Financial Advisor Sentenced for Operating $21M Ponzi Scheme, Stealing Investors' Money, Tax Fraud

[nitpicker]

https://www.justice.gov/usao-ri/pr/financial-advisor-sentenced-operating-21m-ponzi-scheme-stealing-investors-money-tax-fraud

Department of Justice
U.S. Attorney’s Office
District of Rhode Island

FOR IMMEDIATE RELEASE
Thursday, March 16, 2017

Financial Advisor Sentenced for Operating $21M Ponzi Scheme, Stealing Investors' Money, Tax Fraud

PROVIDENCE, R.I. – Patrick E. Churchville, 48, owner and president of ClearPath Wealth Management, LLC, formerly located in Providence and Barrington R.I., was sentenced today to 84 months in federal prison for orchestrating a $21 million dollar Ponzi scheme that deceived more than 110 investors; stealing $2.5 million dollars of investors’ funds to purchase a waterfront home; and failing to pay more than $820,000 in personal federal income taxes.
(snip)

An investigation by the FBI, IRS Criminal Investigation, U.S. Postal Inspection Service and the United States Attorney’s Office determined that from the spring of 2008 through October 2011, Churchville and ClearPath, on behalf of their client investors, invested approximately $18 million dollars in JER Receivables, an entity incorporated in Maryland. At the time of his guilty plea, Churchville admitted to the court that in June 2010, he became aware that the investments with JER were no longer producing returns and that ClearPath had been subjected to fraudulent and misleading representations by the principals of JER. He failed to notify his client investors that he had lost millions of dollars of invested funds.

Churchville admitted that in order to hide the fact that he had lost millions of dollars of client investor funds through his dealings with JER Receivables, and to continue to operate his business and reap his investment fees, he misappropriated approximately $21 million dollars of investment money. Churchville admitted that he misused investor money already under his control and obtained new investor funds. He used this money to pay back the JER investors and told them, falsely, that the money was the return on their investments. Churchville admitted to induce new investments to carry out the schemes, he lied and told investors that ClearPath’s previous investments with JER Receivables had been successful and produced high rates of return.

Additionally, the investigation determined that in 2011, Churchville created a scheme to obtain $2.5 million dollars, using investors’ funds as collateral without their knowledge, to purchase a personal residence in Barrington. Churchville failed to report the $2.5 million dollars as income on his personal tax returns, resulting in a loss to the IRS of $820,528.
(snip)