Marina del Rey Man Sentenced to Over 4 Years in Prison for $ 3.3 Million Ponzi Scheme He Claims to be a Legitimate Forex Firm | USAO-CDCA
LOS ANGELES – An accountant was sentenced today to 51 months in federal prison for carrying out a four-year, $ 3.3 million Ponzi scheme that fooled dozens of investors with false promises of generous returns on investments in foreign currency and was funded, in part, by his embezzlement from his non-profit employer.
Steven F. Brown, 53, of Marina del Rey, was convicted by US District Judge Philip S. Gutierrez, who also ordered Brown to pay $ 3,313,346 in restitution. Brown pleaded guilty in October 2020 to one count of wire fraud.
Brown controlled and operated Alpha Trade Analytics, Inc., a financial advisory and investment firm that he ran largely out of his home. Neither Brown nor Alpha Trade were a registered securities dealer or trader. Brown was also an accountant for a nonprofit organization providing dance and theater arts education to children and young adults in Los Angeles, which gave him access to his bank accounts.
From April 2014 to May 2018, Brown solicited investments in Alpha Trade, particularly from people he met in his role with the nonprofit organization and in his relationships with its executives and its employees, which gave it access to wealthy people.
To encourage these people to invest with Alpha Trade, Brown falsely promised that their investments would only be used for currency trading (Forex) and that they would receive guaranteed monthly payments of around 10%. He also falsely stated that he has extensive experience in Forex investing, regularly trades profitably, and achieves substantial and increasing rates of return that exceed the industry average.
Contrary to his statements to investors, Brown only used a small portion of the total amount invested in Alpha Trade for Forex trading, mainly in 2015. Instead, he regularly used funds from investors to others. purposes, including rent, car payments, restaurant and retail. expenses, and lull payments to other investors.
To induce investors to maintain or supplement their investments with Alpha Trade and to cover up his scheme, Brown periodically provided investors with account statements reflecting fabricated returns on investment that often showed regular and large gains.
Brown made some of the recurring payments promised and provided the requested refunds, not on the basis of Forex investment returns, but instead of money stolen from new investors and funds he embezzled from the academy. dance through unauthorized wire transfers, credit card advances and cash withdrawals that he was able to make by virtue of his position as a dance academy accountant.
In total, Brown caused losses of approximately $ 3,313,346 to 48 victims, including nearly $ 700,000 in losses to his former employer based on the money he embezzled.
The Securities and Exchange Commission in September 2020 filed a complaint against Brown alleging violations of federal securities laws. This litigation is ongoing.
The FBI has investigated this matter.
Assistant U.S. Attorney Kristen A. Williams of the Major Fraud Section continued the case.