Former Head of Coastal Investment Advisors Settles Charges, Admits He Stole Money From Investors
Michael Donnelly, former president of Coastal Investment Advisors Inc., stole nearly $2 million from elderly and unsophisticated clients between 2007 and 2014 by fabricating account statements and using funds for personal expenses, leading to SEC settlement with disgorgement, industry bar, and parallel criminal charges.
Michael Donnelly, former president of Coastal Investment Advisors Inc., admitted to defrauding clients by misappropriating nearly $1.9 million from elderly and unsophisticated investors between 2007 and August 2014, using the funds for rent, car payments, golf club dues, and his children’s private school tuition. He concealed the fraud through false account statements and trade confirmations, falsely assuring clients their investments were performing well. As part of an SEC settlement, he agreed to disgorge $1.9 million in ill-gotten gains plus $365,723 in prejudgment interest, accept a permanent industry bar, and face parallel criminal charges from the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
Michael Donnelly, former president of Coastal Investment Advisors Inc. and its affiliated broker-dealer, orchestrated a multi-year fraud from 2007 through August 2014 by stealing nearly $1.9 million from elderly and unsophisticated clients. He diverted client funds to cover personal expenses including rent, car payments, golf club membership dues, and his children’s private school tuition, while fabricating account statements, trade confirmations, and performance reports to deceive investors into believing their investments were secure and profitable. The SEC charged him with violating antifraud provisions of federal securities laws, and he agreed to a settlement that included a permanent injunction, a lifetime bar from the securities industry, and disgorgement of $1.9 million plus $365,723 in prejudgment interest, with repayment deemed satisfied by a parallel criminal restitution order. In a related action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed criminal charges against him for the same misconduct. The SEC’s investigation, led by Burk Burnett and Scott A. Thompson and supported by the FBI and U.S. Attorney’s Office, followed an examination by David A. Spencer and Frank A. Thomas. Donnelly, who resides in Lecanto, Florida, did not contest the allegations and consented to all terms of the settlement. The SEC emphasized its commitment to holding fiduciaries accountable for abusing trust to exploit vulnerable investors.
Exhibits & Attached Documents (1)
Extracted insights
- $2.00M $2 million $1M–$10M
- $1.90M $1.9 million $1M–$10M
- $366K $365,723 $100K–$1M
- agency an sec order permanently barring him from the securities industry
- person burk burnett
- person criminal charges against donnelly
- person G. Jeffrey Boujoukos
- person michael donnelly
- person sharon b. binger
- agency the sec’s charges by admitting to defrauding his clients
- agency the sec’s investigation
- Michael Donnelly agreed to settle charges that he stole nearly $2 million
- Michael Donnelly took funds from elderly and unsophisticated investors
- Michael Donnelly used funds to pay for his own expenses
- Michael Donnelly concealed his scheme by providing false account statements
- Sharon B. Binger said Donnelly stole from his clients and lied to cover up his theft
- U.S. Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Donnelly
- Michael Donnelly agreed to settle the SEC’s charges by admitting to defrauding his clients
- Michael Donnelly agreed to disgorge ill-gotten gains of $1.9 million and prejudgment interest of $365,723
- Michael Donnelly consented to an SEC order permanently barring him from the securities industry
- Burk Burnett conducted the SEC’s investigation
- Scott A. Thompson conducted the SEC’s investigation
- G. Jeffrey Boujoukos supervised the SEC’s investigation
- David A. Spencer conducted an examination
- Frank A. Thomas supervised the examination
The Securities and Exchange Commission today announced that Michael Donnelly, the former president of Wilmington, Del.-based Coastal Investment Advisors Inc. and its affiliated broker-dealer, has agreed to settle charges that he stole nearly $2 million from his advisory clients and brokerage customers. According to the SEC’s complaint filed in federal district court in Philadelphia, Donnelly took funds from elderly and unsophisticated investors and instead of investing it as promised, used it to pay for his own expenses, including rent, car payments, golf club membership dues, and his children’s private school tuition. Donnelly concealed his scheme by providing investors with false account statements, trade confirmations, and other bogus information that purportedly reflected their investment holdings and repeatedly told investors that their fictitious “investments” were performing well. The scheme ran from 2007 through August 2014. “Donnelly stole from his clients over a period of several years and then repeatedly lied to cover up his theft,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office. “We will aggressively pursue and prosecute industry professionals like Donnelly who abuse their positions of trust to take advantage of their unsuspecting clients.” In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania today announced criminal charges against Donnelly relating to the same misconduct. Donnelly, who lives in Lecanto, Fla., agreed to settle the SEC’s charges by admitting to defrauding his clients and consenting to a final judgment that permanently enjoins him from future violations of the antifraud provisions of the federal securities laws. Donnelly agreed to disgorge his ill-gotten gains of $1.9 million and prejudgment interest of $365,723, which will be deemed satisfied upon the entry of an order of restitution in the parallel criminal case. He also consented to an SEC order permanently barring him from the securities industry. The SEC’s investigation was conducted by Burk Burnett and Scott A. Thompson of the Philadelphia Regional Office and supervised by G. Jeffrey Boujoukos. The investigation followed an examination conducted by David A. Spencer and supervised by Frank A. Thomas. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.
The Securities and Exchange Commission today announced that Michael Donnelly, the former president of Wilmington, Del.-based Coastal Investment Advisors Inc. and its affiliated broker-dealer, has agreed to settle charges that he stole nearly $2 million from his advisory clients and brokerage customers. According to the SEC’s complaint filed in federal district court in Philadelphia, Donnelly took funds from elderly and unsophisticated investors and instead of investing it as promised, used it to pay for his own expenses, including rent, car payments, golf club membership dues, and his children’s private school tuition. Donnelly concealed his scheme by providing investors with false account statements, trade confirmations, and other bogus information that purportedly reflected their investment holdings and repeatedly told investors that their fictitious “investments” were performing well. The scheme ran from 2007 through August 2014. “Donnelly stole from his clients over a period of several years and then repeatedly lied to cover up his theft,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office. “We will aggressively pursue and prosecute industry professionals like Donnelly who abuse their positions of trust to take advantage of their unsuspecting clients.” In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania today announced criminal charges against Donnelly relating to the same misconduct. Donnelly, who lives in Lecanto, Fla., agreed to settle the SEC’s charges by admitting to defrauding his clients and consenting to a final judgment that permanently enjoins him from future violations of the antifraud provisions of the federal securities laws. Donnelly agreed to disgorge his ill-gotten gains of $1.9 million and prejudgment interest of $365,723, which will be deemed satisfied upon the entry of an order of restitution in the parallel criminal case. He also consented to an SEC order permanently barring him from the securities industry. The SEC’s investigation was conducted by Burk Burnett and Scott A. Thompson of the Philadelphia Regional Office and supervised by G. Jeffrey Boujoukos. The investigation followed an examination conducted by David A. Spencer and supervised by Frank A. Thomas. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.