A Barrington, R.I., fund manager pled guilty to orchestrating a $21 million Ponzi scheme and using $2.5 million of the money to buy himself a mansion overlooking Narragansett Bay in Rhode Island, the Securities and Exchange Commission announced Friday.
Patrick Evan Churchville pled guilty in U.S. District Court in Rhode Island to five counts of wire fraud and one count of tax evasion. Sentencing has been set for October.
Churchville was the owner and president of ClearPath Wealth Management LLC, an investment advisor in Providence, R.I. Churchville operated several funds using variations of the ClearPath name.
ClearPath and Churchville diverted deposits from investors to pay other investors, used proceeds from selling particular investments to pay unrelated investors, used investors' funds as collateral for loans and then used other investors' money to repay the loans, and converted investor funds into investments for ClearPath's own benefit, according to the SEC.
He also stole $2.5 million of the borrowed money in order to purchase his waterfront home. According to an SEC complaint against Churchville and ClearPath, they used deceptive acts and misleading accounting tricks to conceal their fraud from auditors, accountants, fund administrators and their own staff. He also failed to report the $2.5 million to the IRS as income.