Vancouver, Washington ‘investment adviser’ pleads guilty to defrauding friends and family out of more than $4 million in investment ‘Ponzi scheme’ | USAO-WDWA

Tacoma – An unlicensed “investment adviser” from Vancouver, Washington pleaded guilty today in U.S. District Court in Tacoma to mail fraud in connection with his scheme to defraud investors, including friends and family, of more than $4 million dollars, announced the US prosecutor. Nick Brown. Charles Richard Burgess, 66, faces up to 20 years in prison when he is sentenced by U.S. District Judge David Estudillo on November 4, 2022.

“For more than two decades, Mr. Burgess led his victims to believe that he had successfully invested their retirement funds. But in reality, since at least 2013, the investment fund was insolvent and losing value, and Burgess stole investors’ funds to line his own pockets,” US Attorney Brown said. “More than two dozen people lost their retirement savings due to Mr. Burgess’ fraud.”

In the mid-1990s, Burgess began selling investments in an unregistered investment vehicle that Burgess called a “pool,” according to documents filed in the case. Burgess never became a registered or licensed investment adviser. But between January 1995 and April 2021, he convinced 64 people to invest $13.4 million in the “pool.” He sought investments from friends and family members with whom he had a relationship of trust. Burgess did nothing to screen the investors to determine what type of risk they could bear, and he did not provide them with written materials about the nature of the investments.

Burgess told investors that he received only a share of the profits from the investments and claimed to some that he would personally cover any losses. Burgess provided investors with reports showing that their account balances had grown significantly over time. However, these claims were false. In 2016, for example, Burgess sent reports to investors showing that their investments had grown by about 10 percent that year. In fact, the investment lost money.

As early as 2013, Burgess failed to repay the full principal amount owed to investors, let alone the profits he falsely told them they had earned. In December 2013, Burgess owed investors $2.3 million in principal and said the value of investor accounts exceeded $4.2 million. In reality, the pool’s assets at the time were only about $711,000. In late December 2015, the situation was even worse: investors were told their accounts were worth more than $5.2 million, while assets were only about $365,000. Burgess owed investors $4.5 million in principal at the end of 2020, and year-end reports put the total value of their accounts at more than $10.3 million. In reality, the pool had only $113,000 in assets.

As the financial situation worsened, Burgess paid off previous investors with money from new investors – a classic Ponzi scheme.

Despite his assurances that he only took a share of the fund’s profits, Burgess actually used the investor’s money for his own expenses. From 2014 to 2021, Burgess transferred $1.4 million to his personal account.

A total of 32 investors lost $4.3 million in principal they had paid Burgess. Under the plea agreement, Burgess will be required to pay $4,359,113 in restitution to injured investors. Prosecutors agreed to recommend the lowest range of sentencing guidelines when Burgess is sentenced. Judge Estudillo is not bound by the recommendations of prosecutors and may impose any sentence of up to 20 years provided by law after considering the sentencing guidelines and other factors provided by law.

The case was investigated by the FBI with assistance from the Washington Department of Financial Institutions.

Assistant US Attorney Seth Wilkinson is prosecuting the case.

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