Former Ellicott City Man Convicted in $17 Million Online Ponzi Scheme
Used Fraud Proceeds to Purchase Numerous Luxury Vehicles
Baltimore, Maryland - A federal jury convicted Byron Keith Brown, age 32, of Vienna, Virginia, formerly of Ellicott City, Maryland, today on wire fraud and money laundering charges related to a five year scheme to fraudulently obtain over $17 million from online investors.
The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office
“Byron Brown used the internet to make it appear as if he were running an investment management business for wealthy investors, when in fact he was stealing millions of dollars from investors and using it to buy a fleet of luxury cars,” said U.S. Attorney Rod J. Rosenstein. “In addition to sentencing criminals to prison, our goal is to seize any assets purchased with criminal proceeds.”
“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” stated Rebecca Sparkman, Internal Revenue Service-Criminal Investigation Special Agent in Charge, Washington DC Field Office. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from; but that time is gone and as this verdict shows it is time for those responsible to face judgment.”
According to testimony at his three week trial, Brown was the chief executive officer for companies called In God We Trust (IGT) Financial Services, IGT Investment Company, IGT Wealth Management Group, and WM Private Equity Fund, Inc. Brown was not licensed as a broker, dealer or investment advisor in Maryland, Virginia or the District of Columbia.
The evidence presented at trial showed that from 2003 to 2009, Brown operated websites in which he falsely: held himself out as having 10 years experience in financial services and securities industries when in fact he had filed personal bankruptcy in 1999; and claimed to have offices in Washington, D.C., Wilmington, Delaware, New York, NY, and London, England, when in fact he had rented a mailbox or services at a virtual office that provided telephone answering services and mail forwarding services to clients. Brown advertised on his websites that the basic investment required was a minimum of $1 million. He used computer software to create an illusion that the investor was logging into a banking website and viewing account information when in fact, the account numbers were made up. Brown found investors through his websites and referrals.
Witnesses testified that Brown opened some bank accounts in the names of investors, but Brown retained a power of attorney over the accounts, managed all the money that was invested, controlled investment decisions and deprived investors of information about their accounts. According to the trial evidence, Brown sometimes used funds from new investors to make payments to old investors and to conceal his diversion of investors’ monies.
Brown used the investors’ money to purchase a 2004 Bentley, a 2005 Rolls Royce Phantom, a 1936 Auburn Speedster, a 2007 BMW, a 1997 Jaguar and a 2006 Aston Martin. To date, the government has seized 16 vehicles, including some of the vehicles described above, as well as a 2007 Lamborghini, a 2008 Maserati, two Mercedes and a 2002 Ferrari.
Brown faces a maximum sentence of 20 years in prison and a $250,000 fine for each of the five counts of wire fraud; and 10 years in prison and a fine of twice the amount laundered for each of the five counts of money laundering. U.S. District Judge William M. Nickerson has scheduled sentencing for November 19, 2010 at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended Assistant United States Attorneys Joyce K. McDonald and Martin J. Clarke, who are prosecuting the case.