A federal judge sentenced an ex-wirehouse adviser to seven years in prison for orchestrating a $21 million dollar Ponzi scheme which ensnared more than 100 clients, according to the U.S. Attorney's Office for Rhode Island.
Patrick Churchville, 48, had pleaded guilty in August to five counts of wire fraud and one count of tax fraud, according to authorities.
Among other misconduct, he was accused of using about $2.5 million of client funds to purchase a waterfront home for himself in Barrington, Rhode Island, a town on the eastern shore of Narragansett Bay, authorities say.
Chief Judge William Smith issued the punishment on March 16. Earlier this month, the SEC also barred Churchville from the industry.
Churchville was an adviser for 16 years, having worked at Oppenheimer & Co. and Morgan Stanley, before going independent in 2009, according to FINRA BrokerCheck records. His independent firm, based in Providence, Rhode Island, was called ClearPath Wealth Management, according to federal prosecutors.
Starting in 2008, Churchville started investing client funds in a company called JER Receivables, authorities say. He became aware that the investments were no longer producing returns, and he failed to notify his clients of that, according to federal prosecutors.
Authorities say Churchville hid the fact that he had lost millions, instead inducing clients to invest new money, some of which he used to pay previous investors.
In addition the Ponzi scheme, Churchville also failed to report income to the IRS, resulting in a loss of $820,528 to the agency, according to federal prosecutors.
The investigation into Churchville's scheme was conducted by the FBI, IRS Criminal Investigation, U.S. Postal Inspection Service and the United States Attorney’s Office.
Churchville's attorney, Mike Lepizzera, says his client was himself the victim of a Ponzi scheme, and that he only began using investor funds to pay back other clients upon discovering that the original assets were lost.
"In the end, don't get me wrong, it's a significant sentence, but it's a much lighter sentence than the government's original theory of the case," the attorney says.