LOS ANGELES (CNS) - An accountant who lives in Marina del Rey will plead guilty today to a federal charge for running a $3.3 million Ponzi scheme that falsely promised generous returns for foreign exchange currency investors and for using money he embezzled from his former nonprofit employer to facilitate the scam.
Steven F. Brown, 52, agreed to plead guilty to a single federal count of wire fraud and will face up to 20 years in federal prison at sentencing, according to the U.S. Department of Justice.
Brown controlled and operated Alpha Trade Analytics Inc., a financial consulting and investment company he largely ran out of his home, according to his plea agreement.
Neither Brown nor Alpha Trade was a registered broker or dealer insecurities. Brown also served as the accountant for a nonprofit organization providing dance and theater arts education to children and young adults in Los Angeles, and had access to its bank accounts, prosecutors said.
From April 2014 to May 2018, Brown solicited investments in Alpha Trade, including from people he encountered through his position with his employer, and through his relationship with its executives and employees, which afforded him access to high-net-worth individuals, according to the DOJ.
To encourage those people to invest with Alpha Trade, Brown falsely promised that their investments would only be used for foreign exchange -- Forex -- currency trading and that they would receive guaranteed monthly payouts of around 10%. He also falsely represented that he had extensive experience in Forex investing, regularly made profitable trades, and achieved substantial and growing rates of return that exceeded the industry average, according to the DOJ.
Contrary to his representations to investors, Brown only used a small portion of the total amount invested in Alpha Trade for Forex trading, mostly in 2015. Instead, he routinely used investor funds for other purposes, including his rent, car payments, restaurant and retail expenses, and lulling payments to other investors, the plea agreement states.
In order to induce investors to maintain or supplement their investments with Alpha Trade and to conceal his scheme, Brown periodically provided investors with account statements that reflected fabricated investment returns that often showed steady, significant gains, the DOJ said.
Brown admitted he made some of the promised recurring payouts and provided demanded refunds, not based on any Forex investment returns, but instead from money stolen from new investors and through funds he embezzled from the dance academy through unauthorized wire transfers, credit card advances, and cash withdrawals he was able to make by virtue of his position as the dance academy's accountant.
In total, Brown caused losses of $3.3 million to more than 10 victims, including nearly $700,000 in losses to his former employer based on the money he embezzled from it, according to the plea agreement.
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