Judge Convicts Investment Adviser Charged with Fraud
Federal Judge Susan Richard Nelson of the U.S. District Court for the District of Minnesota has sentenced Renee Marie Brown, a Minnesota-based investment adviser, to 51 months in federal prison followed by three years probation, and restitution in the amount of $618,408.
This sentence follows an 11-count indictment filed May 11, 2011 by the U.S. Attorney’s Office in Minnesota alleging securities fraud, wire fraud and transactional money laundering in connection with Brown’s misappropriation of $1.1 million from her advisory clients through material misrepresentations or omissions. Brown pled guilty on February 15, 2012.
On April 8, 2010, the SEC obtained a temporary restraining order and asset freeze against Brown. The SEC’s action against Brown, which was filed in the United States District Court for the District of Minnesota, arose out of the same facts that are the subject of the criminal case.
In its complaint, the SEC alleged that Brown defrauded her advisory clients into transferring more than $1.1 million from July 2009 through March 2010 to Investors Income Fund X, LLC (Fund X), a sham fund formed and controlled by Brown, and falsely representing that Fund X is a bond fund with fixed annual returns of 8% or 9%.
The SEC alleged that Brown distributed false “returns” to investors, furthering the fiction that Fund X was a legitimate and successful investment opportunity. Instead, however, the SEC alleged that Brown misappropriated most of the $1.1 million she raised from investors to, among other things, purchase a condominium for herself and build-out office space for her new business.
The court’s decision also barred Brown from participating in any offering of a penny stock. Brown consented to the issuance of the Order without admitting or denying the findings in the Commission’s Order, except that she admitted the entry of the injunction.