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Former New Hampshire stockbroker imprisoned in scam of St. Agatha couple

Jen Lynds | BDN
Jen Lynds | BDN
Former New Hampshire stockbroker James A. Philbrook speaks in Aroostook County Superior Court in Caribou on Friday, Nov. 2, 2012. He will serve three years in prison on two felony charges for bilking a St. Agatha couple out of more than $195,000 stemming from a 2005-2006 investment scheme Philbrook had been found guilty by a jury in September. He also was ordered to repay all of the stolen money to the retirement age couple.
By Jen Lynds, BDN Staff

CARIBOU, Maine — A former New Hampshire stockbroker who was convicted in September for bilking a St. Agatha couple out of more than $195,000 will spend the next three years in prison for his crimes.

James A. Philbrook, 63, also will be required to repay the money that he stole from the retirement-age couple, one of whom called him a “thief, a crook and a rat.”

Because of the money that Philbrook stole, the male victim said he will have to work well past retirement age to support himself and his wife, who cannot work due to health problems.

A jury in Aroostook County Superior Court found the defendant guilty of two felony charges of theft by unauthorized taking and securities fraud stemming from investment schemes carried out 2005-06.

Superior Court Justice E. Allen Hunter on Friday sentenced Philbrook to eight years in prison with all but three years suspended. He also ordered him to pay $195,000 in restitution and to serve three years of probation with a number of conditions, including that he not have contact with the couple.

Philbrook, who was represented by Jeff Pickering, a Houlton attorney, had been the couple’s financial adviser for more than a decade, Maine Assistant Attorney General Michael Colleran said during the more than two-hour sentencing hearing Friday in Aroostook County Superior Court in Caribou. Colleran said that Philbrook approached them with a scheme for developing a pay-per-view cable TV production featuring the entertainer Carmen Electra.

The couple initially invested $145,000 based on their longstanding relationship with Philbrook and his claim that their investment in the production would make a substantial return, Colleran said in court. In reality, the prosecutor contended, Philbrook used nearly half of the investment to pay back money that his son had embezzled from an employer. Philbrook used the rest for his own investments or expenses.

The state also presented evidence that Philbrook subsequently solicited another $50,000 investment from the couple for an education fund, but then spent the investors’ funds on his personal expenses.

Pickering on Friday continued to dispute that Philbrook stole any money, telling Hunter that his client had also invested and lost his own money in the Electra scheme.

He said that Philbrook believed that the funds provided by the St. Agatha couple were merely personal loans and that he could use the funds however he wished.

Pickering said that Philbrook thought he had done due diligence by investigating the Electra proposal. He denied that Philbrook had used the money for personal gain. He noted that it was going to be hard for his client to pay restitution, as he now receives social security disability payments and his health and a felony conviction will likely prohibit him from finding gainful employment when he is released from jail. Philbrook testified in court that he has suffered from Type I diabetes for approximately 40 years, has had a stroke and suffers from heart problems.
Pickering pushed for his client to serve nine months in jail plus probation, so that he could begin paying restitution as soon as possible.

Colleran said that nine months was not nearly harsh enough to punish Philbrook or to deter such crimes in the future.

The female crime victim told Hunter that Philbrook had stolen the couple’s money and future sense of security. She said that she and her husband trusted Philbrook and felt that he understood their desire to provide comfort for themselves and a legacy for their children and grandchildren.

The male victim was much angrier, telling Philbrook that he was the one who had worked hard for the money that they had saved all those years.

Philbrook apologized to the couple before he was sentenced, but he insisted that he thought they understood that the investment carried a risk.

He took the stand briefly Friday to testify about his assets. He said he gives his wife $1,800 a month from his $2,000 social security allotment for living expenses. There are two houses, one valued at approximately $300,000 for tax purposes, in a revocable trust in his wife’s name that he set up years before his crime against the couple, he testified. He is not the trustee or the beneficiary. One of the homes produces rental income.

He also testified that he did not know the amount of his mortgage payments, details about various insurance policies or how much money his wife earns in salary.

Colleran determined that Philbrook and his wife, who is a teacher, live on an estimated $80,000 a year income. They also enjoy luxuries such as cable TV and Internet service and own vehicles.

In imposing sentencing, Hunter characterized Philbrook’s actions as an incredible breach of trust against a couple who had worked hard to save money and plan for their retirement. He noted that Philbrook went back to the couple three times for money that he said was for investments. Hunter added that he did not find it credible that Philbrook, who worked for decades in the insurance industry, did not know financial details surrounding his own household.

Hunter pointed out that if someone takes money from someone else for a stated purpose and does not use that money as stated, it is a crime, even if the money is paid back. The justice said he found it “ironic” that Philbrook had taken $50,000 to help mitigate his son’s criminal actions, which in turn resulted in the 63-year-old becoming a criminal.

He said he feels that Philbrook has, and can attain, the assets to pay restitution to the couple.

Philbrook will report to jail on Nov. 12, a stay of sentence requested by Pickering at the suggestion of a Maine Department of Corrections nurse, who needs time to prepare for Philbrook’s medical care and needs.

The case was investigated by Christian Caruso and Jacqueline Drouin of the state office of securities and prosecuted by Colleran.

“Today’s sentencing sends a clear message to those who would commit securities fraud,” said said Maine Securities Administrator Judith M. Shaw. “Maine officials are working hard to protect investors and are taking strong action whenever advantage is taken of individuals, families or businesses in our state. Maine won’t tolerate investment scams and outright fraud.”

Pickering said his client will appeal.

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