Investment adviser to plead guilty to running a $21 million Ponzi scheme

A Rhode Island investment adviser has agreed to plead guilty to criminal charges for orchestrating a $21 million Ponzi scheme, according to a statement from the U.S. Attorney’s Office.
Aside from that scheme, Patrick E. Churchville, 47, also used $2.5 million of investor funds to help purchase his home and failed to pay more than $820,000 in personal federal income taxes, according to the statement.
Mr. Churchville, the owner and president of ClearPath Wealth Management, will plead guilty to five counts of wire fraud and one count of tax fraud, according to the statement.
He is also a defendant in a civil case brought by the Securities and Exchange Commission in May 2015.
Between 2008 and 2011, Mr. Churchville invested approximately $18 million of client money in JER Receivables, although by June 2010 he had become aware that ClearPath had been defrauded by that company, according to the statement.
Instead of notifying his clients of the losses, Mr. Churchville paid them with money obtained from new investors, misappropriating around $21 million of investor money in the process, the statement alleges. To help carry out his scheme, he told investors JER Receivables was producing high rates of return, according to the statement.
In 2011, Mr. Churchville allegedly purchased a house in Barrington, R.I., using $2.5 million of investors’ funds as collateral without their knowledge. He then failed to report that sum as income on his personal tax returns, resulting in an $820,528 loss to the IRS.
“Mr. Churchville, motivated by greed and a desire to live an outlandishly expensive lifestyle, used sleight of hand to swindle dozens of investors out of funds they had properly earned, giving false assurances all along the way,” said U.S. Attorney Peter F. Neronha in the statement. “Rather than act in the interest of his clients, he acted only in his own.”

Related Topics: Securities and Exchange Commission