U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23517 / April 13, 2016
Securities and Exchange Commission v. Michael Donnelly, Civil Action No. 15-5673 (E.D. Pa. filed Oct. 19, 2015)
Securities and Exchange Commission v. Michael Donnelly, Civil Action No. 15-5673 (E.D. Pa. filed Oct. 19, 2015).
United States v. Michael Donnelly, Crim. No. 15-0501 (E.D. Pa. filed Oct.19, 2015).
The Securities and Exchange Commission announced today that, on April 11, 2016, a federal court in Philadelphia, Pennsylvania sentenced Michael Donnelly of Lecanto, Florida, to 99 months imprisonment, to be followed by three years of supervised release, and the payment of restitution in the amount of $1.99 million. Donnelly is the former president of Wilmington, Delaware-based Coastal Investment Advisors Inc. and its affiliated broker-dealer. Donnelly pleaded guilty to securities fraud and wire fraud in December 2015.
The SEC charged Donnelly in a parallel action filed in October 2015. According to the SEC's complaint, from 2007 through August 2014, Donnelly took funds from elderly and unsophisticated advisory clients and brokerage customers and, instead of investing the money as promised, used it to pay for his own expenses. Donnelly concealed his scheme by providing investors with false account statements, trade confirmations, and other untrue information that purportedly reflected their investment holdings and repeatedly told investors that their fictitious "investments" were performing well. Donnelly agreed to settle the SEC's charges by consenting to a final judgment that permanently enjoined him from future violations of the antifraud provisions of the federal securities laws and agreed to disgorge his ill-gotten gains of $1.99 million and prejudgment interest of $365,723, which was deemed satisfied upon the entry of the order of restitution in the parallel criminal case. He also consented to an SEC order permanently barring him from the securities industry.
Former Head of Delaware-Based Investment Advisor Firm Sentenced to 99 Months Imprisonment for Securities Fraud