Feds say Ponzi scheme funded lavish lifestyle

Towson man indicted for wire fraud, money laundering

The six-bedroom Ruxton colonial was one of three million-dollar homes Kevin B. Merrill purchased in Maryland. He also bought a share in a twin-engine business jet and a fleet of Rolls Royces, Ferraris and Lamborghinis.

The 53-year-old Towson businessman funded his lavish lifestyle, federal prosecutors say, by swindling more than 400 people and businesses in an elaborate Ponzi scheme.

Merrill was arrested Tuesday at his $1.06 million home in Baltimore County. He and his business partner, Jay Ledford, 54, of Texas and Nevada, have been indicted on federal charges of wire fraud, identity theft and money laundering. Both men could face more than 200 years in federal prison.

U.S. Attorney Robert Hur called their business model one of the largest Ponzi schemes ever charged in Maryland. Hundreds of investors around the country — retirees, small-business owners, bankers, lawyers and doctors — were duped into paying the men $364 million in the past five Among the assets seized by the federal government were luxury cars, including a 2008 Bugatti Veyron, top, and a $400,000 2014 Pagani Huayra.

years, prosecutors say.

“Most of these investors are just learning now that they may have been victimized,” Hur said.

The investors believed their money was buying bundles of debt on student loans, credit cards and car loans known as “consumer debt portfolios.” But prosecutors say the businessmen actually were funneling money from new investors to their previous investors. Sometimes, prosecutors say, the men paid an investor with the person’s own money, only returning the funds under the guise of profits.

Meanwhile, Merrill and Ledford allegedly skimmed off millions of dollars to buy themselves luxury homes, exotic cars and diamond jewelry.

On one occasion, an unidentified investor wired Merrill $500,000 to buy two debt portfolios. Prosecutors say Merrill sent the investor a fake document suggesting the purchase was made. But they say he actually took $54,000 to pay his previous investors, put $20,000 toward his credit card, and spent $400,000 on a rare Italian sports car, a 2014 Pagani Huayra Diablo.

Another time, prosecutors say, he used $100,000 from the same investor for a private fitness club membership near his waterfront home in Naples, Fla.

Prosecutors say Merrill used money from a group of Chicago investors last year to buy himself a $950,000 Bugatti Veyron, one of the fastest sports cars in the world. They say he freely spent the money from a group of Bethesda investors: $37,500 on watches and jewelry, $50,000 on private flights, $100,000 at a Las Vegas casino.

On Monday, U.S. District Judge Richard Bennett granted a restraining order barring Merrill from selling his six homes, 25 cars and motorcycles, speedboat, 5 carat diamond engagement ring, and seven Richard Mille watches.

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 indicted a third man, Cameron Jezierski, 28, of Fort Worth, Texas, for wire fraud. Prosecutors say he helped the men create fake paperwork to convince investors their money was spent on the consumer debt portfolios.

The men built an elaborate web of shell companies and bank accounts to fool investors around the country, prosecutors say. They say the men made fake spreadsheets, purchase agreements and profit projections.

“There were lies being told to investors about almost every conceivable aspect of the scheme,” said Hur, the U.S. attorney in Maryland.

To further the ruse, prosecutors say, the men formed “imposter companies” with namessimilar to actual consumer debt sellers, then opened bank accounts under these names. The men allegedly forged the signatures of real employees with legitimate consumer debt sellers.

Prosecutors named five of the fraudulent companies as Global Credit Recovery, Delmarva Capital, Rhino Capital in Maryland, DeVille Asset Management and Riverwalk Financial Corp. in Texas.

Connecticut attorney Sergei Lember said he represented investors in multiple lawsuits against Delmarva Capital. Each of the cases went to settlement, but Lember said the cases “consistently revealed a pattern of harassment, usually through repeated and frequent calls.”

Hur said federal prosecutors and FBI agents continue to search for investors who lost money. He said the number of victims may grow beyond 400. Many of them are believed to be in Maryland.

“We are still identifying victims,” said Gordon Johnson, the special agent in charge of the FBI office in Baltimore.