Patrick Churchville Sentenced for Defrauding Investors of $21 Million
Patrick Churchville, the owner and president of ClearPath Wealth Management in Providence, R.I., has been sentenced to seven years in federal prison for a Ponzi scheme that defrauded investors of $21 million.
The SEC filing from 2015 states: “Beginning in December 2010, private fund manager Patrick Churchville, through his firm ClearPath Wealth Management, misappropriated and misused his investors’ cash and assets through a years-long fraudulent scheme involving theft, covered up by false accounting entries, shadow accounts, and misrepresentations.”
Reports say Churchville raised approximately $2million from new investors for an investment in health-care but instead used most of the money, $1.6million, to cover-up the shortfalls of another investment.
Churchville tried to cover up the shortfalls through a complex series of financial steps, the SEC alleges, and “lulled investors into thinking that at least a portion of their investments were intact, when, in fact, the money was gone.”
In addition to working for the advisory firm ClearPath Wealth Management, Churchville was also a registered broker. According to BrokerCheck, Churchville was registered with Spire Securities from 08/2009 – 02/2011.
Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market.
Broker dealers are also required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.
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