Naperville Businessman Sentenced To Seven Years In Federal Prison For Defrauding Investors Of More Than $3 Million
CHICAGO — A Naperville businessman who fraudulently coaxed his clients into investing millions of dollars in bogus Turkish bonds was sentenced Thursday to seven years in federal prison.
JOHN T. BURNS III persuaded a dozen clients of USA Retirement Management Services to invest more than $3.3 million in Turkish bonds on the promise of lucrative returns. Burns fraudulently told his clients, many of whom were retirees, that he had substantial experience investing money on behalf of clients, that he and his parents were personally invested in the bonds, and that the profitable returns in those investments were providing financial security to him and his family. In reality, Burns was a mortgage salesman with no professional investment experience, and his family hadn’t invested in the Turkish bond program because it didn’t exist.
“You were a good salesman, and they bought it,” U.S. District Judge Charles P. Kocoras said in pronouncing the 84-month sentence. Judge Kocoras also ordered Burns, 56, of Naperville, to pay $3,383,113 in restitution.
A jury in November convicted Burns on two counts of wire fraud and three counts of mail fraud. His scam was part of a larger Ponzi-type scheme involving two principal members of USA Retirement Management Services – ROBERT PRIBILSKI and MAHMUT ERHAN DURMAZ, according to a federal indictment returned against the trio. Taken together, the total scheme defrauded 120 defendants out of $28 million, according to the indictment.
Pribilski, 57, of Lisle, pleaded guilty last year to one count of wire fraud and is awaiting sentencing. Durmaz, 45, formerly of Streamwood and Los Angeles, Calif., fled the United States in 2010 and is a fugitive believed to be residing in Turkey. USA Retirement Management Services, which had offices in Oak Brook Terrace and southern California, was shut down by the U.S. Securities and Exchange Commission in 2010.
“Despite having no prior experience in estate planning or handling investments for clients, the defendant held himself out as an experienced, certified estate planner” to gain access to financial records and to pitch the Turkish bond investment to clients, Assistant U.S. Attorney Ryan S. Hedges argued in the government’s sentencing memorandum. “The defendant’s motive to lie was greed; pure and simple,” argued Hedges, noting that Burns received substantial commissions from USA Retirement Management Services for each client who pledged funds into the bogus bonds.
Evidence at Burns’ week-long trial revealed that he identified potential investors by purporting to provide estate planning seminars in Illinois and California. Burns sent out mass mailings to lure people to the seminars, including a postcard that promoted his presentation and offered a free meal to attendees. Burns then used the seminars to schedule follow up interviews with prospective clients, during which he pitched what he claimed was a uniquely profitable investment opportunity in the Turkish bonds. What Burns didn’t tell the clients is that the Turkish bonds didn’t exist, and that their investments were being used to pay other investors in a Ponzi-type scheme.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The government is being represented by Mr. Hedges and Assistant U.S. Attorney Matthew F. Madden.
The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement. The task force is working to investigate and prosecute significant financial crimes, and to combat discrimination in the lending and financial markets. For more information on the task force, visit: www.StopFraud.gov.