Fraudsters Accused In $364M Ponzi Debt Scheme

Federal prosecutors have charged three men who allegedly ran a $364 million Ponzi scheme.

According to Reuters, the men — Kevin Merrill of Maryland, 53, Jay Ledford of Texas and Nevada, 54, and Cameron Jezierski of Texas, 28 — falsely claimed to be investment professionals and used a fake portfolio to defraud hundreds of investors. They then used the funds to maintain their lavish lifestyles.

The indictment, which was unsealed on Tuesday (September 18) in a federal court in Baltimore, charged the men with conspiracy, wire fraud, identity theft and money laundering.

According to the indictment, the men ran a network of entities and shell companies — including Global Credit Recovery LLC, Delmarva Capital LLC and Rhino Capital Holdings LLC — offering individuals, family offices and funds the chance to invest in consumer debt portfolios. But instead of deploying the investments, the defendants made payments to earlier investors and used the funds to pay for luxury cars, jewelry, houses, boats, private jets and gambling at casinos.

“The defendants lured investors and defrauded their victims with a web of lies, duping them into paying millions of dollars toward buying bundles of debt people owed on student loans and their credit card debt,” U.S. Attorney for the District of Maryland, Robert Hur, said.

“It’s been ten years since the 2008 financial crisis, and it is easy to forget the financial system is one built on trust,” he added.

At least 400 victims in the Baltimore area, Virginia and in Texas were impacted, said Gordon Johnson of the Federal Bureau of Investigation’s Baltimore Field Office.

If convicted, the three men each face up to 20 years in prison.

In addition, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against the men in the same court for violations of federal securities laws. The agency also obtained a temporary restraining order freezing assets and has appointed a temporary receiver.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.