By Mark E. Vogler
---- — During his first tour of duty in Iraq, U.S. Army Lt. Ariel Castillo saved up $25,000 — including a $15,000 bonus for re-enlisting while overseas.
Soon after returning home to Lawrence in 2007, he decided to invest that money with a local financial planner recommended by his sister, who had attended law school with him.
But Castillo said it wasn’t until five years later — after returning from a second tour of duty in Iraq — that he discovered his money was never invested the way Robert Burton had promised.
Burton, 35, owner of Pinnacle Financial Consulting LLC of Lawrence, told Castillo that his money would be placed in an IRA account with a diversified portfolio of publicly traded securities. A year ago, after losing confidence in the way Burton was managing his investments, Castillo asked him to return all of his funds. He has never gotten any of his money back.
“He didn’t just manage my money, he was a friend. He was a friend of my wife, my sister, and he was a guest at my wedding,” said Castillo, 31, who is now a chaplain at a Veterans Administration hospital in New York City. “Rob is a parasite to the entire Commonwealth. What he did in Lawrence he will do elsewhere if he is not stopped.”
State Attorney General Martha Coakley’s Office has filed a lawsuit against Burton and his firm Pinnacle Financial, alleging numerous illegal acts and misappropriation of clients’ funds. Castillo is just one of the victims in the lawsuit.
Burton runs his business from the second floor of a century-old three-story brick office building at 170 Common St. overlooking Campagnone Common, located next to Lawrence Superior Court and several doors down from Lawrence City Hall. From there, the Attorney General’s office alleged that Pinnacle Financial has been “engaging in unfair or deceptive acts and practices in connection with their charging of advance fees and providing dozens of Massachusetts consumers purported mortgage loan modification services, bankruptcy petition preparation services, and financial and investment advice.”
The Eagle-Tribune attempted to get comment from Burton for this story, but telephone and hand-delivered messages left at Pinnacle Financial’s office were not returned.
The primary focus of the lawsuit filed by Coakley’s Office is that Pinnacle and Burton allegedly exploited the foreclosure crisis to prey upon homeowners facing financial troubles and the loss of their home — particularly minority and non-native English speakers. The company unlawfully solicited advance fees for foreclosure-related services and also provided legal advice without a license while misrepresenting the services they provide, according to the attorney general’s office.
But many of Pinnacle’s victims are people like Castillo — clients who weren’t struggling financially and entrusted the company to invest money for them, promising “great returns in a short period of time,” the lawsuit noted.
“After receiving consumers’ investment funds, however, (Pinnacle and Burton) fail to invest the monies as promised, and instead use the funds for their own benefit. Even after repeated demands, (Pinnacle and Burton) fail and refuse to return the funds to consumers,” Assistant Attorney General Justin Lowe alleged in his complaint.
That’s exactly what Castillo said happened to him. Initially, Burton told him that he would open an IRA account and invest his savings in index funds and a diversified equities portfolio. During 2008, he said Burton told him he was putting all of his $25,000 in cash reserve because of the stock market crash.
The economy had recovered by late 2011 when Castillo had returned from his second Iraq deployment, and he believed Burton would manage his investments wisely.
On Nov. 29, 2011, Castillo logged into Pinnacle Financial’s client computer website to check his investments, only to learn that his assumption was wrong: His account balance had decreased from $27,000 to about $18,000, and those funds were still in cash reserves.
“I began to lose confidence in Burton’s competency when he could not provide a reasonable explanation for why my money had remained in cash reserves since 2008 when the market had rebounded significantly over the past several years,” Castillo said in a signed affidavit in February that’s included in the court records of the lawsuit against Pinnacle and Burton.
“At first, Burton stated that the market was not safe and that I should seek out other investment alternatives such as gold or foreign markets. However, Burton provided no explanation for why he had not done anything with my money since 2008. At that point, I decided to withdraw all of my money from under Burton’s management and invest it on my own through the Army,” he said.
Castillo said he suspected that Burton “had defrauded me when he would not return my money.” He said he asked Burton to transfer all of his funds into an Army Thrift Savings Plan account, a U.S. government-sponsored retirement savings and investment plan similar to a 401(k) account. Even after he had arranged for a conference call between Burton and an Army Thrift Savings Plan customer service agent, Burton still didn’t make the transfer and made excuses for the delay, according to court records.
Burton later offered to send him a check for $10,000, claiming that’s what would be left after taxes. But this would be a transaction where Castillo’s investment would be rolled over into a new account without the federal government taxing it.
“I could not understand why Burton would be withholding $8,000 in taxes when I had given him $25,000 in after-tax money in 2007,” Castillo said.
But Castillo said Burton never sent him any money back — “Not a dime.”
“He was my friend, but I got the feeling he befriended me only to take my money,” Castillo, now a 12-year Army veteran. “If he was capable of misleading and stealing from someone he knew closely, I do not want to imagine what he is capable of doing to a stranger.”
An Attleboro resident who once had Burton as his next-door neighbor said he was befriended by Pinnacle Financial’s chief executive officer, too, and said it cost him about $34,500 — for misplacing his trust in somebody who later misappropriated a $40,000 investment.
Burton promised to double his neighbor’s money in just 30 days, according to court documents.
To the neighbor, Burton “appeared very successful.”
“His home is new and large, and he drives two late model Mercedes Benz vehicles, including a 2008 S550 and a 2009 ML350,” the neighbor wrote in an affidavit last month. “Because I considered Burton a good friend of mine, and because I trusted that he would make good on his promises to me, I agreed to participate in the July 30, 2012 investment opportunity.”
The neighbor said he gave Burton a check for $40,000 – half of it was his money; the other half was invested by his 71-year-old mother.
The 30 days passed, and the neighbor never received the $80,000 he was expecting. Last September, Burton told him he had mailed out two $40,000 checks, but added the neighbor could pick up “replacement checks” at Pinnacle Financial if the neighbor didn’t want to wait for the mail.
Both checks were returned, marked “insufficient funds.” But Burton still insisted the funds were in the company’s account.
Eventually, all the neighbor received was $5,500.
“Aside from numerous excuses and false assurances, Burton has not provided any explanation for what happened to my money,” the neighbor said.
In its lawsuit, the Attorney General’s Office said Pinnacle Financial worked in tandem with two defunct entities — Pinnacle Strategic Investments, LLC and the Pinnacle Asset and Capital Management Group, LLC.
“Defendants intermingled the assets of all such entities, including depositing funds payable to one entity into the bank accounts of another entity, and issuing checks from one entity to cover the obligations of another entity,” Assistant Attorney General Lowe wrote.