Federal Officials Seize Assets of Philadelphia Investment Adviser Charged with $105 Million Dollar Ponzi SchemeFriday, June 12, 2020
INVESTOR ALERT: ChapmanAlbin currently represents investors who were defrauded by Brenda Smith against the brokers and brokerage firms that they believe assisted in her in losing their money. Contact us at 1-877-410-8172 if you lost money to Brenda Smith’s fraud.
Philadelphia resident and former broker Brenda Smith was recently charged by a federal grand jury in a complaint which alleges that she defrauded $68 million from investors and used the funds for personal use from December 2016 to June 2019.
Smith was formerly associated with CV Brokerage, Inc. in West Conshohocken, Pennsylvania from May 2010 to June 2019. Her voluntary resignation from the firm followed her consent to a bar from association with any brokerage firm regulated by the Financial Industry Regulatory Authority (FINRA) in a Letter of Acceptance, Waiver and Consent (AWC) approved by FINRA in July 2019. Smith consented to the bar after violating FINRA Rules 8210 and 2010 by refusing to provide documents and information to FINRA in connection to an investigation into potential misstatements about the performance of an investment fund.
On August 27, 2019, in connection to the investigation that resulted in her termination from CV Brokerage, Inc., the U.S. Securities and Exchange Commission (SEC) filed charges against Smith in the U.S. District Court in Newark, New Jersey. The SEC Complaint alleged Smith solicited approximately $105 million from investors for a purported investment in sophisticated securities trading strategies. Instead, Smith allegedly used tens of millions of these investment funds to pay for personal expenses and created a Ponzi scheme in an attempt to conceal this fraudulent activity.
According to the SEC Complaint, Smith set up a hedge fund called Broad Reach Capital and began soliciting investors, claiming returns as high as 33%. Once individuals made investments, Smith allegedly created monthly statements that falsely showed their investments were earning significant returns.
From December 2016 to June 2019, Smith allegedly transferred millions of dollars of investor funds to entities she controlled, to make personal credit card payments, personally invest $10 million in a mineral mining operation and other personal expenses. According to the SEC Complaint, investors are still owed $63 million in principal. The SEC Complaint also alleges that Smith breached her fiduciary duty as investment advisers by making material misrepresentations and omissions.
On June 2, 2020, Smith was indicted on six counts of wire fraud and one count of securities fraud. The wire fraud counts carry a maximum penalty of 20 years and $250,000 fine and the securities fraud charge carries a maximum of 20 years in prison and a $5 million fine. Federal officials have also seized Smith assets including her luxury Philadelphia apartment, numerous properties in Louisiana, the mining company, ownership stakes in Lyft and other companies, cryptocurrency holdings and other assets.
The attorneys at ChapmanAlbin LLC represent investors who were defrauded by Brenda Smith against third parties they believe are liable for their participation in her misconduct. Call us today at 1-877-410-8172 if you lost money due to Brenda Smith’s fraud.