Ex-Advisor Pleads Guilty in $1.17M Securities Fraud Scheme

TRENTON – Acting Attorney General John J. Hoffman and the Office of the Insurance Fraud Prosecutor (OIFP) announced today that a former Morris County investment advisor pleaded guilty to fabricating and mailing more than 100 financial account statements that inflated 14 of her clients’ accounts by a combined $818,000.

Janet Fooshee, 63, who now lives in Maine, also pleaded guilty to stealing approximately $151,000 from four clients, receiving more than $191,539 in unlawful investment advisor fees, defrauding another client out of almost $81,000, and stealing the identities of at least eight corporations.

Fooshee, also known as Janet Gurley and Janet Katz, admitted defrauding more than two dozen retirees and others over a 10-year period beginning in 2003.

Her husband Richard Fooshee, 64, an attorney who also resides in Maine, pleaded guilty to second-degree charges of conspiracy, money laundering, and securities fraud, for his part in the scheme.

Fooshee was an investment adviser who worked at Wachovia Securities, Inc. before forming Janet Gurley Katz LLC in 2003. In a plea before Superior Court Judge Edward Coleman in Somerset County on December 11, Fooshee admitted  that she abused her role as a trusted fiduciary to several of her clients and to a retirement community for which she served as a bookkeeper on a pro bono basis.

Specifically, Fooshee admitted stealing $151,000 from certain clients’ brokerage accounts and from the retirement community’s bank account and depositing that money into other clients’ brokerage accounts.  She admitted to stealing this money in part to conceal financial losses that she incurred while managing various client accounts. She also admitted that she concealed the fraud by fabricating more than 100 account statements on the letterhead of various financial institutions and mailing these statements to 14 of her clients between 2003 and 2012.

Each of these false account statements contained the logo of Fidelity Investments, Dreyfus, Alliance Bernstein, Wells Fargo, Transamerica Life Insurance Company, ING, AIG Life Insurance Company, Bank of America/Merrill Lynch or JMB Realty Corporation.  Janet Fooshee admitted that she created and mailed these false statements without the knowledge or authorization of any of these companies.  These fraudulent statements inflated the value of her clients’ investments (including purported investments in annuities and securities) by a combined total of approximately $818,000, and resulted in at least $17,000 in additional improper fees.

“Janet Fooshee exploited the trust of honest New Jersey residents who invested their money with her believing she was working in their best interest,” said Acting Attorney General Hoffman. “Instead she misappropriated hundreds of thousands of their hard-earned dollars, even going as far as stealing the identity of financial institutions to trick her victims into thinking they were making money on their investments.”

In March 2009, the New Jersey Bureau of Securities issued orders revoking Fooshee’s status as a registered investment adviser and her ability to qualify for exemptions from the registration requirement. As a result, Fooshee was barred from acting as an investment adviser in the state of New Jersey or to New Jersey residents.

Fooshee admitted that after her registration was revoked, she conspired with her husband to continue to act as an investment adviser to several of her pre-existing New Jersey clients through early 2013. During that time, she admitted that she and her husband earned $191,539 in unlawful adviser fees.  This amount is separate from the approximately $17,000 in improper fees described above.

Fooshee’s husband, Richard Fooshee, admitted that he conspired with his wife to help her continue to act as an investment adviser by depositing advisory fee checks from her clients into his personal bank accounts and transferring the money to Janet Fooshee or to a joint account owned by both of them.  These clients were unaware that Janet Fooshee’s registration had been revoked.  Richard Fooshee also admitted that he acted in an investment advisory capacity with respect to Janet Fooshee’s New Jersey clients, and that he did so without registering as an investment adviser and without qualifying for an exemption from the registration requirement.

Janet Fooshee pleaded guilty to 31 of the 37 charges contained in two indictments brought against her in 2012 and 2013.  In particular, she pleaded guilty to the following crimes:

• Second-Degree Identity Theft
• Second-Degree Conspiracy
• Second Degree Securities Fraud
• Second-Degree Theft by Unlawful Taking
• Second-Degree Misapplication of Entrusted Property
• Second-Degree Identity Theft
• Third-Degree Identity Theft
• Fourth-Degree Forgery
• Fourth-Degree Falsifying or Tampering with Records

 

In exchange for Fooshee’s guilty plea, prosecutors agreed to dismiss Second-Degree Money Laundering charges, Second- and Third-Degree Theft by Deception, and Second-and Third-Degree Theft by Unlawful Taking. Fooshee also agreed to pay more than $415,000 in restitution.

Prosecutors will recommend a seven-year prison sentence for Fooshee and a non-custodial sentence for her husband.  Sentencing is scheduled for January, 2016.

“These guilty pleas put to bed a lengthy investigation aided by numerous tips from the public who saw the first indictment against Fooshee and contacted our office,” said Acting Insurance Fraud Prosecutor Christopher Iu. “With the continued help of the public we will make sure that predators like Janet Fooshee will not get away with victimizing the very people whose investments they promise to protect.”

Deputy Attorneys General Michael Locke and TJ Harker represented the OIFP at the plea hearing. Deputy Attorney General Harker and former Deputy Attorney General Brad Muller, Sgt. Jarek Pyrzanowski, Detectives Wendy Berg, Matt Armstrong, Jonathan Berman and Justin Callahan, Analyst Kelly Celenza and former Detective Doug Mattei coordinated the investigation.  Acting Insurance Fraud Prosecutor Iu also thanked Sheriff Todd Brackett, Lieutenant Michael Murphy, Lieutenant Rand Maker, Detective Ronald Rolands, Deputy Sheriff Chad Gilbert, and Deputy Sheriff Eleanor Grover of the Lincoln County Sheriff’s Office (in Maine), and the exhaustive support of Patrolman Devin Polizzotti and Reserve Officer Michael Elwell of the Damariscotta, Maine Police Department for their invaluable assistance and support.

People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.NJInsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud.