MOVE OVER MADOFF FOR KEVIN MERRILL! Three men indicted in $364 Million Ponzi Scheme – Might set a record for Maryland Cons

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1848 Circle Road home of Kevin B. Merrill when it was advertised for sale in 2014. Ponzi scheme indictment.

MOVE OVER MADOFF FOR KEVIN MERRILL! Three men indicted in $364 Million Ponzi Scheme – Might set a record for Maryland Cons

Scheme Believed to Have Over 400 Victims Nationwide, Including Individual, Family Offices, and Investment Groups – FBI Seeking Information Regarding Additional Victims; SEC has Filed Related Civil Complaint

Baltimore, Maryland – A federal grand jury has indicted three men on charges of conspiracy, wire fraud, identity theft, and money laundering, arising from an alleged $364 million investment fraud scheme.  The indictment was returned under seal on September 11, 2018, and unsealed on September 18, 2018, upon the arrests of the defendants.  Charged in the indictment are:

                Kevin B. Merrill, 53, of Towson, Maryland;

                Jay B. Ledford, 54, of Westlake, Texas and Las Vegas, Nevada; and

                Cameron R. Jezierski, 28, of Fort Worth, Texas.

The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.  A related enforcement action and complaint was announced by the U.S. Securities and Exchange Commission Co-Director of Enforcement Stephanie Avakian.

Kevin Merrill and co-conspirators paid for big toys and luxury homes with money fleeced from investors in Ponzi Scheme

“Federal prosecutors, FBI agents, and our SEC partners together interrupted an ongoing fraud scheme, with the potential to victimize even more people.  According to the indictment, the defendants 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.  “Most of these investors are just learning that they have been victimized.  The effects of this kind of fraud can be devastating.  We urge anyone who thinks they may be a victim to contact the FBI at MerrillLedford@fbi.gov (link sends e-mail).”

Kevin Merrill’s luxury list bought with fraudulent funds, according to the indictment.

 

 

 

 

Kevin Merrill luxury list part two

“The FBI takes our responsibility to investigate and pursue those who commit fraud for personal gain very seriously,” said Special Agent in Charge Gordon B. Johnson of the FBI’s Baltimore Division.   “We will continue working with our law enforcement partners to hold accountable those who use illegal means and criminal behavior to take advantage of others. We are committed to protecting investors from the illegal and deceptive practices Mr. Merrill and Ledford used to defraud investors out of their hard-earned money and savings.”

Kevin Merrill home at 27776 Sharp Road, Easton, Md. Ponzi Scheme indictment Sept 19, 2018

According to the fourteen-count indictment, beginning in January 2013, the defendants perpetrated a Ponzi scheme to defraud investors of more than $364 million.  The scheme was revealed with the arrests and unsealing of the indictment. Specifically, the indictment alleges that Merrill and Ledford invited investors to join them in purchasing consumer debt portfolios.  “Consumer debt portfolios” are defaulted consumer debts to banks/credit card issuers, student loan lenders, and car/truck financers which are sold in batches called “portfolios” to third parties which attempt to collect on the debts.  The defendants 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 third-party debt buyers–in a practice called “flipping.”  According to the related complaint filed by the SEC, 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, Las Vegas, Texas, and elsewhere.

Maryland real estate records reveal that one property owned by Kevin B. Merrill and Amanda M. Merrill is listed and taxed as not as their principal residence and is located in Talbot County, Md., at 27776 Sharp Road, Easton. The property includes a brick five-bedroom home on 37 acres of land and was assessed at $2,023,500 as of July 1, 2018. The property was sold to the Merrill’s by Norma M. Redele on May 5, 2016, for the sales price of $1.56 million dollars. Redele bought the property for $1.4 million from First National Bank of Maryland in 1998 after the bank bought the property from Robert J. Bell in 1988 for $1.2 million.

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When the Merrill’s bought the Easton waterfront farm the property was described as follows in an advertisement: “Creek Bend” farm offers a wonderful setting for the discerning buyer. Within 36 +/- manicured acres, six pastures, an 11-stall barn, 120-foot pier with water, electric and boatlift, pool and over 5500 hundred square feet of well-designed and beautifully appointed living space, this offering is equipped to entertain and provide the quiet enjoyment of country living. Rural setting within close proximity to Easton. Country estate with pastures, barns, and waterfront. Nature abounds on the quiet waters of Pickering Creek.

The Merrill’s have another home located at 1848 Circle Road, Ruxton, Md. The last time the property was advertised for sale, the listing boasted the following about the 7,500 square foot, six-bedroom estate built in 1869: REDUCED!! Bring your architect, contractors and decorator and explore the possibilities of this classic Ruxton colonial – Property being sold in “As-is” condition – Generous proportions – Gorgeous 3+ acre lot – Old world charm throughout – Beautiful views – 10′ ceiling on the 1st floor – Awesome, private Circle Road location – Multiple fireplaces & more!!

The Circle Road estate in Ruxton is listed in Maryland tax records as the principal residence of Kevin B. Merrill and he is listed as the only owner of the property. According to land records, Kevin Merrill purchased the property on Dec. 22, 2014, for the price of $935,000 in an arms-length transaction from Patricia P. Onnen.

Another property owned by Kevin Merrill’s wife Amanda is located at 532 Hampton Lane, Baltimore, Md. The property is listed as residential but not the principal residence of Amanda Merrill. The Hampton Lane home was purchased on Aug. 10, 2016, from Daniel B. Wheeler in a non-arm’s length transaction for $350,000. The current assessment on the property is $420,133.

Another pricey home owned by Kevin B. Merrill is described by Zillow as: 3018 Susanne Ct, Owings Mills, MD is a single-family home that contains 4,485 sq. ft and was built in 1996. It contains 6.5 bathrooms. This home last sold for $550,000 in May 2017. The Zestimate for this house is $800,256, which has decreased by $22,030 in the last 30 days. The Rent Zestimate for this home is $5,434/mo., which has increased by $82/mo. in the last 30 days.

Maryland land records reveal that Kevin Merrill is the owner of the property located at 3018 Susanne Court, Owings Mills, not far the home from Jeffrey B. Cohen in Reisterstown. Cohen was the premier Ponzi scheme operator prior to the charges brought against Merrill and his cohorts. Cohen pleaded guilty to a Ponzi scheme he operated as the heart of his insurance business that focused on insuring bars and nightclubs.  Cohen arranged his own plea deal with federal prosecutors and attempted to have the conviction thrown out in an appeal filed with the United States Fourth Circuit Court of Appeals. His appeal was denied in April and his 37-year sentence was upheld, making it likely that he may gain a new cellmate from the charges brought against Merrill and his co-defendants should they be convicted.

The Susanne Court property of Merrill is listed as residential and not the principal residence of Kevin Merrill. Situated on 1.2 acres, Merrill paid Kent E. Baklor $550,000 on May 25, 2017, in an arm’s length transaction.  With nearly 5,000 square feet, the home has six bedrooms.

Topping off the list of Maryland mansions for Kevin Merrill is a property located at 1718 Greenspring Valley Road in Stevenson, Md.  The nearly 10,000 square foot home situated on over eight acres, was bought by Merrill from CT Customs LLC for $1,545,000. The property was bought in 2015 from HSBC Bank for $724,900. The property is declared as the principal place of residence of Kevin B. Merrill.

Since Maryland land records list both the Circle Road property as well as the Greenspring Valley Road, Merrill might find himself in a legal morass with the State of Maryland as well due to tax rules allowing only one property designated as a principal place of residence and other properties taxed at a higher rate when used as either commercial or non-owner occupied.

The indictment alleges that in order to induce investors to participate, the defendants 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. At times, according to the indictment, there was no underlying debt portfolio purchased with the investors’ money.  To conceal the truth, the defendants 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, the defendants created false portfolio overviews, sales agreements which used the names and forged signatures of actual employees of the sellers, created false collections reports, and falsified bank wire transfer records and bank statements.

Further, the indictment alleges that the defendants falsely represented that the monies they 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.

The indictment seeks to forfeit nine properties, 26 luxury cars, one boat, interest in an aircraft, a life insurance policy, seven and nine-carat diamond rings, and a 23-carat diamond bracelet, which were allegedly purchased with proceeds of the scheme to defraud.

The indictment alleges that Merrill, Ledford, and Jezierski personally enriched themselves and concealed their diversion of $73 million of investors’ funds to purchase and renovate high end homes in Maryland, Texas, Nevada, and Florida, purchase luxury automobiles, jewelry, boats, and a share in a jet plane, gamble $25 million at casinos, and support a lavish lifestyle.

The indictment seeks to forfeit nine properties, 26 luxury cars, one boat, interest in an aircraft, a life insurance policy, seven and nine-carat diamond rings, and a 23-carat diamond bracelet, which were allegedly purchased with proceeds of the scheme to defraud.

If convicted, Merrill, Ledford, and Jezierski each face a maximum of 20 years in prison for the wire fraud conspiracy and for each of five counts of wire fraud.  Merrill and Ledford each also face 20 years in prison for an additional two counts of wire fraud, as well as 20 years in prison for a money laundering conspiracy, and for each of four counts of money laundering.  Finally, Merrill and Ledford face a mandatory two years in prison, consecutive to any other sentence, for identity theft.  The defendants also face possible fines of $250,000, or twice the gross gain, for the wire fraud conspiracy and for each count of wire fraud and money laundering.  Merrill and Ledford face an additional fine of $500,000, or twice the value of the property, for the money laundering conspiracy.

The SEC has filed a parallel civil complaint in this matter.

If you believe you may have been a victim, or have information concerning these charges, please email MerrillLedford@fbi.gov (link sends e-mail) and complete a brief questionnaire.  Your responses are voluntary.  You may be contacted by the FBI

Merrill and Ledford each had an initial appearance in U.S. District Court in Baltimore and Las Vegas, respectively, on September 18, 2018, and were ordered to be detained.   Jezierski also had his initial appearance in Las Vegas and was released under the supervision of U.S. Pretrial Services.  Merrill is scheduled to have a detention hearing on Thursday, September 20th at 3:30 p.m.  Jezierski is expected to have his initial appearance in Maryland on September 24, 2018, and Ledford is expected to be brought to Maryland for a court appearance at a later date.

 

 

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