A Poway man who stole nearly $8 million dollars from dozens of victims over a five-year period in San Diego County, most of them senior citizens, has been charged by the District Attorney’s Office with more 80 felony counts. Christopher Dougherty, 46, has been charged with grand theft, fraud and financial elder abuse, and other charges reflecting crimes committed against at least 31 families. Dougherty, a former licensed insurance agent, solicited at least $7.75 million in investments as part of a large-scale Ponzi scheme that eventually collapsed and left victims with nothing. Twenty of the 31 victims were 65 or older at the time of their investments. [TWEET THIS]
“This was a classic Ponzi scheme where the defendant stole millions of dollars from trusting families and senior citizens. These aren’t rich investors, they’re people who worked hard and trusted their life savings with someone who preyed on their vulnerabilities,” said District Attorney Summer Stephan said. “I’m very proud of the investigative work done by the DA’s Insurance Fraud Unit and our law enforcement partners to bring justice to dozens of victims preyed upon by a heartless con man.”
Dougherty was arrested at his home in Poway on April 25 and booked into jail. He was arraigned in Superior Court on April 26 and pleaded not guilty. The court set bail at $5 million. He faces up to 35 years in prison if convicted of the charges.
Currently, 31 households have been identified as having invested with Dougherty, but investigators are currently evaluating the information of approximately 26 additional victims, many of whom are expected to be added to the case in the future.
Many of the investors were identified when Dougherty filed bankruptcy in federal court in October of last year, but additional victims were identified when investigators began looking more closely at Dougherty’s financial records. Some of the victims met Dougherty when he was designated by various school districts (including Sweetwater Union High School District, Imperial Unified School District, and El Centro Elementary School District) as an investment advisor for employees. Other victims were introduced to Dougherty by his current clients. Dougherty leveraged a reservoir of trust he had developed with long-standing clients, convincing them to cash out of established, conventional investments and move their money to his private investments.
Dougherty offered private investments in various companies he owned. One of the investment opportunities Dougherty pitched investors was a 100-acre “organic” cattle ranch in Alpine. While the farm was real, it didn’t actually generate any profits for investors. Dougherty also promoted a marijuana growing project on that Alpine property.
Dougherty shuffled money around in classic Ponzi fashion, paying "profits" to complaining investors with funds invested by more recent investors. In addition, Dougherty used investor funds for personal expenses, including home remodel, travel, college tuition, and large cash withdrawals. Once investors began to demand their money and Dougherty couldn’t pay it back, the Ponzi scheme collapsed.
“Unfortunately, financial scams have become an all too common reality. As your Sheriff, I want you to know that people who masquerade as financial experts only to steal your life savings will be held accountable,” said San Diego County Sheriff William Gore. “I applaud the collaborative action in exposing Dougherty's scheme before he had a chance to manipulate additional victims out of their hard-earned retirement.”
"Dougherty’s criminal enterprise is callous and indefensible,” said Insurance Commissioner Ricardo Lara. “Crimes against the elderly are especially reprehensible. Increasingly we are uncovering complex financial scams that target seniors, and other vulnerable California communities and consumers. We will continue to work with our district attorney partners to aggressively investigate and prosecute anyone who targets seniors.”
The case was investigated by a task force comprised of members from the San Diego Sheriff’s Department, California Department of Insurance, California Department of Business Oversight, and the San Diego Police Department. The case is being handled by Deputy District Attorney Michael Zachry from the San Diego District Attorney’s Office’s Insurance Fraud Division.
“The SEC alleges that Dougherty took advantage of his clients’ trust by using their retirement savings to run a Ponzi scheme,” said Michele Wein Layne, Director of the Los Angeles Regional Office. “The SEC is committed to protecting clients by holding accountable any investment advisers who so grossly abuse the duties they owe to their clients.”
Anyone who believes they are a victim of Christopher Dougherty, and have not already been in communication with law enforcement, may contact the California Department of Insurance at (858) 693-7100.
Many Ponzi schemes share common characteristics. The DA’s Office urged investors to look for these warning signs: [TWEET THIS]
- High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any "guaranteed" investment opportunity.
- Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
- Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company's management, products, services, and finances.
- Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
- Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb.
- Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised.
- Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to "roll over" investments and sometimes promise returns offering even higher returns on the amount rolled over. [TWEET THIS]
In keeping senior citizens safe, the key to prevention is knowledge and awareness. In addition to the Insurance Fraud Division, which is handling this case, the District Attorney’s Office has an Elder Abuse Prosecution Unit. The specialized unit handles about 200 felony cases per year with a lead prosecutor, two victim advocates and a full-time investigator.
Information on how protect yourself and your loved ones from becoming victims of elder abuse can be found on the District Attorney’s public website at www.SafeSeniorsSanDiego.com.