Seattle man who used stolen identities to seek nearly $2 million in COVID-19 benefits pleads guilty to wire fraud and aggravated identity theft
Tacoma – An unlicensed “investment advisor” from Vancouver, Washington, was sentenced today in U.S. District Court in Tacoma to 75 months in prison for mail fraud in connection with his scheme to defraud investors, including friends and family members, out of more than $4 million, announced U.S. Attorney Nick Brown. Charles Richard Burgess, 67, originally tried to blame the COVID-19 pandemic for the loss of victim funds. But in fact, Burgess had lost the bulk of investors’ money many years earlier and had concealed the losses from them. At the sentencing hearing Chief U.S. District Judge David Estudillo noted the “long-lasting effects of the crime on the victims.” Chief Judge Estudillo told Burgess, “To lie, to cheat, to steal seem to be the values you were living by.”
“It is heartbreaking to read the victim statements describing how their lives have been dramatically altered – no retirement, no funds to care for disabled children, in one instance a victim’s home placed at risk of foreclosure,” said U.S. Attorney Nick Brown. “From the mid-1990s until 2021, Mr. Burgess led his victims – mostly friends and family members -- to believe that he was successfully investing their funds for retirement. He sent fake statements showing significant gains. In truth, since at least 2013, the investment fund was insolvent and losing value, and Mr. Burgess took more than $1 million in fees for his own benefit.”
According to records filed in the case, in the mid-1990s Burgess began selling investments in an unregistered investment vehicle that Burgess called “the pool.” Burgess never became a registered or licensed investment advisor. But between January 1995 and April 2021, he convinced 64 people to invest $13.4 million in “the pool.” He sought investments from friends, family members, and others with whom he had a trusting relationship. Burgess did nothing to screen the investors to see what type of risk they could tolerate, and often did not provide them with written materials about the nature of the investments.
Burgess told investors he would collect fees only if the fund made money and told some he would personally absorb any trading losses. Burgess provided the investors with statements indicating their account balances had grown substantially over time. However, those statements were false. For example, in 2016 Burgess sent investors statements indicating their investments had grown about 10 percent that year. In fact, the investments lost money.
As early as 2013, Burgess was not able to repay all the investors’ principal, let alone the profits he was falsely telling them they had earned. In December 2013, Burgess told investors that the value of the investor accounts exceeded $4.2 million. In fact, at that time the pool’s assets were only about $711,000. By the end of December 2015, it was even worse: Burgess told investors their accounts totaled over $5.2 million, when the true value was only about $365,000. By the end of 2020, Burgess represented in year-end statements that the collective value of victims’ accounts exceeded $10.3 million. In fact, the Pool’s assets totaled only $113,000.
As the financial picture worsened, Burgess paid off earlier investors with money from new investors –a classic Ponzi scheme.
Speaking in court today, one victim said Burgess is a “pathological liar.” Another wrote to the court “He is a con, nothing more than that in my eyes.” A 91-year-old victim wrote “He needs to be held accountable for the many lives he has shattered.”
In all, 32 investors lost $4.3 million in principal payments that they had made to Burgess. Burgess was ordered to pay $4,383,617 to the victim investors.
While I’m glad Mr. Burgess accepted responsibility for his actions, the amount stolen from his victims warrants a lengthy sentence,” said Richard A. Collodi, Special Agent in Charge of the FBI’s Seattle field office. “Crimes like these traumatize victims who lose their entire life’s savings. I applaud the work of our investigators and partners with the state who worked to bring this scheme to an end.”
The case was investigated by the FBI and the Washington State Department of Financial Institutions (DFI).
The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.
Press contact for the U.S. Attorney’s Office is Communications Director Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.