A Boston-based investment firm has agreed to pay $1.3 million in restitution to Montana investors for a Ponzi scheme run by an independent broker in Kalispell.
Monica Lindeen, state commissioner of securities and insurance, announced the settlement with LPL Financial Corp. on Wednesday.
The company will also pay a $150,000 fine to the state for failing to supervise Donald Chouinard.
The state Securities Department accused him of making unauthorized trades on customers' accounts, which cost them money and generated $250,000 in commissions for himself. The agency also accused Chouinard of failing to provide investors with statements or tax documents and misrepresenting the amount of money in investors' accounts.
"Too many hard working Montanans lost their savings due to the actions of Mr. Chouinard, but today we started the process of recovering those losses," Lindeen said in a statement.
Lindeen said LPL does not acknowledge or deny any of the allegations as part of the settlement. An after-hours phone call to LPL was not immediately returned.
Joe Kuo, a spokesperson for LPL said that the company is "pleased that we had the opportunity to cooperate with the state of Montana, and to fully resolve all issues raised by the individuals involved in this matter."
In September,
the Securities Department issued a cease and desist order against Chouinard and filed a notice of proposed agency action against Chouinard and his companies, DC Wealth Management Inc., and DC Associates Inc.
The order states that Chouinard and his companies committed securities fraud and conducted a Ponzi scheme involving Montana and Idaho residents who invested in what they thought was his day-trading program. The state said earlier investors received proceeds taken from money contributed by new investors.
In one case, the department said Chouinard persuaded one investor to obtain a $100,000 loan and invest the money with him because he could guarantee a 40 percent return in 30 days. Instead of investing the money, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal checking account and gave the other $25,000 to an attorney.
The state continues to pursue claims against Chouinard and his companies. A home phone listing for Chouinard in Kalispell is disconnected.
