James T. Booth, founder and owner of Norwalk”™s Booth Financial Associates, has been sentenced by a Manhattan federal court to 42 months in prison in connection with a Ponzi scheme.
According to Audrey Strauss, the acting U.S. Attorney for the Southern District of New York, Booth operated a years-long scheme to defraud customers of his financial services firm of nearly $5 million through a variety of lies and misrepresentations.
Booth pleaded guilty to one count of securities fraud on Oct. 22, 2019, before U.S. District Judge John G. Koeltl, who also imposed yesterday”™s sentence.
From 2013 through 2019, according to the indictment, 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 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 more than $4.9 million from approximately 40 investors.
Booth lured many of his victims with false promises of safe investments with high returns.
Examples of Booth”™s misbehavior cited by Strauss include:
- Convincing a recently widowed elderly investor to move money she had received from her late husband”™s pension into Insurance Trends Inc. Booth falsely promised the investor that she would have $1 million by the time she was 100 years old. As a result, she invested more than $600,000 with Booth.
- Similarly convincing another investor 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 that false representation, the investor moved money he had set aside for his child”™s college expenses ”“ at least approximately $60,000 ”“ to Booth. Booth subsequently failed to provide the investor with documentation of his investment or to allow him to redeem his investment.
- Convincing another elderly investor to withdraw money from an annuity established for the care of his disabled sibling ”“ approximately $18,000 ”“ and invest that money with Booth. The investor gave the money to Booth with the understanding that Booth would invest that money for the benefit of the 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 bought 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.
In addition to the prison term, the 75-year-old Booth was sentenced to three years of supervised release, and was ordered to pay $4,969,689 in forfeiture. Booth will pay restitution in an amount to be determined by the court.
