Former LPL Financial Adviser Accused In Montana Ponzi Scheme

Two investment companies owned by a former LPL Financial broker have been shut down by the Montana Commissioner of Securities and Insurance on allegations their owner, Donald Chouinard, was running a Ponzi-like scheme that bilked investors, including some of Chouinard’s own friends, out of millions of dollars.

In addition to working for LPL Financial as a broker/dealer salesperson and investment adviser, Chouinard operated DC Wealth Management and DC Associates. On Sept. 18, Montana Commissioner of Securities and Insurance Monica Lindeen filed a Notice of Proposed Agency Action and issued a temporary Cease and Desist Order against Chouinard and his companies. According to state officials, Chouinard traded in investors’ LPL accounts without their authorization, traded excessively, and forged their signatures to authorize the trades. The excessive trades resulted in nearly $250,000 in commissions for Chouinard.

The Montana commissioner also says Chouinard failed to provide investors with statements or tax documents for their “day-trading” investments. Instead, he routinely informed investors about the values of their investments orally or via email. The complaints further allege that Chouinard misrepresented the values of various investments—in one case by as much as 10,000%.

Chouinard was fired from LPL in May.

One complaint alleges that Chouinard convinced an investor to make him a $100,000 loan and invest with him because he could guarantee a 40% return in 30 days. Instead of investing the money, however, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal checking account, and gave the other $25,000 to an attorney.

Commissioner Lindeen’s complaint charges Chouinard and his companies of violating the antifraud provisions of the Montana Securities Act. Lindeen’s office is seeking to revoke Chouinard’s Montana securities license and suspend or revoke Chouinard’s Montana insurance producer license, as well as levy fines and demand restitution for investors. Chouinard could face penalties amounting to millions of dollars.

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This entry was posted on Wednesday, September 23rd, 2009 at 1:18 pm and is filed under LPL Financial, Ponzi Scheme. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.