RI Investment Advisor to Plead Guilty to Running $21 Million Ponzi Scheme
Wednesday, July 06, 2016
Churchville has also pleaded guilty to theft and use of $2.5 million of investors' funds to purchase his home, and his failure to pay more than $820,000 in personal federal income taxes.
“Mr. Churchville betrayed his investors’ trust, stealing their savings and leaving them with uncertain financial futures for his own personal greed. This behavior destroyed the financial security of hard-working individuals all over the country and the FBI hopes this case will serve as a reminder to executives everywhere that honesty and integrity are more important than the bottom line,” said Harold H. Shaw, Special Agent in Charge of the Boston Field Office of the FBI.
According to court documents, an investigation by the FBI, IRS Criminal Investigation and the United States Attorney's Office determined that in the spring of 2008 through October 2011, Churchville and ClearPath, on behalf of their client investors, invested approximately $18 million in JER Receivables.
In June 2010, Churchville became aware that the investment with JER were no longer producing returns and that ClearPath had been subjected to fraudulent and misleading representations by the principals of JER. Churchville failed to notify his client investors that he had lost millions of dollars of invested funds.
According to court documents, in order to hide the fact that he had lost millions in client investor funds through his dealings with JER Receivables, and to continue to operate his business and reap his investments fees, Churchville misappropriated approximately $21 million of investment money.
To obtain the $21 million, Churchville misused investor money already under his control and obtained new investor funds. He used his money to pay back the JER investors and told them, falsely, that the money was the return on their investments.
To induce new investments to carry out the schemes, Churchville lied and told investors that ClearPath's previous investments with JER Receivables had been successful and produced high rates of return.
The investigation also determined that in 2011, Churchville created a scheme to obtain $2.5 million using investors' funds as collateral without their knowledge, to purchase a personal residence in Barrington.
Churchville failed to report the $2.5 million as income on his personal tax returns, resulting in a loss to the IRS of $820,528.
Churchville is also a defendant in a U.S. Securities and Exchange Commission civil matter.
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