A federal judge froze the assets of Renee Marie Brown after the SEC accused her of ripping off clients by persuading them to invest in a mysterious vehicle known as “ Fund X. ”

U.S. District Judge Donovan W. Frank issued a temporary restraining order against Brown and her company, Investors Income Fund X LLC. The order was issued April 8.

Brown, 46, of Golden Valley, was accused of operating a fraud fund into which investors plowed more than $1.1 million between July 2009 and March 2010.

“Brown told her investors that Fund X is a bond fund with fixed annual returns of 8 percemt or 9 percent,” the SEC said. “She distributed fictitious returns to investors, furthering the fiction that Fund X was a legitimate and successful investment opportunity.”

But Brown “misappropriated most of the $1.1 million she raised from investors to, among other things, purchase a condominium for herself and build …. office space for her new business,” the SEC said.

Investors Income Fund X LLC was registered as a corporation in South Dakota, the SEC said.

“Unbeknownst to her victims, Fund X is a scheme — Brown’s alter ego,” the SEC said.

The case features allegations of siphoning, forgery, cherry-picking clients of Brown’s former employer and issuing fraudulent “returns” in Bernard Madoff-like fashion. It also occurred against the backdrop of March 17 Congressional testimony by FBI Director Robert Mueller III that U.S. companies increasingly were relying on shell corporations to commit fraud.

source: http://www.sec.gov/news/digest/2010/dig041210.htm