A Vancouver man ran a Ponzi scheme

A Washington state agency has filed administrative charges against a Vancouver man accused of violating state securities law by using funds from a common investment vehicle to make Ponzi payments to investors, among other violations.

The Securities Division of the Washington Department of Financial Institutions filed the indictment in mid-December against Charles Richard Burgess, The Columbian reported.

The securities administrator intends to order Burgess to cease and desist and pay a fine of $100,000, as well as investigation costs totaling no less than $25,000, according to the state of charges.

Burgess’s attorney — Todd Maybrown of Seattle firm Allen, Hansen, Maybrown & Offenbecher — declined to comment on the ongoing litigation.

According to the statement of charges, between October 2013 and April 2021, Burgess offered and sold approximately $6.3 million in pool investments to 40 investors.

However, the Securities Division received records from Burgess and investors indicating that he had sold his stake to the pool since approximately 1994, but due to bank record retention policies, the Securities Division could not collect files only until the end of 2013.

The Securities Division could not say if there was a criminal investigation. A spokesperson for the FBI office in Seattle said the agency does not generally confirm or deny investigations. Nothing was forwarded to the county attorney’s office.

As of March 2021, the pool had 43 investors, including 39 in Washington. Burgess often offered and sold an interest in the joint investment vehicle to family and friends or family and friends of participants, the statement of charges shows.

The offering was never registered with the state and Burgess is not a registered investment adviser, the department found.

Burgess provided limited information to potential investors and did not discuss the risks, investment strategy, number of participants, products he buys and sells, whether the pool is diversified and the amount of funds in the pool or total value, depending on the statement of charges.

Burgess is accused of telling investors their funds would be pooled with funds from other investors and that he is using the money to trade stocks. However, he reportedly used new investment funds to make payments to existing investors. In a Ponzi scheme, a person pays investors with proceeds from new investors, rather than money earned on investments, promising large returns with little or no risk.

Burgess is also accused of transferring funds to his personal account before transferring them to a brokerage account and he sometimes paid personal expenses directly from the pool account, according to the statement of charges.

Burgess also sent monthly statements to investors that incorrectly showed the pool was successful and investors were making a consistent profit, the statement of charges says.

In July 2021, Burgess reportedly told some investors that the pool had run out of funds. He gave at least 17 investors a settlement agreement, along with a repayment proposal and a balance sheet showing the principal owed.

However, he did not tell them the number of pool participants to whom funds are owed, the total amount of principal owed, or that the pool has not had enough funds to repay investors since at least 2015, according to the statement. charges.

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