A Rhode Island investment advisor has been ordered to pay $33 million after a Rhode Island federal court ruled in favor of the Securities and Exchange Commission, marking the final chapter in the commission’s charges stemming from his role in a $27 million Ponzi scheme.
Patrick Churchville, of Barrington, R.I., was previously convicted in a separate case brought by the Department of Justice of five counts of wire fraud and one count of tax fraud and was sentenced to seven years in prison for the scheme, in which he and his former firm, ClearPath Wealth Management, defrauded funds they advised and investors in those funds.
According to the SEC, beginning in 2010, Churchville and ClearPath began misappropriating investors’ cash in the funds, misallocating investor assets, and using cash that was meant for particular investors to instead pay for new investments or fund cash distributions to other investors. They also used fund assets to repay borrowed funds with money that should have been distributed to investors.
The DOJ’s charges against Churchville detailed how he’d previously invested about $18 million in a Maryland-based entity. By June 2010, it was no longer producing returns, and it became clear that it had fraudulently misrepresented its standing to ClearPath. But Churchville didn’t notify clients about the losses, employing the a Ponzi-like strategy to pay back existing investors with new investor funds….
