A Maryland man who pleaded guilty to operating a debt buying Ponzi scheme that took $396 million from investors has been sentenced to 22 years in prison and must make full restitution to all of his victims, which is expected to be at least $189 million.
Kevin Merrill agreed in May to plead guilty to charges of wire fraud and conspiracy to commit wire fraud, as well as attempting to obstruct justice by working with his wife to hide assets from a safe in their home and conceal assets from the court.
Merrill, along with Jay B. Ledford, and Cameron R. Jezierski, are accused of creating fake companies, such as Delmarva Capital, Global Credit Recovery, LLC, and Rhino Capital Holdings, 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 scheme involved convincing investors that their money would be used to purchase portfolios of consumer debt, collect on those portfolios, and then sell them for a profit to other debt buyers, according to prosecutors.
“Kevin Merrill lured investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme,” said Robert K. Hur, the United States Attorney for the District of Maryland, in a statement. “As a result of this scheme, a number of victims were devastated, losing their life savings. This sentence sends a strong message that federal prosecutors, federal agents, and our SEC partners will continue to work together to investigate and prosecute those who perpetrate these kind of fraud schemes for their personal gain — leaving a wave of victims in their wake.”
The fraudsters created fictitious companies with names similar to actual debt sellers and brokers and then created fake portfolio overviews, game sales agreements, which used the real names and forged signatures of the sellers, and fake collection reports to induce individuals to invest their money in the scheme.
Ledford is scheduled to be sentenced on Oct. 29 and Jezierski is scheduled to be sentenced on Nov. 14. Amanda Merrill, who conspired with her husband in violation of a court order, is scheduled to be sentenced on Jan. 22.