FEDs: Silver Spring House restaurant owner sentenced to prison for fraud

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David Braeger, 57, of Fox Point, was sentenced Monday to 24 months of incarceration for committing an investment fraud scheme that resulted in a loss of over $2,500,000 to investors, according to Gregory J. Haanstad, attorney for the Eastern District of Wisconsin.

According to court documents, Braeger was previously barred by the Financial Industry Regulatory Authority (FINRA) from serving as a broker or otherwise associating with a broker-dealer firm. In 2017, Braeger incorporated an entity known as Blue Star Automotive Fund (“Blue Star”), in which he sold limited partnership shares to 27 investors who gave him more than $5.4 million for those shares.

Braeger represented to those investors that the money would primarily be used to fund an automobile dealership. Although Braeger provided approximately half of the money to the dealership, he misappropriated more than $2.5 million of investor funds in ways contrary to his representations, according to court documents.

He spent his victims’ money on his own living expenses, including, but not limited to, the purchase of several luxury vehicles and personal legal fees. Braeger also used his victims’ money to purchase the Silver Spring House Restaurant in Glendale, sponsor a NASCAR driver and buy cryptocurrency, according to federal officials.

FOX6 Milwaukee reported in 2018 that the Silver Spring House restaurant suddenly closed its doors after being in business for more than a century, however, the reasons behind the closure were previously unknown.

After the indictment was filed in 2021, Braeger was represented by Attorney Brian T. Fahl of Kravit Hovel & Krawczyk, according to court documents obtained by the Wisconsin Law Journal.

He was also represented by Attorneys Gerald S. Kerska and Stephen E. Kravit in 2021, according to court documents.

However, in 2022, court documents reveal that Brager received new representation — Federal Defender Services of Wisconsin Inc.

Counsel could not be reached for comment prior to publication.

In addition to the Blue Star Scheme, Braeger also stole $100,000 from an investor as part of a venture he called IEF, which Braeger claimed would be used to fund litigation related to a Ugandan Energy company. Instead, Braeger misappropriated most of that money for his own personal use.

At the sentencing hearing, U.S. District Judge Lynn Adelman focused on the pain and suffering Braeger caused to his victims and noted that Braeger’s crime called for a significant period of incarceration because Braeger was motivated by “greed and self-aggrandizement.”

In addition to the 24-month period of incarceration, Braeger was ordered to pay restitution to his victims in the amount of $2,535,103.19.

“Mr. Braeger, who held no other job and earned no other income during the relevant period, used his background and connections to steal millions of dollars from over two dozen victims,” said Haanstad.

“Braeger also added insult to the extensive financial injuries he caused, seeking to intimidate or bully some victims even after his scheme began unraveling. I commend all involved in seeking to hold Mr. Braeger accountable for his actions and for pursuing justice for his victims,” Haanstad added.

Other federal officials agreed.

“Mr. Braeger was brought to justice for engaging in a fraudulent scheme that duped investors and caused them losses of over $2.5 million, while he selfishly used the fraudulently obtained money to fund his own personal living expenses,” said Special Agent in Charge Vincent Zehme, of the Federal Deposit Insurance Corporation Office of Inspector General Chicago Region.

“The FDIC OIG will continue to work closely with our law enforcement partners to investigate and hold accountable those who orchestrate such schemes that harm consumers and undermine the integrity of our Nation’s financial system.”

The case was referred to the U.S. Attorney’s Office by the Wisconsin Department of Financial Institutions. It was investigated by the Federal Deposit Insurance Corporation Office of the Inspector General and prosecuted by Assistant United States Attorney Julie F. Stewart.