A federal grand jury has indicted three men on charges of conspiracy, wire fraud, identity theft, and money laundering, arising from an alleged $364 million investment fraud scheme. The indictment was returned under seal on September 11, 2018, and unsealed on September 18, 2018, upon the arrests of the defendants. Charged in the indictment are:
Kevin B. Merrill, age 53, of Towson, Maryland;
Jay B. Ledford, age 54, of Westlake, Texas and Las Vegas, Nevada; and
Cameron R. Jezierski, age 28, of Fort Worth, Texas.
The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office. A related enforcement action and complaint was announced by the U.S. Securities and Exchange Commission Co-Director of Enforcement Stephanie Avakian.
“Federal prosecutors, FBI agents, and our SEC partners together interrupted an ongoing fraud scheme, with the potential to victimize even more people. According to the indictment, the defendants lured investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme,” said U.S. Attorney Robert K. Hur. “Most of these investors are just learning that they have been victimized. The effects of this kind of fraud can be devastating. We urge anyone who thinks they may be a victim to contact the FBI at www.FBI.Gov/MerrillLedford or e-mail MerrillLedford@fbi.gov (link sends e-mail).”
“The FBI takes our responsibility to investigate and pursue those who commit fraud for personal gain very seriously,” said Special Agent in Charge Gordon B. Johnson of the FBI’s Baltimore Division. “We will continue working with our law enforcement partners to hold accountable those who use illegal means and criminal behavior to take advantage of others. We are committed to protecting investors from the illegal and deceptive practices Mr. Merrill and Ledford used to defraud investors out of their hard earned money and savings.”
According to the fourteen-count indictment, beginning in January 2013, the defendants perpetrated a Ponzi scheme to defraud investors of more than $364 million. The scheme was revealed with the arrests and unsealing of the indictment.
Specifically, the indictment alleges that Merrill and Ledford invited investors to join them in purchasing consumer debt portfolios. “Consumer debt portfolios” are defaulted consumer debts to banks/credit card issuers, student loan lenders, and car/truck financers which are sold in batches called “portfolios” to third parties which attempt to collect on the debts. The defendants falsely represented to investors that they would use the investors’ money to buy consumer debt portfolios and make money for them by (1) collecting the payments that people made on their debts or (2) selling the portfolios for a profit to third party debt buyers–in a practice called “flipping.”
According to the related complaint filed by the SEC, the victim investors included small business owners, restauranteurs, construction contractors, retirees, doctors, lawyers, accountants, bankers, talent agents, professional athletes, and financial advisors, located in Maryland, Washington, D.C., Northern Virginia, Las Vegas, Texas, and elsewhere.
The indictment alleges that in order to induce investors to participate, the defendants falsely represented who they were buying the debt portfolios from and how much they were paying for the portfolios; whether they were investing their own funds, and their track record of success. At times, according to the indictment, there was no underlying debt portfolio purchased with the investors’ money. To conceal the truth, the defendants created imposter companies with names similar to actual consumer debt sellers or brokers and opened bank accounts in the names of those imposter companies. In addition, to lend credibility to the transactions, the defendants created false portfolio overviews, sales agreements which used the names and forged signatures of actual employees of the sellers, created false collections reports, and falsified bank wire transfer records and bank statements.
Further, the indictment alleges that the defendants falsely represented that the monies they paid to investors were “proceeds” from collections and/or flipping debt portfolios, when in fact, the proceeds were paid from funds provided by other investors. The indictment alleges that Merrill, Ledford, and Jezierski personally enriched themselves and concealed their diversion of $73 million of investors’ funds to purchase and renovate high end homes in Maryland, Texas, Nevada, and Florida, purchase luxury automobiles, jewelry, boats, and a share in a jet plane, gamble $25 million at casinos, and support a lavish lifestyle.
The indictment seeks to forfeit nine properties, 26 luxury cars, one boat, interest in an aircraft, a life insurance policy, seven and nine carat diamond rings, and a 23 carat diamond bracelet, which were allegedly purchased with proceeds of the scheme to defraud.
If convicted, Merrill, Ledford, and Jezierski each face a maximum of 20 years in prison for the wire fraud conspiracy and for each of five counts of wire fraud. Merrill and Ledford each also face 20 years in prison for an additional two counts of wire fraud, as well as 20 years in prison for a money laundering conspiracy, and for each of four counts of money laundering. Finally, Merrill and Ledford face a mandatory two years in prison, consecutive to any other sentence, for identity theft. The defendants also face possible fines of $250,000, or twice the gross gain, for the wire fraud conspiracy and for each count of wire fraud and money laundering. Merrill and Ledford face an additional fine of $500,000, or twice the value of the property, for the money laundering conspiracy.
The SEC has filed a parallel civil complaint in this matter.
If you believe you may have been a victim, or have information concerning these charges, please complete a brief questionnaire at www.fbi.gov/MerrillLedford or you can email Merrillledford@fbi.gov (link sends e-mail). Your responses are voluntary. You may be contacted by the FBI.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Merrill and Ledford each had an initial appearance in U.S. District Court in Baltimore and Las Vegas, respectively, on September 18, 2018, and were ordered to be detained. Jezierski also had his initial appearance in Las Vegas and was released under the supervision of U.S. Pretrial Services. Merrill is scheduled to have a detention hearing on Thursday, September 20th at 3:30 p.m. Jezierski is expected to have his initial appearance in Maryland on September 24, 2018, and Ledford is expected to be brought to Maryland for a court appearance at a later date.
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1 thought on “Here is an Interesting Twist on a Debt Scam. Consumer Debt Ponzi Scam.”
There are a lot of such scammers recently. Take ZeroParallel, for example, under the leadership of David Gasparyan, against which the Consumer Financial Protection Bureau has taken action. This company resold loan applications containing confidential personal data to lenders and data brokers without evaluating the sources of these applications or the buyers to whom they sold. You will find more information about this and the measures taken in this reliable source https://www.dwt.com/files/paymentlawadvisor/2017/09/Press-Release-Action-against-Online-Lead-Aggregator.pdf