A trio of individuals from the debt buying world have been indicted on charges of running a Ponzi scheme that defrauded investors of $364 million.
The trio — Kevin B. Merrill, Jay B. Ledford, and Cameron R. Jezierski — were indicted by a grand jury in Maryland last week and are facing charges of wire fraud and money laundering, among others.
The scheme, which bilked more than 400 investors, according to prosecutors, involved the three men convincing investors to give them money which they said would be put into buying portfolios of delinquent and defaulted debt. Instead, the investments were used to pay off other investors and fund “lavish personal lifestyles,” according to a published report. Merrill allegedly owned five houses, 25 cars — including two Rolls-Royces, a boat, and an interest in a private jet.
Some of the company names involved in the scheme are Delmarva Capital, Global Credit Recovery, LLC and Rhino Capital Holdings. The trio are accused of creating fake companies and falsifying bank statements and manufacturing phony sales agreements to make their actions seem legitimate. Prosecutors allege the three men spent more than $73 million of the money to buy houses, gamble in casinos, and make other extravagant purchases.
The pitch to investors was that the trio would buy portfolios using the funds from investors as well as money that they put into deals and then “flipped” by selling them to another debt buyer for a profit. In fact, the defendants would create fictitious purchase agreements, falsify the prices on portfolios, and forge signatures from executives at banks and consumer lending operations to “lend credibility” to the false documents. The trio went as far as to create fake companies to make it look like deals were being made with Santander Consumer USA and National Loan Exchange, or NLEX, according to prosecutors.
A copy of the indictment can be accessed by clicking here.