Scheme Believed to Have Over 400 Victims Nationwide,
Including Individual, Family Offices, and Investment Groups – FBI Seeking
Information Regarding Additional Victims; SEC has Filed Related Civil Complaint
Baltimore, Maryland – 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 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 email MerrillLedford@fbi.gov (link
sends e-mail) and complete a brief questionnaire. 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.
United States Attorney Robert K. Hur commended the FBI in
Baltimore, Dallas, Las Vegas and Tampa, and the Federal Housing Finance Agency,
Office of the Inspector General for their work in this investigation. Mr. Hur thanked Assistant U.S. Attorneys
Joyce K. McDonald and Martin J. Clarke, who are prosecuting the criminal case.
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