SEC charges San Diego-area adviser with $7 million Ponzi scheme

Christopher D. Dougherty charged with defrauding clients with fake private placements

Apr 29, 2019 @ 1:59 pm

By InvestmentNews

The Securities and Exchange Commission has charged a San Diego-area adviser with operating a Ponzi scheme that defrauded his investment advisory clients out of $7 million.

The SEC alleges that Christopher D. Dougherty and his firm, C&D Professional Services, offered about 50 clients — most of whom were school district employees, hospital employees, veterans and neighbors, and largely unsophisticated investors — the opportunity to invest in tax-free "private placements" that purportedly provided quarterly dividends of about 5%.

Mr. Dougherty, 45, also has been charged criminally for his conduct by the San Diego District Attorney's Office.

More: Sales of unregistered securities are a growing problem that's harming investors — and the industry

The SEC complaint alleges that there were no private placements and that the Poway, Calif.,-based Mr. Dougherty was simply running a Ponzi scheme. The SEC said he took new investor money and used it to pay quarterly dividends to existing investors, while also spending some of the money on his personal expenses.

According to the complaint, he also offered investors the opportunity to invest in his farm and his real estate business. Those funds were commingled with the private placement investments and used as part of the Ponzi scheme fraud as well, the SEC said.

In 2012, Mr. Dougherty pleaded guilty to a misdemeanor conviction for fraudulent appropriation from a charitable organization. He and his wife filed for personal bankruptcy in October 2018.

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