Joshua Burrell’s 48-month prison sentence is the sad end of what began as an optimistic story about areas of opportunity that lives up to the vision that Sean Parker and Senator Tim Scott must have had when they endorsed the idea. As I mentioned in the story about the indictment, Borrell was giving interviews in which he talked about a “double bottom line” that takes into account the social impact of investments.

A win-win and win-win narrative for areas of opportunity where promoters, investors, and marginalized communities didn’t take advantage of any of them, at least with Borrell.

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In addition to a four-year prison sentence and one year of supervised release, Borrell has to pay more than $5 million in compensation. Except for a change in wealth, it seems unlikely that it will pay off all of that. The terms of the refund are that he pays 15% of his income up to a maximum of $5,000 per month and 45% on the above amount. Attorney Peter Goldberger, who represents people accused of white-collar crime, wrote to me that he had never seen the compensation terms so harsh. wrote to me:

This request appears to represent a higher percentage of income than I have usually seen. Ten percent more typical. I’ve never seen the graduated percentage, with a higher percentage for amounts over the bottom line, but I think that’s a good idea, although 45% shocks me a lot and single slope is a crude way of ‘graded’ taxation. “

Compensation payments can be deductible, although it’s a complicated area. Without it, it would be confiscation for the high-income earners. According to attorney Goldberger, the lien that enforces the obligation will expire twenty years after his release from prison.

Goldberger also noted that in 48 months Borrell could earn 15% for good behavior and more time by participating in "recidivism reduction classes." Judge Kaplan recommended that Borrell spend his time at the USP Satellite Camp in Lewisburg, Pennsylvania.

Not the criminal mastermind

From reading the sentencing material and some input from informed sources, it seems clear that Joshua Burrell did not begin planning to commit any crimes. What ended up in his guilty plea was:

In 2019, I attempted to raise funds by sending and emailing forged documents from the company's headquarters in New York City. This was done in order to sell interest in real estate investments and securities. You have made fraudulent declarations to potential investors.

According to the Securities and Exchange Commission, fourteen investors placed $6.3 million, some of which was distributed to them (this is a Ponzi). Borrell allegedly made around $100,000 for personal use, although this is not something he pleaded guilty to. I heard from one of the victims who was following the case. They wrote to me:

Over in the eyes of the law, Joshua Burrell has pleaded guilty to a small subsection of the charges against him and is now in prison for his actions. For me, as a victim, I have relied on court filings on this case to illustrate the story. I learned about a capable and well-liked man who overcame an early family trauma and addiction to become a local legend. Only to get rid of his accomplishments and talents due to a toxic mixture of delusion and greed.....

Mr. Borrell appears set to go to prison unwilling to tolerate his actions and remain ignorant of the damage he has done, not only to investors and his victims like me, but to those who live in these fragile, neglected communities. His partner went so far as to claim in the filings that Borrell left the residents in slum-like conditions.

Apparently this is par for the course. Evan Osnos in a piece from The New Yorker Life After White Collar Crimes Quoting Jeffrey Grant who works with released criminals:

โ€œAlmost everyone who contacted us has been successful, controlling and possibly narcissistic,โ€ he said. โ€œThe elements that made them successful are also the ones that contributed to their demise.โ€ Throughout their careers leading up to the indictment, aggression and rule bending have been considered strengths. In American culture, white-collar crime is often portrayed as a sign of unfettered greed less as a misguided brotherhood for success.

the future

Borrell, 39, before Activated Capital, was a director of investments at Midas Capital and worked at Lazard Asset Management. Getting back into this kind of job can be very difficult, if not impossible for someone with a Burrell record, which makes an excerpt from one of his support messages somewhat poignant:

I think that even though Josh makes mistakes, he has a big heart and a very loyal friend. If Josh returns to St. Louis, I will not hesitate to recommend him to Sam's Club or I will be happy to support him in any other way I can.