William Neil Gallagher, a Dallas area-based radio host based who calls himself the “Money Doctor,” is now facing securities fraud charges accusing him and his companies, Gallagher Financial Group and W. Neil Gallagher, PhD Agency, Inc., of seeking to defraud older investors of their retirement money in a $19.6M Texas-based Ponzi scam/affinity fraud. The US Securities and Exchange Commission (SEC) brought the civil fraud charges against them.
According to the SEC’s complaint, from 12/2014 through 1/2019, Gallagher, who is based in the Dallas/Fort Worth area, raised at least $19.6M (maybe even up to more than $29M) from about 60 elderly investors ranging in age from about 60 to the early 90’s. He allegedly did this through his companies in what the regulator is referring to as an “affinity fraud investment scam” that is also a Ponzi scheme.
Gallagher is accused of using his radio shows to target retired Christian investors, who were his radio audience, and to whom he ingratiated himself by often making religious references on his shows. He also allegedly urged radio listeners to call GFC to set up meetings, during which he would help them with their retirement plans and give them advice regarding how to make money without having to take on any risks.
Affinity Fraud and Ponzi Scam
An affinity scam typically involves targeting members of a particular group, community, affiliation, or demographic with the scammer often pretending to be a trusted member of that same group. In a Ponzi scam, existing investors are paid “returns” that are actually the money of newer investors.
Even though Gallagher is not a licensed investment adviser, he allegedly pretended to be one when he offered and sold Diversified Growth and Income Strategy Accounts (DGI Accounts) to his elderly clients. He promised them 5-8% yearly returns, risk-free, and the chance to make retirement money that would outlast them. Gallagher claimed the returns would be a result of using investor money to acquire the following:
- Mutual fund shares
- Life settlements
- US Treasury securities
- Fixed-Index annuities
- Publicly-traded stock
Instead, Gallagher allegedly only used a small portion of investors’ money on just one $75K annuity purchase. He is accused of spending at least $5.8M to issue Ponzi payments to investors (touting the money as investment returns), and close to $3.2M to cover radio costs, personal spending, and payroll.
The SEC reports that even though Gallagher is believed to have raised millions from investors, including at least $500K from investors just in January of this year, as of 1/1/19 there was only nearly $822K in bank accounts that he controlled. The regulator contends that Gallagher is still continuing to perpetuate his Ponzi scam/affinity fraud and soliciting investors.
The Commission is seeking to shut down Gallagher’s alleged fraud. It also wants disgorgement of ill-gotten gains plus interest, permanent injunctive relief, and a civil monetary penalty against the radio host and his companies.
According to Gallagher’s BrokerCheck record, he was previously a registered broker at seven brokerage firms, including the Williams Financial Group, National Securities Corporation, GR Stuart & Co., Financial Securities Network, First Affiliated Securities, AG Edwards & Sons, and Dean Witter Reynolds. In 1999, the Texas State Securities Board reprimanded Gallagher after finding that he engaged in fraudulent business practices and made material misrepresentations, including that he was a registered investment adviser (RIA) when, in fact, he was not. (His BrokerCheck record, however, indicates that he may have one time have been an RIA.)
Texas Investor Fraud
Throughout the state, our Texas investment fraud lawyers are here to help investors in getting back the money they lost due to fraud, negligence, or other wrongdoing. Our Texas retirement losses attorneys work with retirees, senior investors, and other investors who were defrauded of their retirement funds.
Contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today if you invested in DGI Accounts through Gallagher and his companies or suspect you were the victim of a different Texas investor scam.