The Securities and Exchange Commission said Wednesday that it froze the assets of a $345 million investment fund, alleging that it was a Ponzi scheme that used money from hundreds of investors across the United States.
An SEC complaint alleged that Kevin B. Merrill, Jay B. Ledford and Cameron Jezierski attracted investors to their scheme by promising profits from buying and selling consumer debt portfolios, starting in January 2013.
But they used a "web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud," the SEC said in a press release. Rather than buying and servicing debt portfolios as promised, the three used funds from new investors to make payments to earlier investors.
The SEC also alleged that Merrill and Ledford stole at least $85 million of the investor funds to maintain lavish lifestyles.
"We allege that the defendants engaged in a brazen fraud, deceiving investors to perpetuate their wrongdoing and line their pockets with ill-gotten gains," said Kelly L. Gibson, associate regional director of the SEC's Philadelphia regional office, which filed the complaint. "Investors should be warned that low-risk, high-return investments that never lose should be a red flag."
In a parallel case, the U.S. Attorney's Office for the District of Maryland announced criminal charges against Merrill, 53, of Towson, Md.; Ledford, 54, of Westlake, Texas, and Las Vegas, Nev.; and Jezierski, 28, of Fort Worth, Texas.
The SEC's complaint, filed last week in federal district court in Maryland, charges Merrill, Ledford, and Jezierski, and with their investment entities, Global Credit Recovery LLC, Delmarva Capital LLC, Rhino Capital Holdings LLC, Rhino Capital Group LLC, DeVille Asset Management LTD, and Riverwalk Financial Corp., with violations of federal securities laws.
The SEC won an asset freeze, temporary restraining order, and the appointment of a receiver.
