Scam of the day – March 23, 2017 – Ponzi schemer sentenced

Ponzi scheming investment advisor Patrick Churchville has been sentenced to seven years in prison for operating a Ponzi scheme that cheated more than a hundred of his clients out of 21 million dollars. Between 2008 and 2011 Churchville invested his clients’ money in JER Receivables under participation agreements through which they would lend money to JER to buy healthcare receivables promising profits of 30% in 16 months.  When the investment failed, Churchville continued the scam by siphoning money for himself such as in his purchase of 2.5 million dollar waterfront home and used new investors money to pay older investors, which is the defining element of a Ponzi scheme.

TIPS

It bears repeating.  If it looks too good to be true, it usually is.  Anyone being promised a return of 30% in 16 months should be skeptical.  Also, never invest with anyone unless there is an independent custodian who holds the investment in order to avoid having the same person both manage and hold the investment which is a recipe for disaster since it makes it easy for the scammer to hide his or her crimes.  Churchville, like famed Ponzi schemer Bernie Madoff, both made the investments and acted as the custodian of the investment enabling him to falsify records and keep his victims unaware of the scam being perpetrated.

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