Spire Securities

Spire Securities’ CEO David Blisk Makes False Statements After Panel Awards $3 Million Against Him

June 22, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP represents a group of 23 claimants that have been awarded $3 million by a FINRA arbitration panel after 18 days of hearing and litigation that stretched over three years. At hearing the evidence showed that Spire Securities, LLC (Spire Securities) and the firm’s principal officers including its CEO David Blisk (Blisk) and CCO Suzanne McKeown (McKeown) failed to supervise their registered representative Patrick Churchville (Churchville).

Despite the overwhelming evidence of the firm’s failure to supervise Blisk continues to defend his conduct instead of instituting necessary reforms to his practice. In addition, Blisk has made several false statements of fact to the media in his continuing attempts to exonerate himself and his firm.

Blisk told AdvisorHub “’We think the award is outrageous and inappropriate,’ said Blisk, noting that the majority arbitrators appeared to ignore the firm’s claims that the Ponzi scheme began after Churchville left Spire in 2011. “We can’t supervise after somebody leaves us, and we don’t have to be fraud investigators.”

False on all counts. First the only thing that is outrageous is that Blisk and Spire Securities could not produce a single opening account form, subscription agreement, or account statement for any of the 23 claimants who invested over $10 million in Churchville’s fraud on Spire Securities watch. Claimants repeatedly asked Respondents to provide any evidence that the firm monitored Churchville’s activities for supervision without response. Blisk had no evidence that Claimants investments, which were overconcentrated in private equity funds, was suitable. Further, Respondents did not even know what Churchville’s funds were invested in and claimed that brokerage firms can blindly approve products that they have no understanding of.

Finally, Blisk falsely claims that Churchville did not commit fraud on Spire Securities watch. Claimants proved that Churchville directed and ordered the theft of over $900,000 from one of the Claimants over Spire Securities’ email servers. In addition, Claimants introduced numerous emails that showed $750,000 had been stolen from the private equity funds while Churchville fraudulently told investors the same investment was producing fantastic returns. Claimants also showed that Chuchville stole over $200,000 in investor funds to pay administrative expenses that had been overdue for over a year after the service provider questioned whether Churchville was going out of business. Finally, Claimants produced evidence that Churchville’s auditor had concerns over the private equity fund’s valuation and could not find evidence to back up Churchville’s claimed returns.

Spire Securities and Principals Found Liable For $3 Million Due to Supervisory Failures

June 21, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are pleased to announce that a group of 23 claimants have been awarded $3 million by a FINRA arbitration panel after 18 days of hearing and litigation that stretched over three years. The case involved important investor protections concerning broker private securities transactions and outside business activities that firms must supervise and has been picked up by news outlets.

At hearing the evidence showed that Spire Securities, LLC (Spire Securities) and the firm’s principal officers including its CEO David Blisk (Blisk) and CCO Suzanne McKeown (McKeown) failed to supervise their registered representative Patrick Churchville (Churchville). Due to the firm’s non-existent supervision Churchville was able to unsuitably invest his clients in his own private equity funds and misappropriate client funds. Chuchville was later barred from the securities industry and in March of 2017 the United States District Court of Rhode Island sentenced Churchville to 84 months in federal prison for his crimes.

Churchville conducted his fraudulent activities through private equity funds he ran and controlled through a disclosed outside business activity and registered investment advisory practice. Claimants showed that the private equity securities were private securities transactions that the firm was required to supervise. Claimants proved that while Blisk and McKeown approved of Churchville’s activities but that the firm relied on Churchville to supervise himself.

SEC Charges Advisor Patrick Churchville with $11 Million Fraudulent Investment Scheme

July 6, 2015 | by Staff Attorney

The Securities and Exchange Commission (SEC) recently announced fraud charges against Rhode Island investment adviser ClearPath Wealth Management, LLC, (ClearPath) and its president, Patrick Churchville (Churchville), for operating a fraudulent investment scheme that resulted in at least $11 million investor losses.

According to the complaint, from December 2010 onward ClearPath and Churchville diverted deposits from new investors to pay prior investors, used proceeds from selling investments to pay unrelated investors, used investors’ funds as collateral for personal loans, used investors’ money to repay the loans, converted investor funds, and also outright stole $2.5 million of investor funds to purchase a waterfront home in Barrington, Rhode Island for Churchville. The SEC’s complaint alleges that Churchville performed deceptive acts and used misleading accounting tricks to conceal the fraud.

The SEC’s alleged that when ClearPath’s investors requested distributions of their investments in September 2013, Churchville lied to investors about the status, worth, and disposition of those investments. Four other entities: ClearPath Multi-Strategy Fund I, L.P., ClearPath Multi-Strategy Fund II, L.P., ClearPath Multi-Strategy Fund III, L.P., and HCR Value Fund, L.P. were named by the SEC as relief defendants.

Atlas Energy Oil and Gas Investments: Risks Investors Should Know Part II

December 17, 2014 | by Staff Attorney

This article follows up on a recent article reported in Reuters concerning Atlas Energy LP’s private placement partnerships in oil and gas. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal allows investors to participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of oil into viable prospects. In addition, Atlas promises to invest up to $145 million of its own capital alongside investors.

In the last article we explored how the house seems more likely to win on these deals over investors. But beyond the inherent risks with speculating on oil and gas and unknown oil deposits most investors don’t realize the deals are often unfair to investors. In a normal speculative investment as the investment risk goes up the investor demands greater rewards to compensate for the additional risk. However, with oil and gas private placements the risks are sky high and the rewards simply don’t match up.

In order to counter this criticism, issuers say that the tax benefits of their deals where the investor can write off more than 90 percent of their initial outlay the year they make it helps defray the risk and increase the value proposition. First, the same tax advantage claims are often nominal compared to the principal risk of loss of the investment as seen by Puerto Rican investors in the UBS Bond Funds who have now seen their investments decline by 50% or more in some cases. Second, often times brokers sell oil and gas investments indiscriminately to the young and old who have lower incomes and cannot take advantage of the tax benefits.

Atlas Energy Oil and Gas Investments: A Risky Proposition Part I

December 16, 2014 | by Staff Attorney

As recently reported in Reuters, Atlas Energy LP has marketed itself to investors as a way to get into the U.S. energy boom. By contributing at least $25,000 in a private placement partnership that will drill for oil and gas in states such as Texas, Ohio, Oklahoma and Pennsylvania and share in revenues generated from the wells. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal sounds good when pitched: participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of fossil fuels into potentially viable prospects and to boot Atlas will invest up to $145 million of its own capital alongside investors. Through this method and similar deals, oil and gas projects have issued nearly 4,000 private placements since 2008 seeking to raise as much as $122 billion.

But before you take the plunge a review of the Atlas’s offering memorandum reveals some red flags and given Atlas’ past failure rate investors should think twice. First, up to $45 million of the money raised will be paid to Atlas affiliate Anthem Securities that will then be turned over to as commissions to broker-dealers who pitch the deal to investors. Up to $39 million more will be used to buy drilling leases from another affiliate. Think investors will get a fair price on the leases when Atlas controls both sides of the deal? More conflicts ahead as Atlas affiliated suppliers may also get up to $53 million for buying drilling and transport equipment. Next, an additional $8 million of Atlas’s investment is a 15 percent markup on estimated equipment costs. Finally, Atlas will pay itself nearly $52 million in various other fees and markups.

In sum, at least 40% of Atlas’s $145 million investment alongside mom and pop goes right back to the company. In addition, Atlas’ profits don’t stop there, when the venture starts generating revenue Atlas is entitled to 33% before accounting for those payments and markups. In the end, not much of a risk at all for Atlas.