The founder of an investment firm based in west suburban Geneva has been sentenced to five years in federal prison for embezzling client funds to pay for his lavish lifestyle, including a yacht and a luxury vehicle.
Stephen C. Browere, 57, of Geneva, the founder and principal of Stephens Capital Management Inc., pleaded guilty in June to one count of mail fraud, according to the U.S. Attorney’s office.
Browere used the promise of lucrative and guaranteed returns to persuade several clients to purchase $1.66 million in promissory notes in Douglas Capital Corp., which was based in Lisle, according to federal prosecutors. Many of the investors put up their life savings or used funds from retirement plans.
Browere did not tell his investors that his relative was the president of Douglas Capital, according to prosecutors. Browere himself ran the corporation’s day-to-day operations, and had access to its lines of credit.
Instead of investing the funds from the promissory notes, Browere used the money to perform trades within his own investment portfolio, and to cover personal purchases including a yacht and BMW, prosecutors said. He also concealed the fraud by using principal payments from some investors to make interest payments to others, in a Ponzi-like fashion.
The scheme began no later than 2007 and continued until February 2014, prosecutors said.
“Each investor thought defendant was investing his or her money in safe, stable investments that would provide income well into retirement,” Assistant U.S. Attorney Patrick Otlewski said in the government’s sentencing memorandum.
“They did not agree to give defendant free reign to use the savings as his personal slush fund to support a lavish lifestyle,” Otlewski said.
Browere also obtained power of attorney on behalf of an elderly client who was infirm and suffering from dementia, prosecutors said. The power of attorney gave him access to the client’s cash and property, which were valued at more than $2.1 million. He used some of the money to buy four vacant lots in Lisle and make interest payments to other clients.
After the client died, he maintained control over the estate and continued to misuse the assets, prosecutors said.
U.S. District Judge Matthew F. Kennelly sentenced Browere Friday to 60 months in prison, and also ordered him to pay $3.7 million in restitution to the victims.