November 14, 2012

As reported in The Chicago Tribune, two men have been indicted in an estate-planning scheme that yielded $28 million from 120 investors. According to the Justice Department, Robert C. Pribilski and John T. Burns III fraudulently obtained the money by persuading wealthy retirees to invest in Turkish bonds. The ponzi-like scheme was in place from 2005 to 2010.

The men found investors through mass mailings that invited them to local estate-planning seminars. The investors were “absolutely and unconditionally” promised that, at the note’s maturity date, they would receive the principal and interest due on their note. In reality, the invested funds were paid out to other investors. The Justice Department alleges that Pribilski and third defendant Mahmut Erhan Durmaz – who has fled the country – took over $2.5 million of the investor’s funds to make payments to themselves, their friends, and their families. The pair also used invested funds to speculate in real estate and restaurants.

Counsel for Burns, Joseph Lopez, has stated that Burns should not have been indicted because he was simply an employee of Pribilski and Durmaz. He “didn’t get any proceeds” from the scheme beyond his usual compensation, Lopez said. The Justice Department hopes to retrieve the $28 million.