Montana has shut down two investment companies, alleging the owner was operating a Ponzi scheme that bilked investors out of at least $1.5 million.
Monica Lindeen, the state's commissioner of securities and insurance, issued a temporary cease-and-desist order Thursday against Donald Chouinard and his companies, DC Wealth Management Inc. and DC Associates Inc.
Lindeen's action, which also seeks fines and restitution with interest, follows an investigation prompted by consumer complaints. The case has been referred to federal authorities.
"We took an administrative action to put the public on alert about our allegations," said Lynne Egan, deputy securities commissioner. "We know he's actively seeking investors to pay old investors."
Chouinard did not return a phone message left at DC Wealth Management seeking comment. His home phone number was disconnected and there is no listing for DC Associates in Kalispell.
Chouinard has 15 days to respond to state officials if he wants a hearing on the matter.
State regulators also allege Chouinard made unauthorized trades on customers' accounts during the five years he worked as an independent broker for LPL Financial Corp., causing customers to lose money and generating nearly $250,000 in commissions for himself. He was fired in May.
Lindeen's office also alleges Chouinard was soliciting investments to be made through his companies while he worked for LPL.
"He was also making up bogus investment opportunities and steering his clients' money into these bogus investments," Egan said.
Chouinard is also accused of taking money from clients' accounts for day trading without accounting for it and misrepresenting the value of their portfolios.
"He told people that their accounts were worth a million dollars, when there was really only a couple thousand dollars in them," Egan said. "People were basing their investment decisions and their lifestyles on monies that didn't exist."
The investors who lost money were from the Kalispell and northern Idaho area, Egan said.
Lindeen said Chouinard persuaded one investor to obtain a $100,000 loan and invest with him because he could guarantee a 40 percent return in 30 days. Instead of investing the money, 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.