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Press Release


Former Head of Coastal Investment Advisors Settles Charges, Admits He Stole Money From Investors

Washington D.C., Oct. 19, 2015

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.


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