DENVER - A Colorado coin dealer is accused of taking $2.4 million from customers without delivering the coins they had ordered.
Sixty-one-year-old James P. Burg, formerly of Fairplay, has pleaded not guilty to several counts of wire fraud, mail fraud, money laundering and failure to file tax returns. He was arrested in California in November and appeared in federal court in Denver this month.
According to the indictment, beginning on or about October 1, 2007, and continuing through and including on or about January 12, 2012, in Colorado and elsewhere, James P. Burg devised and intended to devise a scheme to defraud customers that ordered coins from a business known as Superior Discount Coins and Gold Run Investments and for obtaining money from those customers by means of materially false and fraudulent pretenses, representations, and promises. Burg took and received $2,464,099 from customers that ordered coins, and he failed to deliver the coins as promised.
As part of the scheme, Burg represented that he was the chief executive officer of a company known as Superior Discount Coins (SDC) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (GRI) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke.” Burg advertised and solicited customers through radio advertisements and over the Internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
The money Burg received from customers was not used to purchase coins for such customers, but instead he converted the money to his own use and benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2006, 2007, 2008, and 2009, Burg failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years.
“A core mission of the U.S. Attorney’s Office is to protect victims from scam artists who try to trick them out of their hard earned money,” said U.S. Attorney John Walsh.
“The FBI has made protecting innocent investors a priority,” said FBI Special Agent in Charge James Yacone. “As such, we will vigorously investigate those who engage in schemes to swindle and defraud.”
“The U.S. Postal Inspection Service has no shortage of investment investigations and this is another example of greed overcoming honest business practices,” said Adam Behnen, Inspector in Charge, with the U.S. Postal Inspection Service. “These criminal charges illustrate the commitment of the U.S. Postal Inspection Service to protect the American public by investigating individuals who use the U.S. mail to further their schemes.”
“Fraud schemes are often described as a house of cards and will eventually fall apart exposing the individuals responsible,” said Stephen Boyd, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office. “This is a great example of federal agencies working together.”
Burg was charged with six counts of wire fraud, nine counts of mail fraud, four counts of money laundering, and four counts of willful failure to file tax returns. If convicted of the wire fraud and mail fraud counts, he faces not more than 20 years in federal prison, and a fine of up to $250,000 per count. If convicted of the money laundering counts, he faces not more than 10 years in federal prison and a fine of up to $250,000 per count. If convicted of failing to file tax returns, he faces not more than one year in federal prison and a fine of up to $25,000 per count.
This case was investigated by special agents with the Federal Bureau of Investigation (FBI), the IRS-Criminal Investigation, and the U.S. Postal Inspection Service.