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NBC 10 I-Team: Barrington man sentenced to 7 years in $21M Ponzi scheme

Patrick Churville was sentenced to 7 years in federal prison on 5 counts of wire fraud and 1 count tax evasion. (WJAR)

A Barrington man was sentenced to seven years in federal prison after duping approximately 115 investors out of millions of dollars.

Patrick E. Churchville, the mastermind behind a $21 million scheme to defraud investors, was sentenced by Judge William E. Smith on five counts of wire fraud and one count of tax evasion. In addition to his seven year sentence, he will have to serve 2,000 hours of community service. Restitution has not yet been determined.

While Churchville's family and friends wrote seven letters asking the court for no prison time and some of his victims asked for life in prison, Smith said he weighed all of details of the case in determining his decision.

Churchville's former father-in-law Stephen Locke says his own money was included in one of the questionable investments, according to a letter filed with the court. Locke and several other family members asked the judge for a fair sentence.

"Patrick's career as an investment advisor is over. He's been stripped of his dignity and has been on home confinement since August," wrote Churchville's former wife and mother of his teenage son and daughter in her plea for a fair sentence.

“This is absolute tragedy for everyone involved,” Judge Smith said. “It’s an absolute financial, emotional train wreck for everyone that is involved.”

“Sentencing is not about revenge,” he added. “The law doesn’t allow me to do that.”

One by one, a number of victims addressed the court, some in tears.

A Barrington man, who asked not to be identified, said he met Churchville in 2008. He transferred a portfolio of about $800,000 from Morgan Stanley to Churchville’s company ClearPath and now, he says, he has nothing.

A disabled veteran, the man said he is now on food stamps and receives heating assistance.

"When he got done with my portfolio, I ended up with zero," he told the court. "I'm on foodstamps. I went through severe anxiety and hardship."

"It was a nightmare that would not go away, he added. "He created my financial death- the man destroyed me."

After court he told the NBC 10 I-Team he wished the judge imposed a stronger sentence. "Ten years would have been better," he said showing the NBC 10 I-Team his food assistance card with his name on it and a letter showing he's on heat assistance.

Robert Skollar who by his own calculations believes he lost $5 million in Churchville's scheme, said he too was totally duped by Churchville. "He was my friend. He stayed at my house - I was really disillusioned."

Paul Poznick, another one of Churchville's victims, told the court that while the shell game and numbers are significant, he wants the court to focus on the impact Churchville's actions had on everyone involved.

" What I’m here to say is that this is about something bigger in a strange way than numbers," Poznick said. "This is about lives that have been ruined. There is emotional value involved, not just a financial value."

Assistant U.S. Attorney Dulce Donovan questioned Churchville's character in court.

“If he had investors at heart he wouldn’t have taken a dime,” Donovan told the court. “He kept taking money. He let John Rosenberg take $2 million and he could have given it to them. He didn’t’ stop there. He stole another $2.5 million to buy a house overlooking Narragansett Bay. Who does that? A criminal."

Churchville pled guilty to those counts on Aug. 4, 2016 before the United States District Court for the District of Rhode Island before being sentenced on Thursday.

Churchville, 47, used ClearPath Wealth Management LLC, a Providence company he owned and managed, to manage several limited liability companies (LLCs).

A joint investigation by the IRS, FBI and other federal prosecutors found that for three years between 2008 and 2011 Churchville and ClearPath invested nearly $18 million in JER Receivables LLC, a New Jersey healthcare business.

A series of investments ClearPath made in JER were no longer producing returns, but Churchville never alerted investors of that fact.

Beginning in 2011 and through 2014, Churchville obtained approximately $21 million from ClearPath investors under false pretenses as a way to hide the fact that he had actually lost millions of dollars in invest. or funds in JER, according to court documents.

He also convinced investors to allow him to continue to run the company as investment advisor and collect the fees associated with that role.

In addition, Churchville devised a scheme to defraud ClearPath investors out of $2.5 million, according to court documents. Some of that money was used to purchase his waterfront home located in Barrington’s Nayatt Point neighborhood, according to investigators.

The complaint alleges that ClearPath and Churchville used a number deceptive acts and misleading accounting tricks to hide their fraud from fund administrators, accountants, auditors and the firm’s own staff.

Documents in the criminal complaint filed by the U.S. attorney alleges that Churchville failed to report the $2.5 million as income on his tax returns, which resulted in a $820,000 personal income loss for the IRS.

In addition to the Nyatt Road home, which he paid $2.4 in 2011, a 30-foot boat, a condo adjacent to Point Judith Country Club, an Audi, and Churchville’s interest in Macaw Investment Co. were taken in receivership.

A tearful and visibly shaken Churchville read a statement addressing his family and victims. He apologized for his actions and told the court he's a decent man who made a mistake. "I didn't set out to hurt or deceive anyone," he cried. "I literally have no money. I will try to recover as much as possible."

Churchville also told the court that he hurt his wife, children and the rest of his family. "I can't write a check to make the financial grief go away," he said.
"I'm not going to lie anymore," he said.



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