2 Arrested in Alleged Stock Scheme

One of the original members of “The Mickey Mouse Club” and her fiance, both of whom were convicted of shoplifting earlier this year, were arrested Wednesday on charges of obstructing justice and lying about an alleged securities fraud scheme.

The FBI arrested Darlene Faye Gillespie, 56, and Jerry J. Fraschilla, 60, without incident at Gillespie’s Oceanaire Drive home in Oxnard, said officials from the U.S. attorney’s office.

The arrests followed a 26-count indictment handed down last week by a federal grand jury in Los Angeles that alleged conspiracy, securities fraud, mail fraud, obstruction of justice and perjury.

The couple are accused of a fraudulent stock-buying practice known as “free riding,” in which they allegedly violated federal securities laws by buying stock in 1992 and 1993 without the means or intention of paying for it.

Gillespie and Fraschilla could not be reached for comment Wednesday.

Believing the couple were embroiled in a scheme involving six brokerage houses in 1992 and 1993, the Securities and Exchange Commission filed a civil lawsuit against them in 1994 in U.S. District Court in Los Angeles.

The suit was settled in 1995 when Fraschilla and Gillespie agreed to pay a civil fine and reimburse securities firms that lost money as a result of the scheme, U.S. attorney’s officials said.

The SEC wields no criminal authority, and the FBI pursued a criminal investigation. It concluded that the couple lied during depositions taken as part of the SEC’s civil action, authorities said.

“This goes further,” said Thom Mrozek, spokesman for the U.S. attorney’s office in Los Angeles. “We’ve alleged they perjured themselves in the SEC depositions and provided false documents.”

The FBI alleges that during the SEC’s investigation, Fraschilla and Gillespie used fraudulent documents to open accounts with stockbrokers in the name of Michael Andrews, a fictitious character.

Both defendants are further accused of lying under oath about Michael Andrews during the SEC depositions.

The indictment also alleges that the pair obstructed justice by offering fraudulent letters from associates and a stockbroker in an attempt to show that they had the means to purchase stocks they had ordered from brokerages.

Fraschilla and Gillespie are accused of opening accounts at six brokerage houses under both Andrews’ name and the names of companies they controlled. Many of the shares were purchased under so-called margin agreements, in effect, borrowing from the brokerages to pay for the trades.

The grand jury indictment alleges that, over a 16-month period in 1992 and 1993, the couple placed orders to purchase more than 194,000 shares of Unique Mobility Inc. common stock, valued at more than $827,000, on the American Stock Exchange.

The indictment alleges that the pair attempted to pay for the shares with checks on closed and overdrawn bank accounts, authorities said.

In a separate case, Gillespie, who appeared on “The Mickey Mouse Club” television show from 1955 until 1959, and Fraschilla were convicted earlier this year of shoplifting at a Macy’s department store at the Buenaventura Mall.