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Phoenix Financial Advisor Ray Thomas Brown Guilty for Investor Fraud

A Phoenix financial advisor who promised investors 100% monthly returns with zero risk has pleaded guilty to running an unregistered commodities pool investment scam.

According to federal authorities, Ray Thomas Brown, owner of Phoenix-based Ray Brown & Associates, solicited investments in pool accounts that purported to trade commodities, oil futures contracts, and currency. Brown persuaded his victims to turn over large sums of money by claiming that he was a wealthy retired banker who had a guaranteed method for earning significant returns with little to no risk. In his marketing materials, Brown identified the purported investments as “risk-free” and/or “guaranteed.” He also promised investors returns of between 30 and 100% per month.

In reality, however, Brown was an ex-convict with at least two fraud convictions. Prosecutors said he never intended to invest the money as promised. Instead, he took the vast majority of the $1.1 million he raised and spent it on personal expenses and Ponzi payments to earlier investors.

Prosecutors filed wire fraud charges against Brown in March, just a few months after the U.S. Commodity Futures Trading Commission (CFTC) accused him of operating the fraud scheme. In its complaint against Brown, the CFTC wrote:

“Brown's written brochures for the Group Trading Program declare to prospective participants: ‘YOU WILL BE GUARANTEED A 100% MONTHLY RETURN.’ Contrary to this representation, Brown either lost participants' funds in trading or misappropriated their funds for purposes unrelated to trading. … The brochures also state that members of the Group Trading Program would ‘enjoy the benefits of having a PROFESSIONAL COMMODITIES trader executing the trades’ and that the ‘Group Trader’– i.e. Brown – ‘utilizes technical and fundamental analysis to forecast the direction of movement of market prices.’ Contrary to these statements, Brown has never been professionally employed by any registered commodity firm handling the trading of customer accounts, has never been registered in any capacity with the CFTC as a person authorized to make trades on behalf of others, and failed to disclose to pool participants and customers that he acting as an unregistered CPO [commodity pool operator] and CTA [commodity trading advisor].”

Approximately 60 investors lost $1.1 million in Brown’s scam. For additional information, read the CFTC’s complaint against Brown here.

Investors who want to ensure they don’t fall prey to a scheme like Brown’s, should read “Want to Avoid Investment Fraud? Spend Time Choosing Your Adviser.”

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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