Chief Executive Officer Of Superior Discount Coins Is Sentenced To 90 Months In Federal Prison For Defrauding Gold Coin Investors Out Of Over $2.4 Million
DENVER – James P. Burg, age 63, formerly of Fairplay, Colorado, was sentenced yesterday by U.S. District Court Judge John L. Kane to serve 90 months in federal prison for mail fraud and failing to file an income tax return, federal law enforcement authorities announced. Following his prison sentence, Burg was ordered to spend 3 years on supervised release. Judge Kane also ordered him to pay just under $2.5 million in restitution to the approximately 40 victims of his crime.
Burg was indicted by a federal grand jury in Denver on November 5, 2012. The indictment remained sealed until his arrest in California on November 29, 2012. He pled guilty on September 12, 2013. According to the indictment as well as the plea agreement, starting in October 2007, and continuing through January 2012, Burg devised a scheme to defraud customers that ordered coins from businesses known as Superior Discount Coins and Gold Run Investments. He obtained money from those customers by means of materially false and fraudulent pretenses, representations and promises. Burg took and received $2,464,099 from customers that ordered coins that he failed to deliver as promised.
As part of the scheme, Burg represented that he was the Chief Executive Officer of a company known as Superior Discount Coins (“SDC”) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (“GRI”) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke”. Burg advertised and solicited customers through radio advertisements and over the internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent, and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
A substantial portion of the money Burg received from customers was not used to purchase their coins but instead was used for his own personal benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2003 through 2009, Burg also failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years. The investigation determined during the above years Burg generated a gross income of over $5.5 million for which he failed to pay $1,100,334 in income taxes on that income.
“The defendant’s sentence serves a number of purposes,” said U.S. Attorney John Walsh. “To those who consider implementing investment fraud, let this case be a warning that there are consequences, including prison sentences. To those who are asked to invest, do research before handing over your hard earned money. And to those who have lost money in these schemes, know we will do the best that we can to recover as much money as possible.”
“Investment schemes are motivated by greed and this sentence should serve as a reminder for those who prey on investors for their personal financial gain. These fraudsters will be caught and sent to prison,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“The collaborative effort between the IRS CI, U.S. Postal Inspection Service, and the FBI is an example of the on-going working relationships federal investigative agencies have to combat violations of federal law,” said FBI Denver Special Agent in Charge Thomas P. Ravenelle. “This investigation highlights the leveraging of federal law enforcement resources to protect innocent investors and our economy from those who engage in these types of fraudulent schemes.”
“The sentence James Burg received reflects the public’s right to expect punishment for those who commit fraud in order to enrich themselves personally,” said Denver Division U.S. Postal Inspector In Charge Adam P. Behnen. “Postal Inspectors will continue to ensure the integrity of the U.S. Mail through these types of investigations and our valued partnerships with other law enforcement agencies.”
This case was investigated by special agents with IRS-Criminal Investigation, the Federal Bureau of Investigation (FBI), and the U.S. Postal Inspection Service.
The case was prosecuted by Assistant U.S. Attorney Tim Neff.