Ex-Mouseketeer Arrested in Securities Fraud Case

OXNARD — One of the original members of “The Mickey Mouse Club” and her fiance were arrested Wednesday on suspicion of obstructing justice and lying about an alleged securities fraud scheme, authorities said.

FBI agents arrested Darlene Faye Gillespie, 56, and Jerry J. Fraschilla, 60, without incident at the couple’s Oceanaire Drive home, the U.S. attorney’s office said.

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.

Gillespie and Fraschilla could not be reached for comment.

The couple is charged with 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.

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

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

But with the SEC wielding no criminal authority, the FBI continued on with a criminal investigation. It concluded that the couple lied during depositions taken as part of the SEC civil action, authorities said.

“This goes further,” said Thom Mrozek, a 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 person they invented.

Moreover, the indictment 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 brokerage houses.

Fraschilla and Gillespie allegedly opened 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, effectively borrowing money from the brokerages to pay for the trades.

Gillespie was one of the original Mouseketeers on “The Mickey Mouse Club” show from 1955 until 1959. She and Fraschilla were convicted earlier this year of shoplifting at a Macy’s in Ventura.