Not that anyone’s surprised, but he appears to have done it before.
The Securities and Exchange Commission has charged a San Diego-based advisor with operating a Ponzi scheme that defrauded clients out of $7 million.
The SEC alleges Christopher D. Dougherty provided investment advice to school district employees, hospital employees, veterans, and neighbors, most of whom were unsophisticated investors and trusted Dougherty completely.
The San Diego District Attorney’s Office separately announced criminal charges related to the same conduct and Dougherty was arrested on April 26.
According to the SEC’s complaint, Dougherty had his own California-registered investment advisor, C&D Professional Services, Inc., doing business as C&N Wealth Management, which offered clients the opportunity to invest in tax-free “private placements” purportedly providing quarterly dividends of about 5%.
The complaint alleges that, in reality, there were no private placements. Dougherty was simply running a Ponzi scheme by taking new investor money and using it to pay quarterly dividends to existing investors and his personal expenses.
Dougherty also supposedly offered investors the opportunity to invest in his farm, JTA Farm Enterprises, and his real estate business, JTA Real Estate Holdings, but investor were commingled with the C&D investments and used as part of the Ponzi scheme fraud as well.
Previously charged
Dougherty and his wife filed for personal bankruptcy in October 2018.
According to the local ABC affiliate in San Diego, he was charged in 2011 with a felony for taking $3,000 from a youth sports league.
“He ended up pleading guilty to a misdemeanor and was sentenced to three years summary probation,” the station reports. “Records from the Department of Insurance showed that Dougherty ‘took somewhere between $60,000 and $84,000 from the League’s bank account’ when he served as volunteer treasurer. In a letter dated April 19, 2012, Dougherty wrote to the Department: ‘…due to extreme financial hardship and personal issues, I suffered a lapse in judgment that was fortunately resolved within a short period of time due to my efforts.’”
The SEC’s complaint in the latest case charges Dougherty, C&D, JTA Farm, and JTA Real Estate with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act, and charges Dougherty and C&D with violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
It also seeks relief including permanent injunctions, disgorgement of ill-gotten gains plus interest, and civil penalties.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
