SEC charges California fund owner with running Ponzi scheme

The Securities and Exchange Commission has charged Steven Fitzgerald Brown, the CEO and owner of Alpha Trade, a Los Angeles-based investment fund, with engaging in a Ponzi-like scheme.

The SEC alleges that Brown operated Alpha Trade from about February 2015 through March 2018, raising approximately $7.5 million from more than 75 investors and claiming that the fund would invest in the financial markets.

According to the complaint, Brown guaranteed investors a fixed payout ranging from 8% to 12% per month. He falsely claimed the investments were safe and risk-free and all losses would be borne by the fund.

The SEC complaint alleges that Brown invested less than 3% of the investors’ money in financial markets and used funds from new investors to pay existing investors their promised returns and the return of their principal. Brown also allegedly misappropriated or misused investor funds for his own benefit.

Without admitting or denying the allegations, Brown consented to the entry of a judgment imposing a permanent injunction, which is subject to court approval. The complaint also seeks the return of ill-gotten gains plus prejudgment interest and civil penalties to be determined by the court upon a motion filed by the SEC.

In a parallel action, Brown pleaded guilty Thursday to a criminal charge of wire fraud arising from the same conduct cited in the SEC complaint.

[More: Court unseals criminal case against former rep Phillip Conley]

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