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The six-bedroom Colonial Ruxton was one of the three million dollars that Kevin B. Merrill was buying in Maryland. He also bought a share in a business jet and a fleet of Rolls Royce, Ferraris and Lamborghinis.
The 53-year-old Towson businessman has funded his lavish lifestyle, according to federal prosecutors, by cheating more than 400 people and businesses under a Ponzi scheme. developed.
Merrill was arrested Tuesday at his home of $ 1.06 million in Baltimore County. He and his associate, Jay Ledford, 54, of Texas and Nevada, have been charged with federal charges of electronic fraud, identity theft and money laundering. Both men could face more than 200 years in federal prison.
US lawyer Robert Hur described their business model as one of the largest Ponzi schemes ever charged in Maryland. Hundreds of investors across the country – retirees, small business owners, bankers, lawyers and doctors – have been duped to pay $ 364 million to men over the past five years.
"Most of these investors are now learning that they have been victimized," Hur said.
Investors thought their money was buying debt packages on student loans, credit cards and auto loans known as "consumer debt portfolios". But prosecutors say businessmen were passing money on to new investors. According to the prosecutors, men sometimes paid an investor with the money of the person, making only the funds under the guise of profits.
Meanwhile, Merrill and Ledford would have made millions of dollars to buy luxury homes, exotic cars and diamond jewelry.
On one occasion, an unidentified investor sent Merrill $ 500,000 to buy two portfolios of debt securities. Prosecutors say Merrill sent the investor a fake document suggesting that the purchase had been made. But they say he actually took $ 54,000 to pay his former investors, spent $ 20,000 on his credit card and spent $ 400,000 on a rare Italian sports car, a Pagani Huayra Diablo 2014.
Another time, according to prosecutors, he used $ 100,000 from the same investor for a private fitness club near his waterfront home in Naples, Florida.
Prosecutors said Merrill had used the money from a group of Chicago investors last year to buy a $ 950,000 Bugatti Veyron, one of the fastest sports cars in the world. They say that he freely spent the money from a group of Bethesda investors: $ 37,500 in watches and jewelry, $ 50,000 in private flights, $ 100,000 in a casino from Las Vegas.
On Monday, US District Judge Richard Bennett granted a restraining order prohibiting Merrill from selling his six homes, 25 cars and motorcycles, his speedboat, his diamond engagement ring and seven Richard Mille watches – the same luxury brand than tennis pro Rafael Nadal.
The judge also barred Ledford from selling homes in Las Vegas and Texas, three cars – a Ferrari, a Bentley and a Tesla – a 7-carat diamond ring, a 23-carat diamond bracelet and a Breitling watch.
The federal grand jury has charged a third man, Cameron Jezierski, 28, of Fort Worth, Texas, for computer fraud. Prosecutors say they helped men create fake papers to convince investors that their money had been spent on consumer debt portfolios.
The men built an elaborate network of fictitious companies and bank accounts to deceive investors across the country, prosecutors said. They say that men made fake spreadsheets, purchase agreements, and profit projections.
"There were lies to tell investors about almost every imaginable aspect of the scheme," said Hur, the US lawyer in Maryland.
To prosecute the trick, prosecutors say the men formed "corporate impostors" with names similar to those of sellers of consumer debt, and then opened bank accounts under these names. Men would have falsified the signatures of real employees with legitimate sellers of consumer debt.
Prosecutors have designated five of the fraudulent companies as Global Credit Recovery, Delmarva Capital, Rhino Capital in Maryland, DeVille Asset Management and Riverwalk Financial Corp. in Texas.
Sergei Lember, a Connecticut lawyer, said he represented investors in multiple lawsuits against Delmarva Capital. Each of the cases went to colonization, but Mr. Lember said the cases "have systematically revealed a type of harassment, usually by repeated and frequent calls".
Hur said federal prosecutors and FBI agents were still looking for investors who had lost money. He said that the number of victims could exceed 400 people. Many of them would be in Maryland.
"We always identify victims," said Gordon Johnson, the special agent in charge of the FBI's Baltimore office. "It is essential to come forward to see how you play in this larger survey."
FBI agents have begun investigating the so-called Ponzi scheme after receiving a tip in the past year, Johnson said.
If men are sentenced by a federal court, the authorities could auction cars, homes and jewelery to repay investors.
The Securities and Exchange Commission has also taken legal action against the three men and their five companies.
The three men's lawyers were not on the court records online.
A woman who answered Merrill's door on Circle Road in Towson declined to comment. The neighbors said they did not know the family, unusual in this bucolic part of Ruxton.
"We know most of the neighbors," said Mary Bryant, who lives a few houses down.
Her husband, Fred Bryant, was stunned to hear the charges against his former neighbor. "These are heavy things," he said. Former investment banker at Alex Brown & Sons, he said, "I know Ponzi programs very well.
Investors are seduced by promises of huge returns that seem "too good to be rejected," he said. Early investors are seeing tremendous returns – and encouraging their friends to join them. But for these investors, Bryant said, "The money I give you comes from the next seller.
Those who believe that they may be victims can contact the FBI by email at [email protected] or by calling 410-265-8080.
This story was presented in the Alexa Briefing of September 11, 2018.
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