A federal court has issued a $33 million civil judgment against a convicted Rhode Island investment advisor for defrauding clients out of millions of dollars.
Patrick Churchville, 48, the owner and president of ClearPath Wealth Management LLC, was sued by the U.S. Securities and Exchange Commission for defrauding investors in funds the firm advised. On June 1, U.S. District Court for the District of Rhode Island entered a final judgment that ordered Churchville to pay $29.1 million in disgorgement, $4.5 million in prejudgment interest and $225,000 as a civil penalty.
From at least December 2010 through 2015, Churchville and ClearPath committed defrauded investors and funds they controlled out of at least $27 million, the SEC said. Churchville was originally charged by the SEC in 2015.
Churchville, formerly located in Providence and Barrington R.I., pled guilty to Department of Justice charges in connection with the scheme and was sentenced in 2017 to serve seven years in federal prison for orchestrating the Ponzi scheme that deceived more than 110 investors. He began serving his sentenced in April 2017.
Prosecutors said that Churchville also stole $2.5 million dollars of investors’ funds to purchase his waterfront home overlooking Narragansett Bay in Rhode Island and failed to pay more than $820,000 in personal federal income taxes.
Churchville was also ordered to serve three years supervised release and to perform 2,000 hours of community service after serving his prison sentence.
From 2008 through 2011, Churchville and ClearPath invested about $18 million dollars on behalf of clients in JER Receivables of Maryland.
“At the time of his guilty plea, Churchville admitted ... that he became aware that the investments with JER were no longer producing returns in 2010 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,” prosecutors said in a statement.
Churchville admitted that in order to hide the fact that he had lost millions of dollars of client investor funds and to continue to operate his business and reap his investment fees, he misappropriated about $21 million dollars of investment money, prosecutors said.
The RIA also admitted that he misused investor money and solicited new investor funds to keep the Ponzi scheme going, prosecutors said.