SEC judge bars Jamerica's Brown from securities industry

Sherwin Brown, a Jamaican immigrant who went from mopping floors at Burger King to become a popular Twin Cities stockbroker, was barred from the industry Monday by an administrative law judge for the Securities and Exchange Commission.

The order comes as Brown is appealing a ruling by a federal judge in Minneapolis last May that similarly barred him from the industry.

Brown went to work in the securities industry in 1988 and once drew standing ovations from his clients at Jamerica Financial, Inc., which he started in 1992.

According to the SEC, his troubles started in May 2004 when he organized a side business called Brawta Ventures that drew $1.62 million from 53 investors.

The SEC says Brown spent $869,644 of the investors' money on personal expenses, including payments to a lawn-care service, electronics and computer stores, and repayments of a personal loan. Brown disputes those allegations.

The SEC filed suit against Brown in 2006 alleging a pattern of securities fraud. Brown learned in 2007 that he was the target of a federal grand jury investigation in Minnesota, so on the advice of his attorney, he cited his Fifth Amendment right against self-incrimination and declined to respond to the SEC's allegations.

He has not been charged with any crimes.

Brown has alleged in court filings since then that he was targeted for prosecution because he's black, and he accuses the SEC of using "dirty tricks" to drive him out of business.

The SEC doesn't allow a respondent to its civil sanctions to reopen issues that were resolved in a previous civil proceeding, however.

Carol Fox Foelak, the administrative law judge, found that Brown's and Jamerica's conduct was "egregious and recurrent. It continued for two years, and ended only when the Commission investigated and sued them," she wrote.

"While Brown has had satisfied clients, the public interest determination extends beyond consideration of the particular investors affected by a respondent's conduct to the public-at-large, the welfare of investors as a class, and standards of conduct in the securities business generally."

Brown filed for personal bankruptcy in June 2006. He and his family moved from St. Paul to Boca Raton, Fla., after losing their home in foreclosure.