The Securities and Exchange Commission announced that it has charged Texas resident William Neil "Doc" Gallagher-the self-styled "Money Doctor" featured on three Dallas-area radio stations-in an emergency action to shut down a $19.6 million Ponzi scheme targeting elderly investors' retirement funds.
The SEC also charged Gallagher Financial Group, Inc. and W. Neil Gallagher, Ph.D. Agency, Inc., companies that Gallagher used to carry out the scheme.
The SEC's complaint, which was filed under seal on March 7, 2019, alleged that Gallagher made frequent religious references on his radio shows to establish his standing among a target audience of retired Christian investors.
From December 2014 through January 2019, he raised at least $19.6 million from approximately 60 senior citizens. Falsely claiming to be a licensed investment adviser, he offered an investment that he called a Diversified Growth and Income Strategy Account, in which he promised to acquire income-generating assets for his clients in five specified categories.
He promised investors that they would receive guaranteed, risk-free returns in their accounts ranging from 5% to 8% per year. In reality, except for one $75,000 annuity purchase, Gallagher purchased no assets in any of the five categories and no other assets to back the promised returns.
Instead, he exhausted virtually all investor funds on spending unrelated to the accounts, including misappropriating significant portions for personal and company expenses and to make Ponzi payments to investors. To lull investors and conceal the scheme, Gallagher provided investors phony account statements showing false account balances.
The SEC alleges that Gallagher and his companies violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 206 of the Investment Advisers Act of 1940. On March 8, 2019, United States District Judge Jane J. Boyle entered orders at the SEC's request, freezing their assets and placing them into receivership and temporarily enjoining the defendants from further violations. The SEC is seeking preliminary, permanent, and conduct-based injunctions as well as disgorgement, prejudgment interest, and civil penalties against the defendants.
In a related case, the Dallas County District Attorney's Office obtained an indictment against Gallagher on March 4, 2019, for securities-fraud and other criminal charges stemming from the scheme. On March 8, 2019, Gallagher was arrested on those charges, which remain pending.
The SEC's investigation was conducted by Melanie K. Good, John J. Devine, and Melvin E. Warren and supervised by Timothy S. McCole. The litigation is being conducted by Janie L. Frank and supervised by B. David Fraser. The SEC appreciates the assistance and cooperation of the Dallas County District Attorney's Office, the Texas Department of Insurance, the Texas State Securities Board, the Hurst Police Department, and the North Richland Hills Police Department.