Man pleads not guilty in $600k securities fraud case
EVERETT, Wash. -- The man accused of scamming at least 17 people out of more than $600,000 has pleaded not guilty.
Stephen Brombach of Mill Creek was charged earlier this month with four counts of unlawful offers, sales or purchases for his alleged defrauding of four Snohomish County residents.
Prosecutors say Brombach ran a bogus investment business for years, defrauding several of his own friends, as well as several others preparing to retire.
Don Hohn and his girlfriend, Mildred, refinanced their home with Brombach six years ago. Somewhere along the process, Brombach began talking to the woman, then 63, about investing her retirement savings. Brombach told the retirement-approaching bartender he could invest her $50,000 into real estate, and earn her a 6-percent return.
In November 2003, Mildred wrote him a check.
Three years later, Mildred wanted to withdraw a portion of her investment for dental work. But she wasn't returned a dime. A year later, Brombach called to tell her he'd been fired.
Mildred was never given back her $50,000.
"It stopped us from retiring, that's for sure," said Hohn. "She was getting ready to retire. She's a bartender."
Hohn's story is just one of 17 outlined by Snohomish County prosecutors in the statement of probable cause against Brombach.
Roger Davis lost $24,000 after investing it with Brombach.
"Well, right now, I would say he's a scam artist," said Davis. "I don't know how this is going to work. I don't know if he's got any of that money anymore. I have no idea."
According to prosecutors, Brombach, who owns Integrity Group Insurance and Financial Services in Marysville, convinced his victims to invest more than $600,000 in a phony "Real Estate Investment Fund (REIT).
Brombach often told his clients the investments were easy with no penalties and minimal risk and, in some cases, even promised a fixed-rate yield of 5 percent for a year, the statement said.
However, prosecutors said Brombach deposited the investments into a Washington Mutual bank account that was yielding a negligible interest, and used the funds for personal and business expenses.
Brombach "employed deception in advising his clients as to the value of securities, or their purchase of sales," prosecutors said.
Some of his clients were returned a portion of their investments; however, most never saw their money again, according to the document.
During questioning by detectives, Brombach "admitted paying his clients with money that other clients were investing," and that "funds from investors were the REIT's only liquid assets," prosecutors said.
According to investigators, many of Brombach's own close friends fell victim to the scam, as did several elderly clients.
Prosecutors cited the case of one woman who invested $130,000 with Brombach in August 2004 with instructions for him to pay her month bill for the care she received at an assisted living facility.
Brombach stopped paying the bill in July 2005, and the woman was never refunded the remainder of her balance, according to the statement. The victim's daughter filed a lawsuit and obtained a judgment, the statement said, but nothing has been collected.
Brombach's trial is set for May.
Stephen Brombach of Mill Creek was charged earlier this month with four counts of unlawful offers, sales or purchases for his alleged defrauding of four Snohomish County residents.
Prosecutors say Brombach ran a bogus investment business for years, defrauding several of his own friends, as well as several others preparing to retire.
Don Hohn and his girlfriend, Mildred, refinanced their home with Brombach six years ago. Somewhere along the process, Brombach began talking to the woman, then 63, about investing her retirement savings. Brombach told the retirement-approaching bartender he could invest her $50,000 into real estate, and earn her a 6-percent return.
In November 2003, Mildred wrote him a check.
Three years later, Mildred wanted to withdraw a portion of her investment for dental work. But she wasn't returned a dime. A year later, Brombach called to tell her he'd been fired.
Mildred was never given back her $50,000.
"It stopped us from retiring, that's for sure," said Hohn. "She was getting ready to retire. She's a bartender."
Hohn's story is just one of 17 outlined by Snohomish County prosecutors in the statement of probable cause against Brombach.
Roger Davis lost $24,000 after investing it with Brombach.
"Well, right now, I would say he's a scam artist," said Davis. "I don't know how this is going to work. I don't know if he's got any of that money anymore. I have no idea."
According to prosecutors, Brombach, who owns Integrity Group Insurance and Financial Services in Marysville, convinced his victims to invest more than $600,000 in a phony "Real Estate Investment Fund (REIT).
Brombach often told his clients the investments were easy with no penalties and minimal risk and, in some cases, even promised a fixed-rate yield of 5 percent for a year, the statement said.
However, prosecutors said Brombach deposited the investments into a Washington Mutual bank account that was yielding a negligible interest, and used the funds for personal and business expenses.
Brombach "employed deception in advising his clients as to the value of securities, or their purchase of sales," prosecutors said.
Some of his clients were returned a portion of their investments; however, most never saw their money again, according to the document.
During questioning by detectives, Brombach "admitted paying his clients with money that other clients were investing," and that "funds from investors were the REIT's only liquid assets," prosecutors said.
According to investigators, many of Brombach's own close friends fell victim to the scam, as did several elderly clients.
Prosecutors cited the case of one woman who invested $130,000 with Brombach in August 2004 with instructions for him to pay her month bill for the care she received at an assisted living facility.
Brombach stopped paying the bill in July 2005, and the woman was never refunded the remainder of her balance, according to the statement. The victim's daughter filed a lawsuit and obtained a judgment, the statement said, but nothing has been collected.
Brombach's trial is set for May.