The Securities and Exchange Commission announced it has obtained a final judgment and permanent injunction against a Rhode Island investment adviser who was charged with defrauding clients in a Ponzi scheme, Financial Advisor reports.
A U.S. District Court ordered 48-year-old Patrick Churchville to pay $29.1 million in disgorgement, $4.5 million in prejudgment interest and a $225,000 civil penalty.
Churchville, the owner and president of investment advisory firm ClearPath Wealth Management, LLC, was charged by the SEC with defrauding over 110 of the firm’s clients out of at least $27 million from at least December 2010 through 2015.
According to the complaint filed in 2015, Churchville and ClearPath misallocated and misappropriated investor assets, used fund assets to secure undisclosed borrowing that they repaid with money due to investors and stole about $2.5 million of investors’ funds to purchase Churchville’s waterfront home. The defendants were also accused of orchestrating a multi-million dollar Ponzi scheme in which investor money was used to pay off prior investments.
Along with the SEC charges, Churchville also faced federal criminal charges of five counts of wire fraud and one count of tax evasion. He pleaded guilty and began serving a seven year federal prison term in 2017. Once his sentence is complete, he will have to serve three years supervised release and perform 2,000 hours of community service.
Under the final judgment entered by the court, Churchville is permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1) and (2) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, as well as the custody and compliance provisions of Rule 206(4)-2 and Rule 206(4)-7 thereunder.
Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (312) 291-4600 or through our online contact form for a no-cost evaluation of your matter.