Federal authorities charged three suburban men Tuesday who promised retirees they would invest their money wisely but instead they operated a Ponzi-type scheme that bilked investors out of $28 million -- some of which was used to pay for homes, cars and other personal expenses.
Charged are Robert C. Pribilski, 54, of Lisle, Mahmut Erhan Durmaz, 42, formerly of Streamwood and Los Angeles, and John T. Burns III, 53, of Naperville, who operated USA Retirement Management Services, which had offices in Oakbrook Terrace and Southern California.
Authorities said the three men obtained $28 million from about 120 investors who attended estate planning seminars in Illinois and California between 2005 and March 2010. The men promised to sell promissory notes for investments in Turkish bonds that would yield returns of 4.75 percent to 11 percent annually, but instead Pribilski and Durmaz used the funds to pay other investors -- and used $2.5 million to pay for their own expenses, including medical insurance, salaries and bonuses to themselves and Burns.
Pribilski and Durmaz were each charged with five counts of wire fraud and four counts of mail fraud. Burns was charged with three counts of wire fraud and three counts of mail fraud.
Each count carries a maximum penalty of 20 years in prison and a $250,000 fine.
The government is seeking forfeiture of $28 million from the defendants.
Pribilski and Burns are scheduled to be arraigned in U.S. District Court Thursday. Durmaz fled the United States in March 2010 and is a fugitive believed to be residing in Turkey, officials said.