A Flathead District Court Judge has issued an order freezing the investment accounts of a Columbia Falls woman who authorities believe orchestrated an illegal $1.3 million Ponzi scheme to bilk investors, siphoning some of the money from an alleged victim with mental and physical disabilities in order to carry out the lucrative scam.
On April 15, District Judge David Ortley issued the temporary restraining order against Catherine Ann “Cathy” Finberg, who attorneys from the Montana Commissioner of Securities and Insurance, State Auditor’s office began investigating after receiving reports from employees at a Kalispell bank about possible illegal activity.
The restraining order prevents Finberg from engaging in securities trading in Montana, and freezes her access to the bank accounts and trading firms she allegedly used to perpetrate the scheme.
The state’s investigation continues, and no criminal charges have yet been filed, according to Jesse Laslovich, chief counsel for the Commissioner’s office. However, state attorneys determined that there was sufficient evidence of illegal activities, and enough concern about further harm to investors if Finberg was able to continue her conduct, that they sought the judge’s order to freeze her assets.
The order is meant to prevent Finberg, who has served as an assistant coach of the Columbia Falls High School girls basketball team, from liquidating assets and property interests obtained fraudulently, using investor funds, the attorneys wrote.
“Given Finberg’s recent and continual activities involving these accounts, failure to freeze them could result in continuing, immediate, and irreparable injury to the investors by depriving them of sources from which to recover their investment funds,” according to an affidavit in support of the restraining order.
Attorneys with the Missoula law office of Datsopoulos MacDonald & Lind are representing Finberg in the case but did not offer comment on a potential defense.
A Ponzi scheme, or pyramid scheme, involves a person paying investors using money obtained from later investors, rather than from any profits earned.
The Montana Commissioner of Securities and Insurance, State Auditor’s office regulates the securities industry in the state, and as a criminal justice agency is responsible for protecting residents from fraud and investment scams.
In seeking the restraining order, Laslovich included an affidavit detailing the probe into Finberg’s conduct.
According to the affidavit, Montana Deputy Securities Commissioner Lynne Egan, a forensics accountant, began investigating Finberg in February after Glacier Bank employees in Kalispell flagged her accounts and tipped off federal authorities about possible illegal account activity.
During the course of the investigation, FBI Agent Shawn Hall learned that Finberg was acting as a securities broker-dealer without being registered as such, soliciting money from people who believed she was investing it to their benefit. Under Montana law, anyone acting as a broker-dealer must be registered with the Securities and Exchange Commission.
Hall reported that Finberg maintained an account at Interactive Brokers, LLC, a brokerage firm that provides investors access to securities trading technology and facilitates “day trading.”
According to account records, Finberg deposited approximately $1,002,000 into the account between January 2010 and January 2016, Egan reported. During the same period, Finberg withdrew $741,000 and placed them into her personal account at Glacier Bank in Montana, while incurring a market loss of more than $275,000 on her trading activities.
The affidavit states that she “executed dozens of stock trades each day,” and records of Finberg’s personal checking account show numerous checks deposited with handwritten notations in the memo line, including “investment,” “day trading investment” and “day trading.”
From January 2008 through March 24, 2016, Finberg obtained money from at least 18 individuals as investment proceeds.
“The aggregate amount of money received by Finberg for this purpose is approximately $1,294,300,” the affidavit states.
One of the victims, identified in court documents only by initials, is a person with mental and physical disabilities for whom Finberg has some financial responsibility, and who has power of attorney control of an inheritance account.
A comparison of money from investors with money repaid to other investors revealed that Finberg owes the 18 individual investors at least $997,302, according to the affidavit.
A contested show of cause hearing in the matter is scheduled for May 25 in Flathead District Court, although two prior hearings have been continued while the temporary restraining order remains in full force and effect.