U.S. Attorney: Financial Adviser Charged In Multimillion-Dollar Ponzi Scheme

NEW YORK, Sept. 30 -- The U.S. Attorney for the Southern District of New York, Geoffrey S. Berman, issued the following news release:

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations ("HSI"), announced today the unsealing of an Indictment charging JAMES T. BOOTH with securities fraud, wire fraud, and investment adviser fraud charges in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates ("Booth Financial").

Throughout the scheme, BOOTH solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts. Instead, BOOTH used nearly all of the money to pay personal and business expenses. In total, BOOTH fraudulently obtained nearly $5 million from his customers. BOOTH was arrested this morning in Norwalk, Connecticut, and will be presented this afternoon before Magistrate Judge Kevin N. Fox in Manhattan federal court.

Manhattan U.S. Attorney Geoffrey S. Berman said: "As alleged, James Booth convinced his clients that he would deliver solid and secure returns on their investments. Instead, as alleged, Booth delivered only lies and deceit, and bilked some 40 clients of nearly $5 million. Booth is now in federal custody and will have to answer for his alleged crimes."

Special Agent-in-Charge Peter C. Fitzhugh: "In an elaborate scheme of false promises and deception, it is alleged that Booth attained almost $5 million by luring investors to move their assets with the guarantee of safer investments and higher returns. Instead, Booth allegedly pocketed the money. HSI New York's El Dorado Task Force has investigated financial fraud cases for more than two decades, and with the continued law enforcement partnerships in these cases, we are able to arrest alleged fraudsters who seek to take advantage of the hopes and dreams of others for their own illicit gain."

As alleged in the Indictment unsealed today in Manhattan federal court:[1]

From 2013 through 2019, BOOTH solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts. Specifically, BOOTH directed certain of his clients to write checks or wire money to an entity named "Insurance Trends, Inc." Instead of investing his clients' funds, BOOTH, who controlled the bank account of Insurance Trends, Inc., subsequently misappropriated his clients' funds to pay his personal and business expenses.

In total, BOOTH raised approximately $4.9 million from approximately 40 investors. BOOTH lured many of his victims with false promises of safe investments with high returns. For example:

BOOTH convinced a recently widowed elderly investor ("Investor-1") to move money she had received from her late husband's pension into Insurance Trends, Inc. BOOTH falsely promised Investor-1 that she would have $1 million by the time she was 100 years old. As a result of BOOTH's false assurances, Investor-1 invested more than $600,000 with BOOTH.

BOOTH similarly convinced another investor ("Investor-2") to move his money into an investment product that, according to BOOTH, would never lose its principal and would grow with the market. Based on this false representation, Investor-2 moved money he had set aside for his child's college expenses, at least approximately $60,000, to BOOTH. BOOTH subsequently failed to provide Investor-2 with documentation of his investment or to allow Investor-2 to redeem his investment.

BOOTH convinced another elderly investor ("Investor-3") to withdraw money from an annuity established for the care of his disabled sibling, approximately $18,000, and invest that money with BOOTH. Investor-3 gave the money to BOOTH with the understanding that BOOTH would invest that money for the benefit of Investor-3's sibling's continued care.

To prevent investors from seeking a return of their money, and to induce additional investments, BOOTH provided investors with fabricated account statements that falsely indicated that BOOTH had purchased certain securities on their behalf and that those investments had generated a profit. BOOTH further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in a Ponzi-like fashion.

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BOOTH, 74, of Norwalk, Connecticut, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of investment adviser fraud, which carries a maximum sentence of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Anyone with information about the crimes charged in the Indictment should call the United States Attorney's Office at 866-874-8900.

Mr. Berman praised the investigative work of HSI New York and HSI Boston - New Haven, Connecticut. Mr. Berman also thanked the U.S. States Postal Inspection Service, the U.S. Internal Revenue Service, the New York City Police Department, and the New York City Sherriff's Office, which assisted in the investigation. Mr. Berman also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendant.

This case is being handled by the Office's Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Robert L. Boone is in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.