Kevin C. Brown and his father George P. Brown, both of Pennsylvania, have agreed to be barred from the financial industry for carrying out multimillion-dollar fraud schemes, the Securities and Exchange Commission announced Friday.
Without admitting guilt, Kevin Brown, 49, of Hilltown, Penn., and George Brown, 81, of Chalfont, Penn., have settled civil charges with the SEC.
Kevin Brown was president, director and sole owner of Summit Trust Company, while George Brown was chief marketing officer and a director. The two also owned, controlled or were executives in Rampart Capital Management LLC, an unregistered investment advisor; Brown Investment Advisors Inc., an investment advisor registered in Pennsylvania and New Jersey, and Trust Counselors Network Inc., a 501(3) charitable corporation.
The SEC says that between 2008 and 2014, the Browns, through Summit Trust, raised more than $33 million in preferred stock offerings by telling the investors the proceeds would be used to open additional trust offices and to acquire other assets under management from trust or advisory firms. Instead, they used millions of dollars to pay earlier investors and to make payments to the other companies.
They also raised more than $12 million for Trust Counselors Network, supposedly for estate planning products such as charitable gift annuities and charitable installment bargain sales. However, due to losses on Trust Counselors speculative investments, it was operated like a Ponzi scheme using funds from new investors to meet older obligations, the SEC says.