Alleged Philly Ponzi schemer Brenda Smith’s largest investor lost $46,000,000 and now levels new charges

Brenda Ann Smith, accused of committing investment fraud in Philadelphia, may have had help, according to a new investor lawsuit.

Smith’s largest investor, a firm in Montreal, filed suit in the Eastern District of Pennsylvania on Sept. 6 with new allegations about a potential co-conspirator. Smith never put to work most of the $100 million she raised, and instead wired newly raised funds out to earlier investors, co-conspirators and outside companies, according to accusations against her. Among those accused by Canadian investor Surefire Dividend’s lawsuit are Smith, her auditor Sanville & Co., fund administrator Nottingham, and alleged co-conspirator Renato Escobar Iregui, who vouched for her strategy and helped persuade Surefire to invest roughly $46 million.

Smith claimed double-digit returns for three years in a row and said she raised more than $100 million, according to an investor pitch book. But about two-thirds of that money has disappeared, according to federal prosecutors.

Smith was arrested at her Rittenhouse Square condo Aug. 27 and charged with stealing at least $63 million through an investment fraud. On Tuesday a federal judge in Newark, N.J., approved the Securities and Exchange Commission’s request to freeze her assets. The SEC also froze two of Iregui’s accounts along with more than two dozen others.

Smith is accused of carrying out crimes through a network of businesses with names such as Broad Reach Capital, Broad Reach Partners, and Bristol Advisors, according to court documents.

The latest lawsuit by the private investor suggests a picture of Smith lying and stealing extensively.

Surefire alleges that Smith and Iregui conspired to steal assets, and that Iregui pretended to be a longtime investor who vouched for her strategy.

“No one could replicate ... the trade because it requires special infrastructure and being ‘grandfathered in’,” Iregui told Surefire investors, according to its suit.

When Surefire asked to redeem its $46 million this year, Smith began making excuses. The 59-year-old accountant had fabricated portfolio holdings, returns and trading records, and sent false data to auditors and administrators, who didn’t question her, according to the suit.

PNC Bank records show that Smith wired some money to Iregui and his firm TN Investment in Tennessee after Surefire put money into the fund. Smith may have also used Surefire money to repay earlier investors, the suit alleges. A copy of the lawsuit is available here:

Iregui couldn’t be reached for comment through his Facebook and LinkedIn pages. A woman who answered his home phone in Murfreesboro, Tenn., said “I have no comment” and then hung up.

His LinkedIn profile says he worked for Swiss Allied Trust AG in Switzerland, but Dun & Bradstreet corporate records indicate the firm went into liquidation in 2018.

Smith allegedly used her legitimate brokerage firm, CV Brokerage, as part of the investment pitch for her fake hedge fund, claiming she had a special edge with a trading strategy called “dividend re-capture.”

Authorities say she operated the phony hedge fund under a few names – Bristol Advisors, Broad Reach Capital, and CV International – but the Surefire suit claims actual investing never occurred. Surefire declined to comment through a lawyer.

Among others who were listed as part of Smith’s investment team: Andrew “Drew” Hurni, listed as legal counsel to the fund (he was fired in early 2018, his lawyer said); Ken Leith, then-senior managing director of the affiliated brokerage, and Sanville & Co., a CPA and auditor out of Abington.

Hurni declined to comment and referred The Inquirer to his lawyer Michael Bachner in New York. “Drew invested in the fund through a pooled fund with other investors and did not raise capital for the fund,” Bachner said.

Leith did not return calls for comment. Sanville & Co., the firm’s auditors, has not returned multiple calls since Smith’s arrest.

Mark Carrow, managing partner at Citrin Cooperman accounting firm in Center City, was an early investor in Smith’s hedge fund. She and Carrow owned property together at the Jersey Shore for several years, records show, although she signed away her ownership rights in 2014.

An entity called Ardleigh Partners, co-owned by Carrow, invested about $652,000 in capital with Smith’s hedge fund, according to a 2016 investor list shared with The Inquirer.

Carrow declined to comment. His lawyer Gavin Lentz said: “My client is also an unfortunate victim in this case and he has been stunned by these allegations just like everyone else.”

Carrow is now married to an assistant U.S. Attorney in Philadelphia working in U.S. Attorney William McSwain’s office. It’s unclear whether that’s why the venue for the criminal case is New Jersey.

Other sophisticated investors in Smith’s hedge fund included Spouting Rock Asset Management in Bala Cynwyd.

“We invested a small amount in October 2017,” Spouting Rock chairman John Coyne said of its $1.7 million investment in Smith’s fund. “It was on behalf of four clients who were investors,” said Coyne, who said he joined Spouting Rock in 2018.

Over time, however, “they were slow to get us information. We decided to terminate. We applied to redeem our shares in November 2018” and received money back in January 2019.

Spouting Rock isn’t party to any lawsuits against Smith, he said.

“We thought the strategy was interesting. We did substantial due diligence and it was something that could be promising for investors looking for income. We just assumed she was sloppy. Then we got anxious about K-1s getting out late,” referring to tax forms for limited partners in a hedge fund, Coyne said.

Smith’s offices were located in 200 Four Falls Corporate Center in West Conshohocken, a part of the suburbs where many finance firms operate. CV Brokerage continues to operate under new ownership, with roughly 15 employees working there.

Smith is being held in Essex County jail in New Jersey. The county facility has a contract to hold federal prisoners.