2002-10-11 -- Romano, Louis -- Indictment -- News Release

Former Securities Dealer Indicted for Defrauding Customers of More Than $350,000

NEWARK - A former licensed securities broker employed by Seaboard Securities in Florham Park was indicted today of two counts of mail fraud in connection with his scheme to defraud Seaboard clients of more than $350,000, U.S. Attorney Christopher J. Christie announced.

Louis Romano, 59, of Madison, was employed by Seaboard Securities for 12 years, during which he sold customers a variety of mutual funds. Beginning in 1986, he devised a scheme to obtain funds from those customers, purportedly earmarked for legitimate investments in stocks and bonds, and diverted those funds for his own personal use, according to the Indictment. Between 1986 and 1998, he allegedly defrauded more than thirteen of his customers of more than $350,000.

According to the Indictment, Romano solicited his existing mutual fund customers to make additional investments in stocks and bonds recommended by him. As part of his scheme, Romano falsely represented that the stocks and bonds were high-yield, safe investment opportunities for long term investment.

Romano allegedly induced his customers to pay for these securities in cash or by check made out to him, explaining that they would be purchasing a small share of a much larger investment. Romano explained that he would be investing his clients' funds in Seaboard "house accounts" or "street accounts," and for that reason they would not receive monthly account statements for these investments, according to the Indictment. In fact, his customers would receive no monthly statements because no investments were made for them by Romano.

Romano is also charged with obtaining funds at times from his customers by inducing them to sell a portion of their existing investments in mutual funds and turning the proceeds over to him.

As proof of their investments, Romano provided his customers with "bond powers" or "stock powers" which purported to indicate that a securities investment had been made on their behalf, according to the Indictment. In fact, Romano is charged with fabricating these fraudulent documents, which are not proof of any investment.

In order to conceal his fraudulent activity, Romano allegedly provided his customers with verbal reassurance, and made periodic payments to a number of his customers as if he were actually providing them with returns on their investments.

The Indictment charges Romano with two counts of mail fraud, each carrying a maximum prison sentence of five years, a $250,000 fine, and an order of restitution.

Christie credited agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Louie F. Allen, with bringing the case against Romano.

The Government is represented by Assistant U.S. Attorney Michele Brown, of the U.S. Attorney's Office, in Newark.

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Defense Attorney: John Whipple, Esq., Morristown