By Cathy Locke
clocke@sacbee.com

A Vallejo man has pleaded guilty in federal court to wire fraud in connection with a fraudulent investment scheme, according to news release from the U.S. Department of Justice's Sacramento office.

Robert Cephas Brown Jr., 56, entered the plea before United States District Judge John A. Mendez, the release states.

The case was the result of an investigation by the U.S. Postal Inspection Service.

On Feb. 26, 2009, Brown and co-defendant Duane Allen Eddings, 49, also of Vallejo, were indicted on charges that beginning in 2001, they devised a scheme to defraud investors throughout the United States.

Brown touted himself as a stock market expert who could make huge profits in both good and bad times, according to Assistant U.S. Attorney Matthew Stegman, who is prosecuting the case.

The indictment alleged that one of the high return investments claimed by Brown and Eddings was a "24-Month/High Yield Loan Agreement" promising 21 percent to 30 percent every four to four and a half months with three annual payouts for a total of 63 percent to 90 percent, Stegman said.

Another investment scheme offered a "24-Month Gifted Agreement" that promised that the money invested, called the "gift", would be invested for 24 months, with the investor receiving "the original gift amount plus 100 percent accrued interest, Stegman said.

They also offered investors a "Double Diamond Plan" that promised to double the invested principal in three months, the release states.

The indictment alleged that Brown spent investor funds on personal expenses, including expensive clothes, hotels, restaurants and a Ferrari Testarossa, and made cash withdrawals of more than $3.5 million of investor money.

In addition to the criminal case being prosecuted by the Department of Justice, the federal Securities and Exchange Commission filed a civil lawsuit July 23, 2008, alleging securities fraud, and obtained an emergency court order prohibiting Brown from engaging in such fraud, the release states.

The lawsuit also seeks to require him to give up monies gained through the activities and to pay monetary penalties.

Eddings pleaded not guilty May 3, 2009 and is scheduled to appear in court April 13 to set a trial date.

Brown is scheduled to be sentenced by Judge Mendez at 9:30 a.m. Aug. 5.

Call The Bee's Cathy Locke, (916) 776-6866.