KC’s $14 million Music Man scammer caught running a new fraud

The Kansas City area’s Music Man is back — and back in trouble — right here in River City.

He’s Michael Burnos, perpetrator of a $14 million musical instrument scam that took in 1,342 victims across Missouri, Kansas and other states.

It was an elaborate scheme that ran for nine years. Burnos, who lives in Independence, attracted investors partly by sponsoring a bowling league in Overland Park.

That was 20 years ago, and Burnos, who was 52 at the time, was sentenced to more than seven years in federal prison even after cooperating with authorities.

More recently, 72-year-old Burnos has run a more mundane fraud —one victim, $66,700 scammed.

And he used the money for the mundane. No evidence of a fancy car, posh vacation spot or high living usually found with financial frauds.

Burnos covered his many payday loans — at least $29,900 worth — and paid attorney fees evidently from his personal bankruptcy, according to a 14-page cease and desist order signed by David Minnick, Missouri’s securities commissioner.

It said Burnos withdrew $36,786 in cash or wrote checks to himself for cash from the account where the victim’s money went.

Efforts to reach Burnos were not successful.

Minnick said the small scale of Burnos’ new scam became evident not only from examinations of banking records but also because no victims have come forward other than the 82-year-old man who filed a complaint.

“He’s a good-natured man who took Burnos at his word and was taken advantage of,” Minnick said. “There may be a victim out there we don’t know about.”

Already Burnos faces $133,481.20 in penalties, restitution and investigation costs, according to a criminal referral at the Jackson County prosecutors office, where it is under review.

Burnos collected from his new victim in a series of small transactions over 20 months. At first he promised a 24 percent profit from buying and reselling collectibles. Later, Burnos claimed to have a mafia connection, which the victim took as a threat to his and his family’s safety if he stopped investing, according to the state’s order.

The musical instrument scam had been a much more extravagant scheme.

It ran for nine years on a promise to buy huge lots of musical instruments and resell them at profits of 20 percent and more.

Burnos not only sponsored that bowling league but also mailed tax forms to his purported investors. And he created a “Product Spotlight” newsletter to further the fraud that he was buying and selling musical instruments.

Instead of buying instruments, Burnos carried out an old familiar fraud.

He delivered gains for his early investors by giving them money provided by subsequent investors. It’s called a Ponzi scheme, like the nearly $50 billion dollar fraud of investment manager Bernie Madoff.

Records Burnos provided investigators 20 years ago showed he had taken in $14,066,844 and paid out $13,226,767 during the nine-year scheme. Investigators said at the time that they believed he kept $800,000 to $1 million.

One of his victims was Hurley W. Mahan of Independence, who showed up with about 70 other victims for the court hearing at which Burnos pleaded guilty in June 1997.

Mahan had told The Star that Burnos never said how he would invest the money. “He said, ‘What difference does it make? You’re buying in cheap,” Mahan had said. “Five months after I got into it, he folds.”

Mahan died not long after that, said his son, Hurley D. Mahan.

The son said he did not know about his father’s investment loss with Burnos but did know of two others. One was a copper scam and another a property scam.

“That’s at least three now,” Hurley D. Mahan said of his father’s fated attempts at striking it rich with his humble savings from working at Ford’s Claycomo Assembly Plant.

Neither Burnos nor his investment schemes had been registered with the Missouri securities division of the secretary of state’s office, a requirement under state law.

Minnick urged residents to check out any investment and the person offering it before handing over money. Simply call the investor protection hotline at 800-721-7996, or the hotline for Vulnerable Citizens Services at 855-653-7300.

“We’ll tell you if he’s registered, and if he’s not registered, walk,” Minnick said.

Kansas residents should check out investments and those offering them by calling the Kansas securities commission at 800-232-9580.

This story was originally published August 14, 2017 at 10:46 AM with the headline "KC’s $14 million Music Man scammer caught running a new fraud."