State auditor investigating alleged Columbia Falls Ponzi scheme
The Montana State Auditor’s Office has frozen the investment accounts of Catherine Ann “Cathy” Finberg for allegedly investing money without proper registration and mishandling more than $1.3 million in a suspected Ponzi scheme.
The accounts are frozen indefinitely until she requests a hearing to show why she shouldn’t be prohibited from accessing her accounts, according to documents from the Auditor’s Office.
Flathead County District Judge David Ortley issued a temporary restraining order April 15 that froze Finberg’s accounts at Glacier Bank, Vanguard and Interactive Brokers.
Interactive Brokers is a firm in Connecticut that facilitates day trading for individual investors.
A hearing on the case was scheduled in Flathead County District Court Wednesday on the matter, but was canceled mutually by both parties.
The investigation into Finberg began after Columbia Falls Police Department received a complaint of missing money from a physically and mentally disabled man in January, Police Chief Dave Perry said.
The police department started an investigation, but then turned it over to the Federal Bureau of Investigation because it involved people from outside of the city. Finberg was a standout athlete in her youth at Columbia Falls High School and is currently an assistant girls basketball coach for the Wildkats.
According to state auditor documents, the disabled man’s grandfather had given Finberg the full power of agent over a retirement account before his death in 2011. The disabled individual is the primary beneficiary of the account with a value of $122,000.
Finberg allegedly received about $3,000 annually from the account which was deposited into her personal account at Glacier Bank, according to court documents.
Lynne Egan, a forensic accountant for the Auditor’s Office, started an investigation in February after being contacted by the FBI. Egan found that Finberg had deposited about $1 million into the Interactive Brokers account over the past six years and had a market loss of about $275,000 during that time. Also, Finberg withdrew $741,000 from the account and placed it in her Glacier Bank account.
Since 2008, Finberg allegedly obtained investments of $1,294,300 from more than 18 people, according to court documents. Numerous checks deposited into Finberg’s account listed “day trading” or “investment” in the memo field.
One of the investors was the grandparent of the disabled individual. Investigators found that $44,000 of the grandfather’s money was transferred to Finberg’s account at Interactive Brokers. And Finberg allegedly used $31,000 for her personal use and to pay other investors.
Egan determined that Finberg typically wired a portion of investment proceeds to the brokerage account and retained some of the money for personal use and to make monthly payments to previous investors.
The accountant found that each month, Finberg wrote checks averaging $3,805 to investors, wired an average of $1,950 to pay off a personal Bank of America Credit Card, wired $500 to pay off her personal Chase Bank credit card and paid her $1,730 mortgage.
“These payments were paid primarily with the investment proceeds of individual investors,” wrote Egan. Egan found that Finberg allegedly owes investors $997,302.
The Auditor’s Office also could not find evidence that Finberg has ever been registered to invest as a securities broker-dealer as required by state and federal law.
No criminal charges had been filed in the case since the investigation is ongoing. However, for the alleged violations, the maximum penalties are a fine of $50,000 and 20 years in prison.
Attorney Dave Cotner of the Datsopoulos, MacDonald and Lind office in Missoula is representing Finberg.
Finberg hasn’t returned a phone call for comment.