U.S. plans to use proceeds to repay Brown's fraud victims

6:03 p.m. EST, March 1, 2011

http://www.baltimoresun.com/news/maryland/bs-md-luxury-car-auction-20110301,0,7764386.story?track=rss

Crouching to examine the contours of a gleaming Ferrari 360 Spider convertible Monday afternoon, 21-year-old Daniel Giron couldn't help but imagine himself as owner of the luxury car, seized by the U.S. government from Byron Keith Brown, a Maryland man convicted last year of wire fraud and money laundering.

After admiring the car at a vehicle auction site in Elkridge, Giron whipped out his phone, leaned in close to the cherry-red exterior and snapped a couple of pictures of his face next to the Ferrari logo.

"It's not common to see on the street," Giron said, when asked what attracted him to this particular make and model. "These are faster, I think."

Amid a jostling crowd of mostly male auto dealers and regular buyers conversing in English, Spanish and Persian, the Ferrari sold Tuesday for a cool $100,000 at the Manheim auction site, the buyer known only to the crowd as No. 350.

"That cannot be real!" gasped one bidder as the deal closed. "That's like 10 grand over retail."

The Ferrari was one of 17 vehicles, many of them exotic, seized by the U.S. Department of the Treasury from Brown, who was convicted of duping wealthy investors in a Ponzi-type online scheme between 2003 and 2009. The sale of the vehicles netted the government close to $1.1 million, in line with expectations. The money will be used to repay some of the $17 million that authorities say Brown stole from investors, according to Rebecca A. Sparkman, a special agent with the Treasury Department.

Authorities say Brown advertised online investing services with a minimum $1 million buy-in and used computer software to set up a fake website where victims could log in and see the value of their "investments" rise.

"You'd watch your investment go up," Sparkman said, "but in fact it was a completely fabricated online scam."

Brown was caught as part of Operation Broken Trust, which targeted investment fraud across the country and has led to charges against hundreds since August.

"The government made their money back a little bit, and it'll go to the people who got ripped off," said Bill Pearce, who was at the auction with his friend Brian Scott, a collector of both exotic cars and "regular, old American iron."

Authorities say Brown, a former Ellicott City resident, used money from the scam to buy the luxury vehicles, a Virginia mansion and courtside seats at NBA games. His taste in cars apparently tended toward British, German and Italian models. Also in Tuesday's auction were a blue Bentley coupe, two BMWs, a Lamborghini roadster — which sold for about $210,000, the most of any auto in the bunch — two Land Rover sport utility vehicles, and a black Rolls-Royce Phantom Saloon, which went for $160,000.

The government also seized money from Brown's bank account but will likely never retrieve the full $17 million, Sparkman said.

"It's impossible usually to recover all the money," she said. "It's just gone. It's just spent away, unfortunately.

"Mr. Brown enjoyed the money and enjoyed the flash," Sparkman added.

Sean O'Kelley came to Elkridge from his home in Macon, Ga., with about $60,000 and credit cards, hoping to find a steal on a luxury car and flip it for a profit.

"The high-end vehicles got my attention," he said.

Thanks to aggressive advertising by the government, Manheim has been fielding interest from buyers all over the country for the past month, said Mark Wanamaker, general manager of the company's Baltimore-Washington site in Elkridge.

"Dealers flew in from California, Texas, Kansas City," he said. "We were getting hundreds of phone calls almost every day about these cars, from a lot of places."

About 2,500 bidders registered for the sale online and in person, Wanamaker said, compared with the typical 2,200 bidders for an auction.

Scott said Brown's expensive tastes reminded him of Jeffrey A. Levitt, a Baltimore slumlord who in 1986 admitted to stealing almost $15 million from his savings and loans operation, Old Court. Years ago, Scott attended the auction of Levitt's vehicles, too, and found them garish.

"They all want to look more important than they are," Scott said, noting the flashy, lemon-yellow finish on the Lamborghini and extra-large rims on a copper-toned Land Rover. "This guy had better taste than Jeffrey Levitt did, but he's still tacky."