LOS ANGELES (CNS) - Technical difficulties caused the delay of a change of plea hearing today for a Marina del Rey man who allegedly operated a $3.3 million Ponzi scheme that falsely promised generous returns for investors and used money embezzled from a dance academy that employed him as its accountant.
Steven F. Brown, 52, is now expected to plead guilty Tuesday in Los Angeles federal court 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. Attorney's Office.
Without being a registered broker or dealer in securities, Brown operated Alpha Trade Analytics out of his home. He also served as an accountant for an unidentified dance academy for children and young adults in Los Angeles, and had access to its bank accounts, federal prosecutors said.
From April 2014 to May 2018, Brown solicited investments in Alpha Trade from people he encountered through his position with the academy, and through his relationship with its executives and employees, which afforded him access to wealthy potential investors, according to his plea agreement.
To encourage investments, Brown falsely promised that investments would only be used for foreign exchange -- Forex -- currency trading and that they would receive guaranteed monthly payouts of around 10%, prosecutors allege. He also allegedly 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 U.S. Attorney's Office, Brown only used a small portion of the amount invested in Alpha Trade for Forex trading. Instead, he routinely used investor funds for his rent, car payments, dining and retail expenses, and making payments to other investors, his 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, he admitted in his plea agreement.
Brown said 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.
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 prosecutors.
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