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March 24, 2017 at 05:25 AM
Patrick Churchville, a defendant in an ongoing SEC litigation, was sentenced to seven years in federal prison following his guilty plea to five counts of wire fraud and one count of tax evasion in connection with orchestrating a $21 million Ponzi scheme and misappropriating additional money from funds he advised.
The court also ordered Churchville to perform 2,000 hours of community service, and to pay restitution to harmed investors in an amount that will be determined at a future hearing.
The SEC previously charged Churchville, the owner and president of ClearPath Wealth Management LLC, an investment adviser formerly located in Providence, Rhode Island, and ClearPath in a civil action filed on May 7, 2015.
According to the SEC’s complaint, from at least December 2010, 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 to make investments for their own benefit then used other investors’ money to repay the loans, and converted investor funds into investments for ClearPath’s own benefit.
Churchville borrowed money by using investors’ funds as collateral, without investors’ knowledge, and stole $2.5 million of the borrowed money in order to purchase his waterfront home in Barrington, Rhode Island.
The SEC’s litigation against Churchville and ClearPath continues.
SEC Charges Virginia Man With Insider Trading
The SEC charged on March 23 an Alexandria, Virginia man with insider trading in the securities of Verso Corp. in advance of a Jan. 6, 2014, announcement that Verso would acquire NewPage Holdings Inc.
The SEC’s complaint, filed in federal court in Alexandria, alleges that Christopher Ludwig purchased the securities of Verso on the basis of material nonpublic information he learned from his longtime friend who was performing work as a consultant to Verso.
The complaint alleges that, despite agreeing not to act on the information that he learned from his friend, Ludwig traded on the information and realized illegal profits of more than $30,000.
Without admitting or denying the allegations in the SEC’s complaint, Ludwig agreed to pay a total of $49,320.03, consisting of disgorgement of $30,616.69, and prejudgment interest of $2,263.33, and a civil penalty of $16,440.01. The proposed settlement is subject to the court’s approval.
