UPDATE: Renee Marie Brown, Sued By SEC Last Year In Mysterious ‘Fund X’ Scam, Now Faces Criminal Charges Of Securities Fraud, Wire Fraud And Money Laundering

Renee Marie Brown, the Minnesota woman accused by the SEC last year of orchestrating a bizarre fraud known as “Fund X,” has been indicted on criminal charges of securities fraud, wire fraud and money laundering.

Brown, 47, of Golden Valley, presided over a company known as Investors Income Fund X LLC, which the SEC described as a “sham” bond fund that promised investors annual returns of 8 percent or 9 percent.

Federal prosecutors now say that Brown lied to investors when she told them she had put $200,000 of her own money into the purported fund.

“Fund X never was a bond fund, and Brown never invested any of her own money in Fund X,” prosecutors said. “Moreover, Brown allegedly used more than $500,000 of the investors’ funds for her personal use, including the purchase of a condominium and the payment of credit card bills. Allegedly, the ‘returns’ distributed to investors merely were transfers from Fund X investors’ funds, not legitimate returns from investments.”

Money-laundering came into play because Brown transferred $85,000 in fraud proceeds into the account “of another one of her companies,” prosecutors said.

And securities fraud and wire fraud occurred because she fraudulently induced investors to give her money and electronically communicated with financial institutions and her marks, prosecutors said.

Brown potentially faces decades in prison if convicted of all counts in the indictment. The case was brought by elements of the Financial Fraud Enforcement Task Force created by President Obama in November 2009.

Minnesota has been home to a number of massive fraud capers in recent years. Brown’s assets were frozen on the very same day in 2010 that Ponzi schemer Tom Petters was sentenced to 50 years in federal prison.