The Securities and Exchange Commission charged Christopher D. Dougherty and several entities he controlled with operating a Ponzi scheme that defrauded his investment advisory clients out of $7 million. The San Diego district attorney’s office separately announced criminal charges related to the same conduct.
The SEC alleges that Dougherty provided investment advice to school district employees, hospital employees, veterans, and neighbors, most of whom were unsophisticated investors.
According to the SEC’s complaint, Dougherty had his own California-registered investment advisor, C&D Professional Services Inc., and offered clients the opportunity to invest in tax-free “private placements” that purportedly provided 5 percent quarterly dividends.
The complaint alleges that there were no private placements, and that Dougherty was running a Ponzi scheme by taking new investor money and using it to pay quarterly dividends to existing investors and his personal expenses.
Dougherty also offered investors the opportunity to invest in his farm, JTA Farm Enterprises LLC, and his real estate business, JTA Real Estate Holdings LLC, but investor funds in these ventures were commingled with the C&D investments and used as part of the Ponzi scheme fraud as well. Dougherty and his wife filed for personal bankruptcy in October 2018.
The SEC’s complaint charges Dougherty and his businesses with violating the antifraud provisions of various securities laws and seeks relief including permanent injunctions, disgorgement of ill-gotten gains plus interest, and civil penalties.