A former broker-dealer with Ameriprise and GunnAllen Financial could spend up to 30 years in federal prison after pleading guilty to overseeing a $1.9 million investment fraud scheme.

Jeffrey J. Southard, 44, of Pittsgrove, N.J., entered his plea to mail fraud and filing a false tax return in U.S. District Court in Camden, N.J., June 12 and faces sentencing Sept. 15, according to the U.S. Attorney’s Office in New Jersey.

Southard admitted that from around December 2001 to May 2008, he devised and operated a scheme where he would solicit and/or induce his clients to purchase “Ohio bonds” or “Bank of America” bonds, neither of which actually existed. He told the court that he would describe the fake securities to his clients as guaranteed investments promising a tax-free rate of return of between 6% and 10%, according to the U.S. Attorney’s Office.

Clients would then write investment checks to “JD BAC Financial Service,” and Southard would deposit them in an account he created at a local bank. He then spent the funds on mortgage and automobile payments, private schooling for his five children, vacations and numerous other personal items, according to a federal criminal complaint.

Southard said he often provided “statements” to his clients on their believed investments, documenting their activity and tax-exempt dividend gain earned on a monthly basis.

Regarding the mail fraud charge, Southard said on June 4, 2007, he mailed such a statement to one of his clients to execute the fraud. The filing a false tax return charge comes from Southard’s 2003 U.S. Individual Income Tax Return that states his taxable income from his job at American Express Financial Advisors, now Ameriprise, and JD BAC Financial Services was $1,670. The amount did not include about $245,042 in taxable income received through the fraudulent securities scheme, officials said.

In addition to the federal charges, Southard also faces pending charges in New Jersey.

According to the federal criminal complaint, Southard was a licensed broker-dealer with Ameriprise from around July 1997 through September 2003, when he was suspended and allowed to resign. He was then hired in December 2003 by Florida-based GunnAllen Financial and worked there until July 2008, when he was investigated by the company regarding the sale of nonexistent investments through an undisclosed and unapproved outside business entity.

In August 2008, federal agents began an investigation into Southard after one of his clients contacted them. At least 14 of Southard’s former clients claim to have been victimized by his fraudulent conduct, according to the complaint.

Southard was arrested at his home in December 2008 by special agents with the FBI, IRS and U.S. Department of Labor, along with members of the N.J. Division of Criminal Justice.

As part of his plea deal, he has agreed to make full restitution in the amount of $1.8 million, which officials said represents the total losses resulting from the fraud.