Saturday, October 31, 2020

Hedge fund CEO arrested at her Rittenhouse Square condo, charged in $63 million Ponzi scheme


Federal agents on Tuesday morning arrested a hedge fund CEO at her Rittenhouse Square condo, charging her in a massive fraud that rooked investors out of at least $63 million.

Brenda A. Smith, 59, ran a Conshohocken-based network of investment companies that included Broad Reach Capital, Broad Reach Partners, and Bristol Advisors. Smith was the only employee of each company.

The funds “were essentially her alteregos,” according to court papers. Smith solicited more than $105 million from dozens of high-net worth individuals.

She told them their money would net 30 percent returns with her sophisticated trading strategies. She lied, prosecutors said. Instead of deploying those funds to make her alleged victims wealthier, Smith funneled the money through the web of entities she controlled.

- Advertisement -

Smith used the money to pay off previous investors, cover $2 million in personal American Express credit card charges, and make her own personal bets on the market, according to court papers.

To lull her existing investors, Smith allegedly created phony reports touting “outlandish and inaccurate” returns and claimed that she had never had a losing month.

Relation: Hedge Fund Co-Founder Gets 30 Months for Role in Alleged Bribery Scheme

“These and other performance statements were false,” the criminal complaint notes. Smith could not be reached for comment. Even as tens of millions of new investment poured into Smith’s Broad Reach fund beginning in December 2016, the total assets dwindled to less than $32 million.

As she claimed returns of over 35 percent in 2016 and 33 percent in 2017, in reality the small portion offunds she had invested on behalf of her clients crashed by over 50 percent, according to the complaint. In March this year, when one of her clients asked to redeem his $46.6 million stake, Smith made various excuses why her fund couldn’t comply.

- Advertisement -

She falsely claimed another of her companies, London-based CV International, owned a $2.5 billion HSBC bond and listed other “dubious” assets, including $20.25 million in “securitized cryptocurrency,” according to a complaint filed by the Securities and Exchange Commission.

The SEC filed suit against Smith on Tuesday for “fraudulent, deceptive, and manipulative” business practices. The U.S. Attorney’s Office for the District of New Jersey additionally charged Smith in a criminal complaint with four counts of wire fraud and one count of securities fraud.

Smith previously was disciplined by the Financial Industry Regulatory Authority (FINRA). In June, her registration was revoked and she was barred from associating with any FINRA member.


Actress Lori Loughlin begins 2-month prison sentence for role in college admissions scam

Actress Lori Loughlin reported to a federal prison in Northern California on Friday to start a two-month sentence for her role in a massive...

FirstEnergy fires CEO, other executives over Ohio bribery scandal

FirstEnergy Corp. has fired its CEO amid multiple federal investigations related to an Ohio nuclear bailout law passed year. The Akron-based utility company announced in a...

Ukraine’s court strips critical power from anti-corruption agency

Ukraine's Constitutional Court has stripped the country’s anti-corruption agency of some of its critical powers. The high court’s ruling published on October 28 declared it...

Former South Korean President Lee Myung-bak sent back to prison for 17 years in corruption case

Former South Korean president Lee Myung-bak was ordered back to prison on Thursday (Oct 29) as the country's Supreme Court upheld a 17-year jail...

Nigerian court declines to issue international arrest warrant for fugitive ex-Petroleum Minister in corruption case

The Abuja Division of the Federal High Court, on Wednesday, refused an application by the Economic and Financial Crimes Commission, EFCC, for an arrest...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World


Latest News

This Week

Spanish police arrests operator of Crypto Arbitrage firm Arbistar on fraud charges

The CEO of Arbistar the Spanish investment company, Santiago Fuentes, has been arrested and arraigned on charges of fraud, belonging to a criminal organization...

Actress Felicity Huffman complete full sentence for role in college admissions scam

Felicity Huffman has completed her full sentence for her involvement in the college admissions scandal. As of Sunday, she has finished her sentence, which included jail...

Former Jacksonville City Council members set for sentencing in fraud case

Former Jacksonville City Council members Katrina Brown and Reggie Brown are scheduled to be in federal court Tuesday to begin a hearing on their...

Taiwan’s UMC fined $60m for theft of trade secret to help Chinese chipmaker

Taiwan’s UMC has pleaded guilty to trade secret theft in the United States and will pay a $60 million fine in a case where...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks