David Blaine Welliver, whose career as a financial advisor began in the early 1990s with a $400 classified ad promoting his one-man office, ended that career by recently pleading guilty to a charge of securities fraud in a St. Paul, Minnesota federal courtroom. He is looking at up to five years in prison.

The former advisor is the great-grandson of Val J. Rothschild, who co-founded St. Paul’s oldest mortgage banking and real estate sales company over 130 years ago.

Welliver’s career issues started many years ago when he was promoted at Technimar Industries Inc. of Houston. The company wanted to build a $35 million plant outside of Grand Rapids, Minnesota to produce a composite building product called Stonite under license with an Italian company. The Minneapolis police and fire pension put millions into the project on Welliver’s advice, unaware that he was also a fundraiser for the company. Technimar collapsed without ever producing any Stonite. The Minneapolis Police Relief Association and the Minneapolis Firefighters’ Relief Association won a $14.6 million judgment against Welliver in 2000 on allegations that he mismanaged fund assets.

In 2003, he pleaded guilty to misdemeanor charges related to his failure to file IRS employee benefit plan forms.

In 2004, he consented to a $19,161 judgment to settle a U.S. Department of Labor complaint alleging he transferred funds from his company’s retirement savings plan to his personal bank account.

Welliver created the Dblaine Capital advisory firm in 2005 at his home address. The SEC sued him in 2011 alleging that he engaged in “flagrant and numerous” securities violations. The SEC claimed the firm only had a small number of clients with about $500,000 in assets under management and generated less than $7,000 a year in fees, its only revenue. However, Welliver paid himself a six-figure salary.

The SEC accused Welliver and the firm of placing client assets into a worthless investment. It also accused him of spending $500,000 on personal expenses that included a $40,000 car, vacations, liquor, meals, home improvements, jewelry, his son’s college tuition and back taxes.

Welliver settled with the SEC. According to the agreement, he will repay about $922,483 including interest and will no longer participate in the securities business.

The SEC’s allegations culminated in his indictment last August on fourteen federal fraud and money laundering charges. The indictment states Welliver had agreed in 2010 to pay $100,000 to another investment adviser to buy the assets of two other mutual funds to increase his own struggling fund’s assets. But at the time, the indictment says, Welliver’s advisory company had less than $200 in liquid assets and he had less than $2,000 in his bank account. He also owed millions of dollars in civil judgments, federal income taxes and other debts.

To complete the acquisition of the mutual funds, the indictment says, Welliver borrowed $4 million. But the indictment says he used just $95,000 for that purpose and instead diverted over $500,000 for his personal use, with the remainder going to loan repayments and his business operating expenses.

Welliver entered into a plea agreement in which he agreed to plead guilty to a single count of securities fraud in exchange for having the remaining charges dismissed.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.