The sentencing of Joshua Burrell to 48 months in federal prison is the sad ending to what started out as an optimistic story about opportunity zones living up to the vision that Sean Parker and Senator Tim Scott must have had when they backed the idea. As I reported in the story on his indictment, Burrell had been giving interviews in which he talked about a “double bottom line” which considers the social impact of investments.
The win, win, win narrative of Opportunity Zones where promoters, investors and marginalized communities benefit did not play out for any of them, Burrell least of all.
Restitution
In addition to the four year sentence and one year of supervised release Burrell is required to pay over $5 million in restitution. Barring a change in fortune, it seems unlikely he will pay it all. The terms of the restitution are that he pay 15% of his income up to $5,000 per month and 45% on the amount above them. Attorney Peter Goldberger who represents people accused of white collar crime wrote me that he had never seen restitution terms that harsh. He wrote me:
This order seems like higher percentage of income than I have typically seen. Ten percent is more typical. I have never seen the graduated percentage, with a higher percentage for amounts in excess of a threshold, but I guess that’s is good idea, although 45% strikes me as a lot and the single cliff is a crude way of doing a graduated “tax.”
Restitution payments can be deductible, although it is a complicated area. Without that the order would be confiscatory on higher incomes. According to Attorney Goldberger, the lien enforcing the obligation will expire twenty years after release from prison.
Goldberger also indicated that on the 48 months Burrell could get 15% for good behavior and more time off through participating in “recidivism reducing classes”. Judge Kaplan has recommended that Burrell do his time at the USP Satellite Camp in Lewisburg PA.
Not A Criminal Mastermind
From reading the material used in sentencing and some input from knowledgeable sources, it seems pretty clear that Joshua Burrell did not start out planning to commit any crimes. What ended up in his guilty pleas allocution was:
In 2019, I attempted to raise money by sending and e-mail with false documents from the company headquarters in New York City. This was done in order to sell interest in real estate investments, securities. I made fraudulent representations to potential investors.
According the the SEC fourteen investors put in $6.3 million some of which was distributed back to them (That’s the Ponzi piece). Burrell purportedly diverted $100,000 to personal use, although that is not something he pled guilty to. I heard from one victim who has been following the case. They wrote me:
It is over in the eyes of the law, Joshua Burrell pled guilty to a small subsection of the charges filed against him and is now going to prison due to his own actions. To me, a victim, I have relied on the filings with the court on this case to outline the story. I have learned of a capable and well loved Man who overcame substantial early family trauma and addiction to become a local legend. Only to throw away his achievements and talents due to a toxic combination of delusion and greed…..
It seems Mr. Burrell is scheduled to enter prison both unwilling to own his actions and remaining blind to the damage he has done, not only to his victim investors such as myself, but to those living in these fragile overlooked communities. His partner going so far as to claim in filings that Burrell left the residents in slum like conditions.
Apparently this is par for the course. Evan Osnos in a New Yorker piece Life After White-Collar Crime quoted Jeffrey Grant who works with released white collar criminals:
“Almost everyone who contacts us has been successful, controlling, and perhaps narcissistic,” he said. “The elements that made them successful are also the elements that contributed to their demise.” Throughout their pre-indictment careers, aggression and rule-bending were considered strengths. In American culture, white-collar crime is often portrayed less as evidence of unfettered greed than as a misguided sibling of success.
The Future
Burrell, who is 39, prior to Activated Capital had been a Director of Investments for Midas Capital and had worked for Lazard Asset Management. Breaking back into that sort of work can be very difficult, if not impossible for someone with Burrell’s record, which makes an excerpt from one of his support letters kind of touching:
I think that even though Josh has made mistakes, he has a big heart and is a very loyal friend. If Josh comes back to St. Louis, I would not hesitate to recommend he be hired at Sam’s Club or happy to support him in any other way I could.