Three men are facings charges by the SEC and federal prosecutors over allegations of running a $364 million in one of the largest Ponzi Schemes found in the Washington D.C region. A federal grand jury indicted the three alleged perpetrators, Kevin Merrill of Maryland, Jay Ledford of Texas and Cameron Jezierski of Texas in a Maryland court. The charges leading to their arrest include wire fraud, identity theft, money laundering, and conspiracy, according to the U.S attorney’s office. They falsely represented themselves as financial professionals selling credit portfolios to unsuspecting investors. Meanwhile, most of the investor money was pocketed or used to pay existing investors. The alleged victims include individuals, family offices, and investment groups across the nation. Investment fraud attorneys see parallels between this case and the textbook example of a Ponzi Scheme.
Alleged Ponzi Schemers Kevin Merrill, Jay Ledford, and Cameron Jezierski allegedly ran a multi-million-dollar scheme to defraud investors using consumer debt portfolios, according to the indictment. Consumer debt portfolios consisted of outstanding debt owed to consumer lenders like banks and student loan lenders. It is alleged that starting in January 2013, the three men collected investor money through offering investments in consumer debt portfolios. The investing victims were allegedly promised profits from successful “flips” or collections from consumer payments. The indictment further alleges that the men shielded their fraudulent activity from investors through the creation of falsified documents and companies. The investors allegedly received collection reports, consumer debt portfolio overviews and sales agreements, bank wire transfer records and bank statements containing falsified information.
According to the indictment, most of the money was not invested but used to maintain their elaborate Ponzi Scheme, unbeknownst to the victims. A Ponzi Scheme is an investment fraud that solicits people to invest in non-existent investments. New investor money ends up being used to produce “returns” to existing investors to maintain the Ponzi Scheme and fund their lavish lifestyle. The Ponzi Schemer will distribute falsified documents containing inaccurate information about their nonexistent investments. The schemes will spread as investors bring more people on board based on their positive returns in the beginning. As more investors join, Ponzi Schemers, such as the three men receive more money to fund their lavish lifestyle. Notably, according to the indictment in the Baltimore case, $73 million of investor funds went to personal expenses that included high-end cars, expensive homes, and jewelry. Additionally, the accused allegedly spent the money gambling at casinos and other luxuries to sustain their lavish lifestyles.