A Buffalo, Minn., money manager with a history of financial misconduct will be barred from the securities industry and has been ordered to pay $1.1 million, including a $200,000 civil penalty.
David B. Welliver agreed to the conditions, without admitting or denying most of the allegations, as part of a settlement with the U.S. Securities and Exchange Commission (SEC).
U.S. Magistrate Judge Steven Rau in St. Paul approved the agreement Tuesday.
Welliver, 53, ran Dblaine Capital out of his home northwest of Minneapolis. The SEC sued Welliver and Dblaine in 2011, accusing them of illegally mismanaging a mutual fund between 2010 and July 2011, leaving shareholders with worthless investments while Welliver pocketed money to pay for things such as vacations, home improvements, back taxes and his son’s college tuition.
Most of the 100 investors in the Dblaine Fund lived in upstate New York.
Dblaine Capital has shut down, according to the SEC.
Welliver started a new company called Stringfield Capital shortly after he was sued. When Welliver is barred he will have to stop operating Stringfield as an investment firm.
Welliver’s track record is pocked with controversy. Court documents show that the Minneapolis Police Relief Association and the Minneapolis Fire Fighters Relief Association won a $14.6 million judgment against him in 2000 after accusations that he mismanaged their pension fund assets.
Then in 2003, Welliver pleaded guilty to two misdemeanor counts related to failing to file IRS Employee Benefit Plan forms.
In 2004, the U.S. Department of Labor filed a civil complaint against him on allegations he illegally transferred money from his company’s retirement savings plan into his personal bank account. Welliver consented to a judgment and was required to pay $19,161.
Welliver could not be reached for comment. Shortly after the SEC sued him, Welliver sued the investment consultant he had hired “for his utter failure to competently render compliance services.” Welliver blamed David D. Jones of Laredo, Texas, for exposing him to SEC violations. The lawsuit was ultimately dismissed.
Under terms of the latest settlement, Welliver is prohibited from future violations of the numerous federal securities laws he allegedly violated. He also agreed to repay about $922,483 including interest, plus a $200,00 civil penalty, and consented to an SEC order that will forbid him from any securities activities.