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Alleged Rittenhouse hedge fund scammer raised $100 million, targeting a Who’s Who of Philly

Smith remains in jail in Essex County, N.J. About two-thirds of $100 million in investors' money disappeared.

A page from Brenda A. Smith's passport issued by the Caribbean nation of Dominica. Smith was being held Aug. 28, 2019 at the Essex County Jail in New Jersey on charges related to a Ponzi scheme that rooked clients out of $63 million.
A page from Brenda A. Smith's passport issued by the Caribbean nation of Dominica. Smith was being held Aug. 28, 2019 at the Essex County Jail in New Jersey on charges related to a Ponzi scheme that rooked clients out of $63 million.Read moreSecurities & Exchange Commission

Brenda Ann Smith, Rittenhouse Square’s jailed investment scammer, kicked off her scheme in a simple, methodical way: She made a list.

According to the following account set out by federal authorities, Smith and two marketing executives compiled a “rich list” of prominent Philadelphians and wealthy people on an Excel spreadsheet, with columns recording dates of first meetings, any progress made, and an estimate of how much money might flow in. Among the prospects: owners of the Eagles and Philadelphia Union, high-profile lawyers and bankers, and successful entrepreneurs.

Smith failed to meet most of the folks on the list, let alone pitch her astonishing investment gains. But she still succeeded in luring $100 million into her phony hedge fund.

Her victims weren’t just in Philadelphia. Between 2016 and 2018, Smith raised roughly $46 million from one Canadian firm, and the rest from Wall Street outfits and individuals, according to federal prosecutors.

At least two-thirds of that $100 million has disappeared, according to prosecutors. Some she spent on international travel, but much of the money may have been lost in a classic Ponzi scheme, where new victims’ cash pays out old investors. She also wired funds offshore, according to the Securities and Exchange Commission and Department of Justice investigators.

Smith was arrested at her Rittenhouse Square condo on Aug. 27. She is in an Essex County, N.J., prison, awaiting trial. A grand jury has convened , and she’s charged with investment fraud, among other counts.

One investor listed in tax statements was Nancy Glass, the Emmy-winning television producer and former Inside Edition news anchor. Glass declined repeated requests for comment.

Others included an entity called Credit the Americas. Prophecy Asset Management, a firm based in New York with offices in South Carolina, was also listed as a investor in Smith’s fund.

Neither responded to phone calls and emails over the last two weeks. Prophecy’s website describes the firm as an investment company that allocates money to new portfolio managers.

Dropping names

A CPA by training, 59-year-old Smith didn’t have a Wall Street or portfolio management background, so she hired marketers to pitch her complicated-sounding, high-return strategy starting about 2016.

Mary Sun, a deal-maker and broker registered with securities regulator FINRA, also pitched Smith’s hedge fund, known as Broad Reach, by stressing it was female-owned and operated.

Sun and Ken Leith, another marketer, prospected among so-called family offices, private investment firms run by and for wealthy families. Drew Hurni, another employee of Smith’s, worked as legal counsel for the fund. Sun, Leith, Hurni, and other employees who worked at her offices in West Conshohocken either did not return requests for comment or declined to speak.

Among those who heard Smith’s pitch were Patrick Ward, former head of Penn Liberty Bank, and Davis Sezna, a golf course developer and Delaware native. In 2013, Sezna and his wife hosted a party during the U.S. Open at Merion Golf Club attended by Smith and clients of her brokerage firm, according to the Main Line Media News.

Ward met with Smith but didn’t invest in the fund, according to a spokesperson for WSFS, the bank that now owns Penn Liberty.

Sun tried to meet in 2018 with Joseph Greco, a former boxer, part-owner of the Philadelphia Union, and now a financial adviser to athletes.

Smith, Sun, and Leith maintained the spreadsheet of about 1,700 prospects, the Who’s Who of Philadelphia, ranging from Christina Lurie, ex-wife of Eagles owner Jeffrey Lurie, to bank executives and heads of Philadelphia law firms. Though Smith never even met most of them, she dropped names to open doors, said one banker who later heard — to his surprise — that he was being touted as an interested investor.

Trio of friends

Federal investigators are also looking at Brenda Smith’s longtime associate George Heckler, whose hedge funds Cassatt Short-Term Trading and CV Fund were clients of the accounting firm where she worked.

Heckler is cooperating with federal agencies, according to his lawyer, Lawrence McMichael with Dilworth Paxson. George Heckler is the son of Howard Heckler, onetime mayor of Hatfield Borough.

Heckler, Smith, and her early accounting and investment partner Mark Carrow, currently managing partner at Citrin Cooperman, were a trio of business associates who had known each other at least a decade.

Heckler wasn’t a direct investor in Broad Reach, but he sometimes worked out of Smith’s offices in West Conshohocken.

Carrow signed Heckler’s formation documents for the Cassatt Short-Term Trading hedge fund in 2008. Heckler’s fund filed to raise $50 million, with a $1 million minimum investment, and Carrow was listed as chief executive, according to SEC filings. Smith was the fund administrator for Cassatt and other entities controlled by Heckler.

Carrow was also an investor in Smith’s fund through an entity called Ardleigh Partners, although it’s unclear whether he still had money in the fund when she was arrested. Citrin Cooperman has a wealth management arm that operates under a different name, but it’s not known whether any clients were invested in Smith’s hedge fund.

Carrow’s lawyer Gavin Lentz declined to comment.

Heckler "had nothing to do with Broad Reach,” said his lawyer, McMichael of Dilworth Paxon.

“But there’s a lot of money involved and it’s a very difficult situation. There’s a cascade of personal consequences.”

Heckler now blames Smith for his inability to pay back investors, according to a Sept. 12 letter to his clients signed by his lawyer.

SureFire Dividend, a Canadian investment firm that lost $46 million in the Smith scam, is suing her and alleged accomplices in U.S. District Court for the Eastern District of Pennsylvania.

SureFire alleges that Smith wired money to overseas bank accounts and to Renato Escobar Iregui and his firm TN Investment in Tennessee. Smith may have used Surefire money to repay earlier investors, the suit alleges. A copy of the lawsuit is available here.

Smith is considered a flight risk, particularly after she bought a second passport from Dominica and traveled extensively to such places as Dubai, London, and Curacao.

“Having a way to travel on a non-U.S. passport is significant,” said Mark Zanides, former assistant U.S. Attorney in the Northern District of California.

“Dominica is notorious for selling identity documents. That’s how they make money. It’s a nothing island in the middle of the Caribbean. I’m not sure if they have an extradition treaty with us, but it’s more likely it would have provided her a way to get to a country like Brazil, which has no extradition treaty with the United States,” he said.