Judge to decide Montco businessman's fraud sentence

Expecting a $15 million windfall in September 2011 from a deal involving pre-IPO Facebook shares, Montgomery County businessman Timothy D. Burns agreed to buy a bayside house in Avalon for $4.6 million.

When the Facebook deal did not happen as expected, Burns stole from clients of his money-management firm and another business to pay cash for the 4,380-square-foot house.

Bad move.

At Burns' sentencing hearing Monday in federal court in Philadelphia for the Avalon deal and other fraud totaling more than $19 million, U.S. District Court Judge Legrome D. Davis said he would give Burns credit for his role in the recent conviction of another fraudster, California-based Troy Stratos.

But Davis gave no sign that he would go easy on Burns. "I'm just perplexed. I don't think you're the kind of guy who needs to steal," he told Burns.

The $11.25 million of client money that Burns thought he paid for pre-IPO Facebook shares was, in turn, stolen by Stratos, a career con man who used the money to pay off gambling debts and to buy a $92,000 Land Rover, among other extravagances.

A federal jury in California found Stratos guilty in May, thanks in no small part to Burns' testimony, which stretched over 21/2 days, U.S. Justice Department officials said.

Burns, 36, grew up in Phoenixville, graduated from St. Joseph's University, and worked for Morgan Stanley before starting his own firm in 2005.

In their character statements, Burns' parents said he was a hardworking entrepreneur from a young age.

But Davis brushed aside those statements, saying: "This conduct comes from a dark place."

After the hearing Monday that lasted more than three hours, Davis delayed his decision on Burns' prison sentence until the amount of restitution he must make can be decided. Davis granted Assistant U.S. Attorney Nancy E. Potts 30 days to settle that issue.

Burns owes roughly $12 million. The question is whether he should get a $1.1 million credit on the sale of a commercial property in Conshohocken.

Burns pleaded guilty in June 2013 to mail fraud, wire fraud, and two counts of loan fraud - involving the house in Avalon and the property in Conshohocken - against the Bancorp Inc., of Wilmington.

Based on federal sentencing guidelines, Burns faces a prison sentence of 10 years to 121/2 years, but the prosecutor, Potts, asked Davis for a reduction because of his help in the case against Stratos and other factors.

Burns, his parents and friends told Davis, has been in prison since last August.

In 2005, Burns founded Executive Services Group in Conshohocken to offer bill-paying and concierge services to wealthy clients.

Burns also ran investment funds through ESG Capital Partners L.P. for others, a filing said.

Burns' testified that his fraud began long before the debacle involving Facebook, which went public in May 2012.

With business expenses growing faster than revenue in 2008, Burns started embezzling from client accounts to pay bills, typically $10,000 or $20,000 at a time, but once he stole $200,000, he testified.

Davis pressed Burns on why he was so driven to keep the growth going. "You would have made it in a different way, if you'd just slowed your jets for half a second," Davis said.

Burns told Davis that, given the chance, he would do whatever it took to repay the stolen money.

"Having known what you've done before, I'm not sure I want to hear that," Davis said.

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