The state auditor’s office shut down an alleged Ponzi scheme run by a Kalispell securities salesman.
The agency filed a temporary cease and desist order against Donald Chouinard and his companies, DC Wealth Management, Inc. and DC Associates, Inc. There is also a notice of proposed agency action filed against Chouinard.
State officials reported investigating consumer complaints from investors who initially thought they were involved in a “day-trading” operation, but instead suspected a Ponzi scheme.
According to state officials, one complaint alleges that Chouinard convinced an investor to get a $100,000 loan and invest with him, promising a 40 percent return in 30 days. After receiving the money, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal joint-checking account and gave the remaining $25,000 to his attorney.
The agency also alleged that Chouinard, a broker/dealer salesperson and investment adviser for LPL Financial Corporation, traded in their LPL accounts without permission, forged signatures and traded excessively, earning himself $250,000 in commissions.
State Auditor Monica Lindeen said if a broker makes excessive trades, the account owner can pay more in commission than they earn with their investment. She advised investors to regularly check their brokerage statements.
Chouinard didn’t provide tax documentation or statements for “day-trading” investments, officials said. The complaints also allege he misrepresented investment values, in one case as much as 10,000 percent.
Lindeen’s complaint charges Chouinard with violating anti-fraud provisions of the Montana Securities Act. The auditor’s office will seek to revoke Chouinard’s Montana securities license and revoke or suspend his insurance provider licensure. State officials are also seeking to enforce fines and restitution for investors.
The penalties could be millions of dollars, Lindeen said. Security Act violations cost $5,000 per violation.
The state auditor’s office is asking for anyone who may have been solicited by or have invested with Chouinard to call 1-800-332-6148 or (406) 444-2040.