Alleged Ponzi scheme creator had crypto links, says report

Christoph Haaks

A woman who is accused of building a Ponzi scheme and running investment vehicles entirely by herself with no oversight has been linked to crypto fraud.

Brenda Ann Smith, of Philadelphia in the US, was seen by many as a prominent woman financier who was successful in her field.

She had a seat on the New York Stock Exchange, and she was also involved in the Philadelphia Stock Exchange too.

She operated a firm called Broad Reach Capital, however, one particular trading decision ended up causing her losses of around $10 million US dollars.

When this happened, she allegedly concealed the loss and told her investors that their profits were in fact rising.

In recent days, press articles have shone some light on the areas in which Smith allegedly planned to invest this cash from traders.

One of these, according to the Philadelphia Inquirer, was cryptocurrencies.

On one occasion, a client of Smith’s is believed to have approached her to ask to liquidate his investment.

She is alleged to have told him that his money could not be taken out as it was invested in a range of locations – such as $20.25 million which she had placed in “securitized crypto-currency”.

However, she never moved ahead with many of the investments she told her clients she was performing – and instead ended up holding on to the cash entrusted to her.

In a move outlined by the US Securities and Exchange Commission (SEC), she has now had her assets frozen.

She has also been taken into custody on a range of criminal charges.

In a statement given by the SEC, more details were given about how she considered “various trading strategies”.

She allegedly “raised approximately $105 million from approximately 40 investors by representing that she would invest their money in publicly traded securities through various trading strategies that she championed as providing consistent high returns”.

“However, Smith made very few investments in these trading strategies, and instead largely used investors’ money to repay other investors and for her own personal investments”, the complaint added.

The complaint also outlined the nature of the “fabricated documents” Smith supposedly created.

“The complaint alleges that Smith, and the entities she controls, also disseminated false statements touting positive returns and most recently fabricated documents in an attempt to inflate Broad Reach’s assets and lull her investors into believing their capital is safe”, it reads.

G. Jeffrey Boujoukos, who is regional director of the SEC’s Philadelphia Regional Office, added that her alleged lies breached her duties.

“An investment adviser serves in a position of trust, and has a fiduciary duty to speak truthfully to clients”, Boujoukos said.

“We allege that Ms. Smith breached her clients’ trust by misleading investors with false claims of how she invested their money and how those investments performed.”

If the case is successful, Smith may end up being liable for a range of payments including disgorgement of ill-gotten gains, interest accrued in the run-up to any judgement which is applies, and civil penalties.


Christoph Haaks

Latest news

Cybercrime still on the rise – be wary of potential scams
While our attention may be drawn to the latest news regarding the COVID-19 pandemic or the Tokyo Olympic Games, cybercrime statistics continue to grow unabated in the shadows. Read more
How to Learn to Trade Unpredictable Summer Markets
Recent events in the financial markets have left traders and investors dazed and confused. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2011 Global CFD & FX Broker
Number One Broker
BEST FOREX BROKER Visit broker
5
#2 ForexTB logoYour capital is at risk Founded: 2015 Global Forex & CFD Broker
Number One Broker
LOWEST FEES Visit broker
4.9
#3 Tickmill forex broker logoYour capital is at risk Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
4.9
#4 BlackBull MarketsYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8
#5 Forex Broker Pepperstone LogoCFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9

    Forex Fraud Certified Brokers

    Pepperstone
    HYCM Logo
    LegacyFX Small Logo
    XM Logo
    ATFX Logo
    OctaFX Logo
    Vantage FX logo
    Forex.com Logo
    skilling logo
    City Index Logo
    Plus500 Small Logo
    BlackBull Markets Logo
    FXTM Logo
    Exness Small Logo
    IC Markets Logo
    IQ Option Logo