CLEVELAND (CN) – An Ohio adviser’s investment strategy predicated on an imminent, apocalyptic “financial reset” and focused on precious metals cost a philanthropic family more than $10 million, they claim in court.
Cornerstone Family Office LLC and Altus Capital Inc. are the financial firms named as defendants in the complaint filed Thursday in Cuyahoga County, but Altus founder John Burns is at the heart of the suit.
The B.C. Ames Family 2003 Trust and the J.G. Ames Irrevocable 2012 Trust, represented by trustee Dorothea Kingsbury, and Paula Redman claim they were Burns’ biggest client, and that he “and his firm exercised de facto control over Redman’s portfolio and the portfolios of her family members.”
Kingsbury and Redman allege “Burns conceived a radical plan of investment for Redman and her family, to which he committed absolutely, without any hedge or acknowledgement of alternative strategies.
“Burns’s [sic] program reflected his apocalyptic view of the financial markets and the world in general, which he articulated in his emails to Redman,” the lawsuit states. “Specifically, Burns believed the ‘real decision makers in the world operate MANY LEVELS above our government leaders[,] …who are merely props who serve as distractions and who carry out orders from above.’” (Emphasis in original.)
“Eventually, Burns expected a financial ‘reset’ to take place that would ‘transform the world and eliminate the ‘dark side’’. Over the course of several years, Burns consistently predicted this event would occur within a matter of months. In the meantime, he saw financial markets a ‘corrupt and dangerous place for savings,’” the complaint continues.
Based on this outlook, Redman says Burns invested a substantial amount of money in precious metals, mainly gold and silver, which he believed would eventually increase in value “by a multiple of 20.”
According to the complaint, Burns said “dollars are Monopoly money” and he “eventually became convinced that investors personally had to take possession of their precious metals instead of storing them with a custodian.”
“Burns also believed the individuals and entities controlling the economy were artificially depressing the price of gold and silver. He described precious metals as the ‘enemy of the dollar (and therefore the Cabal) and … suppressing their values is a very high priority,’” the complaint states.
Redman and Kingsbury say they invested over $10 million in gold and silver based on Burns’ advice, but that by the summer of 2014, “these assets had already depreciated considerably … as the price of gold and silver floundered.”
According to the lawsuit, “Redman comes from a prominent Cleveland family with an established history of philanthropic giving,” and while she and her siblings have controlling interests in the accounts, Burns was “often in a position to act unilaterally in implementing the investments he was advising them to make.”
Other investment strategies espoused by Burns allegedly had devastating results as well, as the investor “doubled or tripled down” on trades involving inverse exchange-traded funds, or ETFs, “which seek to deliver the opposite of the performance of the designated index or benchmark.”
While ETFs are generally held by investors for a day at most, Burns kept them significantly longer, and exposed his clients “to volatility risks that otherwise would not exist,” they claim.
“In 2013 and 2014 alone, Redman and the trusts lost almost $850,000 from the ETF trades engineered by Burns and Altus Capital,” the lawsuit states. “This sum represents only a fraction of the tens of millions Burns and his firm lost for Redman’s family through transactions of this sort.”
Redman and Kingsbury seek compensatory and punitive damages for claims of breach of fiduciary duty and accountant malpractice. They are represented by Joshua Cohen of Cohen, Rosenthal, and Kramer LLP in Cleveland.
Catherine Veres, president of Cornerstone Family Office LLC, is also named as a defendant.
Cornerstone Family Office did not immediately return a request for comment Friday.
No contact information for Burns could be located, as the Altus Capital website is currently under construction.