Former Burns Finance Official Accused of Fraud

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Montana officials have accused a recently-departed fundraising chief for Sen. Conrad Burns’ (R-MT) re-election campaign with securities fraud, according to a press release.

State Auditor John Morrison says Pat Davison defrauded two families of $1.2 million. Morrison said Davison convinced them to withdraw the money from investment accounts so he could put them in “fake” investments, including a bond issue from a local school trust.

Officials from the school “confirmed that no such trust exists and they do not issue bonds,” the release states. Morrison has referred the matter to the state attorney general for possible prosecution.

Burns named Davison his state finance director in January. According to Burns spokesman Jason Klindt, Davison left the campaign last month. “Pat Davison resigned on July 27th. He is not Burns’ finance chief,” he said in a message. However, a search of the campaign’s Web site turns up no press release announcing the departure, and a search of the Nexis database results in no articles mentioning the split.

Klindt added that the finance director spot was a “voluntary position.”

Davison also convinced people to invest in several of his companies, none of which had been registered to offer or sell securities in the state, according to Morrison.

Calls to the Montana Attorney General’s office were referred to FBI’s Office in Salt Lake City, Utah. A bureau spokesperson said she could not confirm or deny “any sort of activity.”

Reached by phone this afternoon, the Burns campaign appeared to be unaware of the charges. A receptionist there said all spokespeople were at lunch and unavailable. Telephone messages left at Davison’s house and business went unreturned.

Full press release after the jump.

Update: This post originally referred to Davison as Burns’ current state finance director.

STATE AUDITOR’S OFFICE TAKES LEGAL ACTION AGAINST BILLINGS BUSINESSMAN FOR ALLEGED FRAUDULENT ACTIVITY

Helena, Mont., Aug. 25, 2006 – Today the Montana State Auditor’s office filed a Notice of Proposed Agency Disciplinary Action and a Temporary Cease and Desist Order against Billings businessman, Patrick Davison. These documents allege Davison committed securities fraud against two Montana families. Davison is charged with convincing these families to take in excess of $1.2 million from investment accounts they owned at UBS/PaineWebber, including an IRA account and giving the money to Davison. Davison then put the money into fake investments he created. One of the fake investments Davison created was a bond supposedly issued by the St. Labre Indian School Trust. Officials at St. Labre’s Indian School have confirmed that no such trust exists and they do not issue any bonds.

Davison also allegedly took money from one of these families to invest in a promissory note he personally guaranteed. The family alleges they have yet to see any of the promised return on the note. Davison allegedly has convinced Montanans to invest in companies he owns or controls but that have shown no return on any money invested in, including Davison, LLC, P & N Ventures, or the d/b/a for P & N known as PPV. Davison, LLC and P & N Ventures have never been registered to offer or sell securities in the state of Montana. Further, Davison is not currently registered to sell or offer securities in Montana.

The Securities Department alleges several counts of fraud, unethical and dishonest practices, as well as selling unregistered securities and conducting securities business in Montana while not properly registered to do so. Davison was once registered as a securities salesperson and an investment advisor representative in Montana while employed by UBS/PaineWebber’s Billings branch office. The firm and Davison terminated their business relationship in early 2003. The following year UBS/PaineWebber handled several customer complaints lodged against Davison resulting in over $500,000 in restitution being paid by the company. UBS/PaineWebber is aware of the Department’s allegations and is cooperating with the Department on this matter.

The Montana State Auditor’s Office has notified the appropriate criminal justice authorities in this matter.

Montanans who may have been solicited by or may have invested with Patrick Davison are asked to immediately notify the State Auditor’s Office by calling toll-free at 1-800-332-6148 or in Helena at 444-2040.

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