Former Rhode Island StrategicPoint Boss Brochu's Epic Fall
GoLocalProv News Team and Kate Nagle
Former Rhode Island StrategicPoint Boss Brochu's Epic Fall
The revelation marks the latest in a series of serious legal issues for Brochu, who in 2014 was arrested on sex and weapons assault charges in New Hampshire, and in 2010 was embroiled in a court battle after selling StrategicPoint to Focus Financial Partners.
The New Hampshire Secretary of State’s office last week charged Brochu with failing to disclose material conflicts of interest to his clients, misappropriation of investor funds, sale of unsuitable investments to clients and unauthorized borrowing of money from clients, and includes an outline of the total amount of principal still owed to Brochu’s former clients, including the ten Rhode Islanders. (SEE LIST BELOW)
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“I don’t think we’ll be seeing any of our money,” said Dick August, one of the Rhode Islanders who had invested with Brochu at his now defunct firm Kleossum in New Hampshire.
August said he hopes that the New Hampshire Attorney General will now take action. “Let’s put it this way. If Dave Brochu walked into a bank and stole $1.3 million, do you think he would be arrested?”
“Unfortunately, white collar crime is a lot harder to prosecute,” continued August. “But the [New Hampshire] Secretary of State’s office put a lot of hours into the findings, which he agreed to. So the evidence is all there.”
Brochu's lawyer William Saturley did not respond to request for comment on Monday.
Latest Legal Troubles
While Brochu was at StrategicPoint, the company was managing assets reportedly worth more than $550 million. Along with CFP Jill Schlesinger, Brochu had a weekly "Making Money Show" on AM radio every Saturday morning on airwaves throughout New England.
Brochu however was suspended and fined by the Financial Industry Regulatory Association in 2009 while at StrategicPoint, prior to departing the Rhode Island-based company in 2010.
August and his wife were two of the investors that August said he later found out was 'part of a ponzi scheme.”
“There's a series of entities that [Brochu] created that was almost like a ponzi scheme. He was shifting money around that wasn’t there,” said August. “If you haven't been taken in by a con man, you don't know how they work - everyone trusted him, and he was only working in his best interest.“
August recounted how he got involved.
“My wife and I joined [Brochu’s] list of clients when he was a StrategicPoint, after he had a falling out with the new owner, he went up north,” said August. “He had a non-compete for a short time but he stayed in touch with a number of people — he told us he was opening a boutique firm, with a small number of investors, to give them more personal attention. We had confidence in him, so we elected to do it.”
“[Brochu] told us he wanted to start a timbering operation up there, he said it would be kept to ten investors and a LLC,” said August. “He stated that he and his now-estranged wife Alexis would be major investors. We were two of the smaller investors. He told people it was going along great, and at the end of the year we met about dividends -- then he got arrested [for domestic and sexual assault].”
“Then we were told another firm was buying his business. As I had been named the treasurer of one of the entities -- for KP1 -- and taking care of tax issues, I became aware of what was going on,” said August. “The firm that took over when Brochu was arrested, they saw what was going on and reached out to Secretary of State and I worked with them.”
Action Taken
Brochu signed a consent agreement on February 11 agreeing to pay a totally of $1.365 million to the investors, but stated that he “currently has an inability to pay the restitution, fine, and costs in full but agrees to make periodic payments.”
The agreement also bars Brochu from any securities licensure in New Hampshire, or from issuing securities in the state moving forward.
"I know that [Brochu] filed a Chapter 11, then converted to a Chapter 7," said August. "You'll see in the consent order that he alleges that he has no assets. I know one of the other investors went to the Chapter 11 meeting to ask him how he has three attorneys -- and his answer was his mother's paying. It's not clear to us how he is paying."
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