LOS ANGELES (CNS) - An accountant from Marina del Rey was sentenced today to 51 months in federal prison for running a four-year, $3.3 million Ponzi scheme that conned dozens of investors through false promises of generous returns on foreign exchange currency investments and was funded, in part, by his embezzlement from his nonprofit employer.
Steven F. Brown, 53, was sentenced by U.S. District Judge Philip S. Gutierrez, who also ordered Brown to pay $3.3 million in restitution. Brown pleaded guilty last October to one count of wire fraud.
Brown controlled and operated Alpha Trade Analytics Inc., a financial consulting and investment company he largely ran out of his home. Neither Brown nor Alpha Trade was a registered broker or dealer in securities.
Brown also served as the accountant for a nonprofit organization providing dance and theater arts education to children and young adults in Los Angeles, which gave him access to its bank accounts, according to the U.S. Attorney's Office. The organization is not identified in court papers.
From April 2014 to May 2018, Brown solicited investments in Alpha Trade, including from people he encountered through his position at the nonprofit, and through his relationship with its executives and employees, which afforded him access to high-net worth individuals, according to the U.S. Attorney's Office.
To encourage those individuals 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.
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, prosecutors said.
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, court papers show.
Brown 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 about $3.3 million to 48 victims, including nearly $700,000 in losses to his former employer based on the money he embezzled from the organization.
The U.S. Securities and Exchange Commission in September 2020 filed a lawsuit against Brown alleging violations of federal securities laws. That litigation is pending.
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