PEABODY — Last September, John Michael Babiarz insisted to a reporter that he’d done nothing wrong and claimed to have been “blindsided” by what at the time was an administrative complaint brought by the state’s securities division.
Yesterday, Babiarz, 40, admitted in federal court to defrauding elderly clients of his former employer, Bishop, Rosen and Co., by claiming that he’d landed a new job with Fidelity Investments or that he was working as an independent adviser, then convincing them to move their funds to Fidelity accounts that he had set up.
The scheme netted Babiarz more than $500,000.
Under the terms of a plea agreement reached with federal prosecutors, Babiarz pleaded guilty to charges of wire fraud and aggravated identity theft. Prosecutors will recommend a four-year prison term, to be followed by three years of probation, and the forfeiture of $645,340 in ill-gotten gains, including his 3 Dobbs Road home, his 2006 Range Rover and all the cash in his Fidelity account.
He is scheduled to be sentenced on Aug. 1.
Prosecutors say that Babiarz convinced at least four elderly clients to entrust him with their life savings, convincing them to move their money to brokerage accounts at Fidelity that he set up for them online.
In setting up the accounts for those clients, Babiarz created usernames and passwords and used his own email address, giving him total access to the victims’ funds.
He then used the accounts like his own personal bank to finance the purchases of his home and SUV, as well as stays at the luxury Taj Hotel in Boston, prosecutors alleged.
Babiarz was indicted in the case by a federal grand jury in December.
U.S. District Court Judge Dennis Saylor is not bound by the plea agreement and could impose up to 20 years in prison and a $250,000 fine.
Courts reporter Julie Manganis can be reached at 978-338-2521, via email at email@example.com or on Twitter @SNJulieManganis.