A Kalispell man pleaded guilty to bilking Flathead area investors of nearly $200,000 through felony embezzlement and securities fraud by Ponzi scheme on Dec. 16 in District Court.
Donald Chouinard changed his not guilty plea in Flathead County District Court after negotiating an agreement in which three additional security fraud charges were dropped.
The plea agreement lays out a 10-year prison sentence, with all the time suspended except 30 days Chouinard must spend in the county jail over 15 consecutive weekends. He would also be required to pay $10,000 fines on each charge and more than $200,000 in restitution.
District Court Judge Katherine Curtis will decide whether to follow this sentencing recommendation during Chouinard’s sentencing hearing on Feb. 24.
Before Feb. 24, Curtis requested a pre-sentencing report complete with an extensive look at Chouinard’s finances to ensure he can pay restitution. During the hearing, Chouinard assured the prosecution that he could.
Curtis noted that the maximum sentence could be 20 years in prison and $100,000 in fines. The investment schemes took place in Flathead County between September 2008 and June 2009.
According to court documents, one investor gave Chouinard $50,000 to invest in a company, but Chouinard instead deposited it into his DC Wealth Management Inc. account, on which he was the only signatory. He did not invest in the previously agreed upon company, court records state, but instead spent the money on personal expenses.
Another investor took out a 90-day, $100,000 loan for Chouinard to invest in a day-trading platform. Instead of doing so, court records state that Chouinard used $50,000 to pay back his first investor, put $25,000 into a personal checking account and paid $25,000 to his lawyer.
A third investor paid Chouinard $25,000 to invest in the day-trading platform as well, $20,000 of which was transferred to the DC Wealth Management account and $5,000 was used on personal expenses, according to court records.
In total, Chouinard misappropriated $187,400, court records state.
Two of the investors reached a $1.3-million settlement with LPL Financial Corp. last October. According to the Associated Press, State regulators alleged Chouinard made unauthorized trades on customer’s accounts during the five years he worked as an independent broker for LPL Financial Corp., causing customers to lose money while generating $250,000 in commissions for himself.
LPL Financial also paid a $150,000 fine to the state for failing to supervise Chouinard.