Bad broker scams friends
He was their trusted financial adviser. Sadly, that's how he was able to steal more than a half million dollars from his clients before he was eventually stopped.
Dorothy Kerzner is one of the victims.
"It's taken me awhile to get myself back on my feet," Kerzner said. "I'm still not on my feet."
Kerzner has a hard time accepting she lost more than $250,000 to a man she trusted with her investments.
"I had confidence in him," she said. "He came to my house. I went to his house."
She considered John Babiarz her financial adviser as well as a friend. He was her adviser for many years. Then, a postal inspector came to her door to tell her a significant portion of her life savings was gone. Dorothy said,
"I didn't believe them," Kerzner said. "I could not believe them."
Then she was shown proof. Babiarz told Kerzner he was liquidating some of her investments to purchase Facebook stock for her portfolio. Instead, he used that money to purchase a new home for his family -- in cash.
"I could not get Dorothy to understand what had happened to the bulk of her life savings until I showed her a copy of the check and on the reverse of the check, that's when she saw her endorsement and then the deposit stamp of that deposit going into an attorney account," said Fred Busch, a U.S. postal inspector. "That's the time she realized she was defrauded."
Kerzner was not alone. Seven victims lost more than $650,000 in just 12 months.
"So, they invested with him," Busch said. "They trusted him and low and behold a few months later, their money was gone and they didn't know where it went. He had access to all of their investments and personal information, and he simply used it for himself. He would have them send checks to him or do electronic funds transfers into his own account. That is how he would embezzle the money. He was very unsophisticated, but these investors were very trusting. These people knew his family, they had known him for years, invested with him for years had no reason at all to worry about him."
Postal inspectors said though Babiarz was a legitimate adviser at one time, a simple search online would have shown that he was no longer registered with the state.
"If you're investing with someone who is not part of a firm, verify they are registered," Busch warned. "Demand documents of where your investments are and what you have in your portfolio."
Babiarz pleaded guilty to wire fraud and aggravated identity theft and was sentenced to four years in prison. He was also ordered to pay more than $645,000 in restitution to his victims.
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