Burton Guilty in Phony Trust Deed Scheme
Five years after the collapse of a trust deed scheme that took in $105 million from investors, Southland financier Wayne Burton has been convicted of 110 criminal charges and faces a possible prison term of 10 years.
San Bernardino County Superior Court Judge Bob N. Krug set sentencing for June 17.
State and local prosecutors described the operations of Burton and his San Bernardino-based United Financial as “the largest real estate brokerage fraud in California history.”
At the peak of his operation in 1980, Burton had obtained some of the highest-priced developments in downtown San Bernardino, as well as residential and commercial properties elsewhere in Southern California.
About $50 million of the money that Burton took in from some 6,000 investors still has not been accounted for, said John Gordinier, deputy attorney general, and Ken Kohne, deputy district attorney.
27 Cents on the Dollar
Investors, originally promised interest rates of 10% to 24%, are likely to get back no more than 23 cents to 27 cents on the dollar, according to court-appointed receiver Robert Baker.
Burton, 42, was convicted on charges of theft, forgery and tax and securities violations. The jury acquitted him on three grand theft counts and failed to reach a verdict on one grand theft and five obstruction of justice counts.
He was indicted in May, 1982, in a case that grew out of a Securities and Exchange Commission civil suit in January, 1981. Burton’s attorney, B. Gene Bristoll, said he will move for a new trial.
The jury that convicted Burton on Tuesday found two of his associates innocent of all charges against them. Lowell Young was acquitted on 104 counts of conspiracy, grand theft, forgery and securities violations. Ronald Taylor was found innocent of five counts of obstruction of justice.
The jury convicted another Burton associate, Jodie James Sanders Jr., of one count of failing to file a corporate tax return but acquitted him on 72 counts of grand theft, forgery and securities violations.
Three other co-defendants have pleaded no contest to some of the charges in the same indictment and are awaiting sentencing.
Another defendant, Daniel French, a former partner of Burton’s, will be tried separately on 14 felony counts involving an alleged insurance fraud scheme.
Prosecutors said that Burton used 17 mortgage brokerage companies to sell trust deeds but that in reality he operated a fraudulent “pyramid” scheme. Using appraisals inflated by as much as 100%, Burton allegedly used part of the investors’ money to buy properties on which he sold trust deed interests to clients. He also used some of the new investors’ money to pay interest to old investors, prosecutors said.
