle customer complaints behind his employer’s back, defaulting on a promissory note to a client and exercising his own discretion with customers’ accounts without their written authorization.
However, as Galvin’s complaint outlines, Babiarz convinced at least four Massachusetts residents, all senior citizens, that he was a broker-dealer for Fidelity Brokerage Services and furthermore, convinced them to transfer their funds to Fidelity for his management.
Galvin’s office charged that Babiarz transferred at least $486,790.41 of his four victims’ funds to his own brokerage and bank accounts and spent much of it shopping and dining out, often at Target, Market Basket and Dunkin’ Donuts.
According to the complaint, the withdrawals increased in frequency after one of Babiarz’s clients noticed them and requested he follow up with her by phone or email.
Galvin’s complaint sought an order requiring Babiarz to immediately cease and desist his wheeling and dealing, to compensate his victims for their losses and provide the state a full accounting of all proceeds received by way of his wrongdoing and to disgorge all profits he made in the scheme. Galvin also wants to slap Babiarz with a fine and permanently ban him from ever again working in broker dealing, securities or investment advice.
The Massachusetts Securities Division issued Babiarz a subpoena on Sept. 5 requiring him to testify before the division on Sept. 12, but he failed to appear. Babiarz denied the charges to a news outlet in Salem and said that he had nothing to hide.
