Scam goes down in Raleigh; exec loses $5M

Triangle Business Journal/August 11, 2003
By Lee Weisbecker

Raleigh -- With the promise of a monthly 10 percent return on his money, Chapel Hill Amway executive
Billy B. Britt drove over to Raleigh's Capital City Club in May 2001 to meet Wilmington securities dealers Daniel and Robert Henry Burr.

At that meeting, Britt slid a $3 million check across a linen-covered table to the Burr brothers. Two months later, Britt gave the men another check - this one for $2 million.

Passage of those two checks has sparked what's being called perhaps the largest single financial fraud case in North Carolina history in terms of the amount of dollars that have disappeared.

"Well, it's a lot more money than normally comes through our criminal justice system," says Howard Cummings, a Wake County assistant district attorney.

Today, the Burr brothers sit in the Wake County Jail, awaiting an arraignment and motions scheduled for the week of Aug. 18. Combined, they face 10 felony charges that could land them up to a decade in prison if convicted. They are being held in lieu of a $10 million bail.

According to the Wake County indictments, Robert Burr and his brother told Britt that his $5 million would be "invested in a private placement program that would generate profits of 10 percent a month."

Instead, the indictments say, the Burrs converted the money to their personal use.

Each is charged with two counts of obtaining property by false pretense. Robert additionally is charged with six counts of securities fraud, stemming from his alleged failure to inform Britt about events in his past.

State securities regulators, federal marshals, a court-appointed receiver and officials from the U.S. Securities and Exchange Commission caught up with the Burrs in Wilmington on June 25.

Their homes - each valued in the $400,000 range - were seized and sealed, as were their automobiles. "They (federal officers) even took the watches off their wrists," says George Jeter, a spokesman for the North Carolina Secretary of State's Office, which houses the state's Securities Division.

It marked the end of a long road for the SEC, which initially had moved against Daniel Burr, 53, and his younger brother Robert, 40, and their investment company, Cornerstone Management, in 1999.

The company was on a short list of scattered investment firms that had aligned themselves with Phoenix, Ariz.-based Dennel Finance Limited and its leader, Benjamin Franklin Cook.

In June 2003, Cook, 55, was sentenced in Arizona to 17 years in prison for allegedly masterminding a nationwide Ponzi scheme that bilked some 300 investors, mostly elderly citizens and religious groups, of $46 million.

SEC documents detail the scam.

According to those documents, investors were told that their money would be transferred to, and guaranteed by, a London bank, and that the funds would then be used as collateral to trade in currencies and other financial instruments with 50 top European banks. Annual returns of up to 60 percent were promised.

In reality, the SEC says, the "prime bank" program marketed to investors didn't exist, and Cook and his lieutenants "misappropriated investment funds for personal and unauthorized uses, including making Ponzi payments to existing investors with funds provided by new investors."

Throughout most of 2000 and 2001, the Burrs were caught up in legal problems. The assets of Cornerstone were put under the supervision of a receiver. Robert Burr, in a plea arrangement with Arizona prosecutors, agreed to plead guilty to two felony counts and pay $5 million in restitution. He has yet to be sentenced on those charges. In December 2000, he was jailed for contempt in Texas in a disagreement with a court-appointed receiver.

SEC documents say that it was while he was being held in the Federal Detention Center in Seagoville, Texas, that Robert Burr began laying plans to approach Britt, a well-known Chapel Hill businessman. Attempts to reach Britt were not successful.

Robert Burr, claiming that he is indigent, has received a court-appointed attorney, Peter Wood of Raleigh, to represent him. Superior Court Judge Robert Rader also agreed to provide Wood with up to $2,500 to pay for a private investigator to help him prepare his case.

"I'm still trying to piece together what happened," says Wood, who declined to discuss the case in detail. "It's complicated."

To date, no attorney of record has been named to represent Daniel Burr.

To see more documents/articles regarding this group/organization/subject click here.