SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25966 / April 3, 2024
Securities and Exchange Commission v. Patrick Churchville, et al., No. 15-cv-00191-S-LDA (D.R.I. filed May 7, 2015)
SEC Obtains Final Judgment Against a Rhode Island Investment Adviser Charged in Multi-Million Dollar Ponzi Scheme
On March 29, 2024, the U.S. District Court for the District of Rhode Island entered its final judgment and a permanent injunction against Rhode Island-based investment advisory firm ClearPath Wealth Management, LLC, for defrauding the funds it advised and the investors in those funds.
Prior to the entry of the permanent injunction, ClearPath and Patrick Churchville, ClearPath’s owner and president, were subject to a preliminary injunction and asset freeze entered by the Court. According to the SEC’s amended complaint, from at least December 2010, Churchville’s and ClearPath’s fraudulent conduct caused at least $27 million in losses to the private funds they advised and controlled. Churchville and ClearPath misallocated and misappropriated investor assets, used fund assets to secure undisclosed borrowing that they repaid with monies due to investors, stole approximately $2.5 million of investors’ funds to purchase Churchville’s waterfront home, and engaged in a multi-million-dollar Ponzi scheme, using investor money to pay off a series of prior investments. In July 2015, the Court appointed a receiver to marshal assets of the two defendants as well as the assets of the private funds advised by Churchville and ClearPath for the benefit of harmed investors. On March 16, 2017, Churchville was sentenced to 7 years in federal prison following his guilty plea to five counts of wire fraud and one count of tax evasion in connection with orchestrating the Ponzi scheme and misappropriating additional money from funds he advised. On June 1, 2022, the Court entered its final judgment and a permanent injunction against Churchville.
The final judgment against ClearPath permanently enjoins the firm from violating the antifraud, custody, and compliance provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rules 206(4)-2, 206(4)-7, and 206(4)-8 thereunder. The final judgment also orders ClearPath to pay, on a joint-and-several basis with Churchville, $22,553,095 in disgorgement and $4,577,810 in prejudgment interest, less any amounts distributed by the receiver or paid by Churchville as criminal restitution after the date of the final judgment.
The SEC’s case was handled by Marc Jones of the Boston Regional Office and Cynthia Storer Baran and Robert Baker of the Enforcement Division’s Asset Management Unit. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Rhode Island, the Federal Bureau of Investigation for the District of Rhode Island, the Internal Revenue Service - Criminal Investigation Division, and the United States Postal Inspection Service.