Former life insurance agent Christopher Dougherty, 47, pleaded guilty to several fraud charges this week, partly related to a phony marijuana farm investment he successfully pitched to unknowing investors.
Dougherty pleaded guilty in a California court to three counts of securities fraud, three counts of grand theft, and a sentencing enhancement after running a $6 million Ponzi scheme that scammed 49 victims -- 31 of whom were 65 years or older at the time of the fraudulent investments.
He received a 12-year state prison sentence, with sentencing is set for April 24, 2020. Dougherty has been in custody with a $5 million bail since his arrest in April 2019.
“Dougherty ruthlessly took advantage of his clients’ trust in order to steal their life savings, causing unfathomable harm,” said Insurance Commissioner Ricardo Lara. “Thanks to the great work by Department of Insurance investigators and the San Diego District Attorney's Office, his conviction will bring some level of justice to victims and their families.”
Dougherty offered private investments in various companies he owned. One of the investment opportunities Dougherty pitched was a 100-acre “organic” cattle ranch in Alpine.
While the farm was real, it did not actually generate profits for investors. Dougherty also promoted a marijuana growing project on the Alpine property.
Dougherty shuffled money around in classic Ponzi fashion, paying “profits” to investors with funds received from recent investors, Lara's office said.
In addition, Dougherty used investor funds for personal expenses, including home remodeling, travel, college tuition, and large cash withdrawals, according to court documents. The Ponzi scheme collapsed when investors began to demand their money and Dougherty could not pay it back.
Investigators identified many of the investors when Dougherty filed bankruptcy in federal court in October 2018, but found additional victims when investigators began looking more closely at Dougherty’s financial records, court documents said.
Some of the victims met Dougherty when various San Diego and Imperial County school districts designated him as an investment advisor for employees. Other victims met Dougherty through his current clients, court documents said.
Dougherty leveraged a reservoir of trust he had developed with long-standing clients, convincing them to cash out established, conventional investments and move their money to his fraudulent investments, court documents said.