A shocking case of greed has been laid bare in a New Jersey courtroom.
Brenda Smith, 61, of Philadelphia, pleaded guilty to securities fraud for her role in orchestrating a $100 million scheme. According to the indictment, Smith managed Broad Reach Capital LP, a pooled investment fund/hedge fund that was open to accredited investors with a minimum investment of $1 million.
Smith made false promises to investors, assuring them that their funds would be invested in trading strategies that Broad Reach Capital was optimally situated to execute. However, in reality, the total cash and securities in the fund’s bank and brokerage accounts decreased significantly over time.
Instead of investing the money as promised, Smith transferred tens of millions of dollars out of Broad Reach Capital to entities she controlled, including over $10 million for mineral mining operations and $2 million for American Express credit card bills.
When investors requested redemption of their investments, Smith diverted other investors’ funds to pay the requested redemption amounts. The securities fraud count to which Smith pleaded guilty carries a maximum penalty of 20 years in prison and a $5 million fine.
Acting U.S. Attorney Rachael A. Honig announced the guilty plea, crediting the FBI and the U.S. Securities and Exchange Commission’s Philadelphia Regional Office for their assistance in the investigation.
Smith’s sentencing is scheduled for January 20, 2022. The U.S. Securities and Exchange Commission previously filed a civil complaint against Smith based on the same conduct.
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Key Facts
- State: New Jersey
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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