Kevin Merrill Also Obstructed Justice After his Arrest; SEC
Has Related Civil Action
Defrauded Investors Across the Country
Baltimore, Maryland –
U.S. District Judge Richard D. Bennett today sentenced Kevin B. Merrill, age
54, of Towson, Maryland, to 22 years in federal prison, followed by three years
of supervised release, for conspiracy and wire fraud arising from a $396
million investment fraud scheme that operated from 2013 through September 2018,
with an additional $260 million in attempted investments at the time of
Merrill’s arrest. Judge Bennett also
ordered Merrill to pay restitution in the full amount of the victims’ losses,
which will be determined later, but which is at least $189,166,116. Judge Bennett will also enter an order of
forfeiture, with the exact amount of forfeiture still to be determined.
The U.S. Securities and Exchange Commission (SEC) has a
pending parallel civil action in this matter.
The sentence was announced by United States Attorney for the
District of Maryland Robert K. Hur; Special Agent in Charge Jennifer C. Boone
of the Federal Bureau of Investigation, Baltimore Field Office; and Special
Agent in Charge Robert W. Manchak of the Federal Housing Finance Agency, Office
of Inspector General.
“Kevin Merrill 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. “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.”
“Considering there were hundreds of victims and millions of
dollars lost, it is fitting that Kevin Merrill will be spending a significant
amount of time in federal prison,” said Special Agent in Charge Jennifer Boone
of the FBI's Baltimore Division. “The FBI, and our partners, are firmly
committed to holding accountable fraudsters who victimize the public by selling
a false bill of goods.”
According to his plea agreement, beginning in January 2013,
Merrill and his co-conspirators, Jay B. Ledford and Cameron R. Jezierski,
perpetrated a Ponzi scheme to defraud investors of more than $396 million. Specifically, Merrill and Ledford invited
investors to join them in purchasing consumer debt portfolios. Merrill
knowingly used fictitious sales agreements and other documents, including tax
returns, provided by Ledford, to induce individuals to invest with his
companies, Delmarva Capital and Global Credit Recovery. For 2013, Merrill deposited approximately
$4.3 million from investors, while Ledford raised just over $186,000 from
investors. Thereafter, Merrill’s
superior sales ability caused Ledford to assume a background role supplying
Merrill with fictitious documents, while Merrill was the “front man,” promoting
the fraudulent investments to potential investors.
Specifically, the conspirators 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 other
third-party debt buyers, in a practice called “flipping.” According to court documents, 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, Boulder, Texas, Chicago, New York, and elsewhere.
To induce investors to participate, Merrill and his
co-conspirators 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. According to
their plea agreements, sometimes there was no underlying debt portfolio
purchased with the investors’ money. To
conceal the truth, Merrill, Ledford, and Jezierski 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, Ledford created false portfolio overviews, created false sales
agreements which used the names and forged signatures of actual employees of
the sellers, created false collections reports, and falsified bank statements
and merchant account reports. In late
2014, Ledford transferred Cameron Jezierski to manage debt collections for
Riverwalk/DeVille. DeVille had a
collections center in Euless, Texas, and the conspirators began to invite
prospective investors to tour Riverwalk’s office and the collections center,
which added substance to their claims regarding the success of their portfolio
purchasing strategy and collections efforts.
In December 2017, Ledford recruited Jezierski to the criminal conspiracy
because his analytical skills enabled him to contribute significantly to
creating false documentation to induce investors to invest, and to conceal the
mark-up Merrill and Ledford added to the purchase price charged to investors
for debt portfolios.
Further, Merrill and Ledford falsely represented that the
monies the conspirators 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.
Merrill and Ledford provided monthly or quarterly reports to investors
regarding the “purported progress of the portfolio and its recovery,” which
Merrill and Ledford created. From 2013
to 2018, the scheme to defraud took in over $396 million, and at the time of
their arrests, the co-conspirators were attempting to obtain an additional $260
million from investors. Ledford assisted
Merrill to divert investors’ funds to purchase a home in Naples, Florida, and
also helped Merrill falsify records to the bank lender. Ledford diverted fraud proceeds to purchase
and renovate a home in Las Vegas, Nevada;
refinance a home in Texas; gamble at casinos; purchase luxury
automobiles and jewelry; and to support a lavish lifestyle.
Finally, Merrill admitted that while the scheme was ongoing,
he met with the FBI, lied to the investigating agents, and provided false
documents to the FBI. As detailed in his
plea agreement, after his arrest, Merrill attempted to obstruct justice by
causing his wife to remove assets from their Naples, Florida home on October
13, 2018, and by preparing a handwritten note instructing his wife to conceal
assets from the court-appointed receiver, which he intended to hold up to the
glass in the detention center on December 5, 2018, when his wife visited. These actions violated the restraining order
with which Merrill was served in the criminal case, and the preliminary
injunction ordered by the Court in the SEC’s civil action.
The Court has appointed a receiver to marshal the assets for
the benefit of the victims.
U.S. District Judge Richard D. Bennett has scheduled
sentencing for Jay B. Ledford, age 55, of Westlake, Texas and Las Vegas,
Nevada, on October 29, 2019, at 10 a.m. and for Cameron Jezierski, age 28, of
Fort Worth, Texas, on November 14, 2019, at 3:00 p.m. Kevin Merrill’s wife, Amanda Merrill, age 30
of Towson, Maryland, pleaded guilty on October 9, 2019, to conspiracy to remove
and conceal assets in violation of court orders, and is scheduled to be
sentenced on January 22, 2020, at 3:00 p.m.
Merrill and Ledford have been detained since their arrest on September
18, 2018, and Amanda Merrill and Cameron Jezierski are released under the
supervision of U.S. Pretrial Services.
United States Attorney Robert K. Hur commended the FBI in
Baltimore, Dallas, Las Vegas and Tampa; the Federal Housing Finance Agency,
Office of the Inspector General; and the SEC 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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