Securities Law Blog

A temporary restraining order and asset freeze has been issued against Minnesota-based investment advisor Renee Marie Brown, and Investors Income Fund X, LLC. On April 8, 2010 the Securities and Exchange Commission (SEC) alleged that Ms. Brown, the president of the Real Estate Investment Securities Association (REISA), misappropriated advisory clients’ money to the tune of $1.1 million.

According to the SEC complaint, from July 2009 until March 2010, Ms. Brown raised the $1.1 million by allegedly scamming six investors into transferring their money into Fund X. Ms. Brown allegedly told investors that Fund X was a legitimate and successful investment opportunity, and promised clients a fixed annual return of 8% or 9%. She allegedly would distribute bogus returns to investors to further facilitate the fund’s illusion of success.

The misappropriated funds allegedly went towards Ms. Brown’s purchase of a condominium for herself and to build-out office space for her new business.

According to the SEC, Ms. Brown has several investment adviser affiliations. Until about a month ago, Ms. Brown was a registered representative affiliated with Capital Quest Securities Inc. She had recently started her own investment adviser business, Aaria Capital Inc. and was one of the founders of due-diligence firm FactRight LLC.

Ms. Brown was also a founder and registered investment advisor with Wildwood Wealth Management LLC. It was during her time at Wildwood that Ms. Brown allegedly opened the unregistered Fund X and began competing for clients with her employer. According to the SEC complaint, Ms. Brown “either discreetly convinced Wildwood clients to withdraw their money from Wildwood and invest with the fund or forged a client’s signature to facilitate the fund’s transfer.”