A Grass Valley, California resident has been found guilty of fraud charges for her role in an “advance fee” Ponzi scheme that raised millions of dollars from victims who paid to obtain financing.
Daisy M. Burlingame, 62, was convicted late Friday by a federal jury in Santa Ana. Burlingame was found guilty of conspiracy, two counts of mail fraud, three counts of wire fraud and three counts of money laundering.
During an 8-day trial, the evidence showed that Burlingame and others ran the scheme through a shell company called Morgan Weinstein & Co., Inc., which was located in Laguna Hills. From 1997 to January 2002, Burlingame and her co-conspirators fraudulently collected more than $17 million in advance fees from victim-borrowers by falsely promising to provide more than $30 billion in loans.
Burlingame and her co-conspirators falsely claimed that they were able to provide loans, typically of $100 million or more, to companies and individuals seeking venture capital. In order to induce them to pay an advance fee, typically 0.1 percent of the promised loan amount (usually $100,000 or more), Burlingame and her co-conspirators falsely told victim-borrowers that Morgan Weinstein had funded multimillion dollar loans in the past and had the financial capacity to fund loans in the future. Burlingame and her co-defendants falsely claimed to be able to fund the promised loans through use of over $22 billion worth of Japanese bonds and $10 billion that was supposedly on deposit in a Singapore bank.
Burlingame always told victims that the advance fees were refundable if the promised loan was not funded within 180 days. In some instances, fees were refunded, but usually not until at least a year later. In the fashion of a classic Ponzi scheme, earlier victims who were paid off received money that Burlingame and her co-conspirators had obtained from new victims.
Burlingame is scheduled to be sentenced on January 26 by United States District Judge David O. Carter. At sentencing, Burlingame faces a maximum possible penalty of 165 years in federal prison.
Previously in this case, five co-defendants have pleaded guilty to federal fraud charges. They are:
* Richard A. Parker, the 80-year-old chairman of Morgan Weinstein, a Laguna Niguel resident, July 31 to conspiracy, mail fraud and wire fraud. He is scheduled to be sentenced on November 17.
* Richard A. Parker II, 56, of San Juan Capistrano, who was the president of Morgan Weinstein, pleaded guilty on August 12 to conspiracy and mail fraud. His sentencing is set for November 17.
* David Feldman, 64, of Fallbrook, pleaded guilty on September 10 to wire fraud. He is scheduled to be sentenced on November 17.
* Donald Allen, 46, of Brandenton, Floriday, pleaded guilty on August 13 to mail fraud. His sentencing is set for November 17.
* Wayne Chan, 53, of Vancover, pleaded guilty on March 6 to mail fraud. Chan is scheduled to be sentenced next Monday.
* This case is the result of an investigation conducted by the Federal Bureau of Investigation.