Baltimore, Maryland – U.S. District Judge Richard D. Bennett today sentenced Jay B. Ledford, age 55, of Westlake, Texas and Las Vegas, Nevada to 14 years in federal prison, followed by three years of supervised release, for conspiracy to commit wire fraud, aggravated identity theft, and a money-laundering transaction, 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 Ledford’s arrest.  Judge Bennett also ordered Ledford to pay restitution in the full amount of the victims’ losses, 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.  On October 10, 2019, Judge Bennett sentenced co-defendant Kevin B. Merrill, age 54, of Towson, Maryland, to 22 years in federal prison.

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. 

“Jay Ledford created phony documents and operated a debt collection center to provide credibility to Kevin Merrill’s false claims to investors, duping them into paying millions of dollars into this Ponzi scheme,” said U.S. Attorney Robert K. Hur.  “The effects of this kind of fraud can be devastating and a number of victims have lost their life savings.  This sentence sends a strong message that law enforcement will root out, prosecute, and send to prison criminal fraudsters like Jay Ledford and his co-conspirators.”

According to his plea agreement, Ledford was a certified public accountant in Texas, starting his own practice in Amarillo in 1996 and later expanding to Dallas.  In 1999, Ledford met Kevin Merrill in Dallas, when Merrill was a salesman for a Baltimore company that sold supplies for X-ray machines for hospitals and doctors’ practices.  Ledford and Merrill became friends, attending sporting events and visiting casinos together.  Ledford prepared Merrill’s taxes for several years.

“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 that attempt to collect on the debts.  Ledford and Merrill both had businesses that collected on consumer debt or purchased consumer debt.   Beginning in January 2013, Ledford and Merrill joined forces to perpetrate a Ponzi scheme to defraud investors.  Specifically, Ledford and Kevin Merrill invited investors to join them in purchasing consumer debt portfolios.  Ledford provided fictitious sales agreements and other documents, including false tax returns, to Merrill, knowing that Merrill was using them to induce individuals to invest with his companies, Delmarva Capital and Global Credit Recovery.  For 2013, Merrill took in 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, while Merrill was the “front man,” promoting the fraudulent investments to potential investors.

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., Virginia, Colorado, Texas, Illinois, New York, and elsewhere.

Ledford admitted that to induce investors to participate, he 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 the plea agreement, sometimes there was no underlying debt portfolio purchased with the investors’ money.  To conceal the truth, Ledford, 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, 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 employee and co-defendant Cameron Jezierski to manage debt collections for the Riverwalk and DeVille companies.  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 Ledford and Merrill added to the purchase price charged to investors for debt portfolios.

Further, Ledford admitted that he and Merrill 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.  The conspirators provided monthly or quarterly reports to investors regarding the “purported progress of the portfolio and its recovery,” which Ledford and Merrill created.  From 2013 to 2018, the scheme to defraud took in over $396 million; the co-conspirators spent only 14% on purchasing consumer debt portfolios. 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 himself diverted fraud proceeds to purchase and renovate a home in Las Vegas, Nevada, to refinance a home in Texas, to gamble at casinos, to purchase luxury automobiles and jewelry, and otherwise to support a lavish lifestyle.

At today’s hearing, the government presented evidence that over the course of the scheme, Ledford used more than $42 million in investors’ funds to gamble at casinos throughout the United States.  Generally, Ledford would deposit a cashier’s check with the casino, which provided Ledford with chips up to the value of the check.  At the end of the gambling trip, if Ledford won, the casino would pay any winnings to Ledford by cash or check, and return the “front money” cashier’s check to Ledford.  If Ledford lost at the casinos, the casino deposited the “front money” cashier’s check to cover his losses, and paid Ledford the difference by cash, check, or chips. Ledford returned over $18 million in casino wires or checks to the Ponzi scheme. Currency Transaction Reports filed by the casinos show that Ledford took $14.9 million in cash out of casinos and paid over $9 million in cash into the casinos. Over the six years of the fraud, according to casino records, Ledford had net losses of more than $16 million.

For example, on December 28, 2017, a group of investors paid over $14 million into a Merrill account to invest in credit portfolios.  Of those funds, Ledford spent over $3.5 million on actual credit portfolios purchases, but he also paid Merrill, gave a bonus to Jezierski, and bought a $2.5 million cashier’s check which he gambled against at the Las Vegas Sands, home of The Venetian and The Palazzo casinos.  Ledford lost over $1.5 million of the investors’ monies on that gambling trip.

Cameron R. Jezierski, age 28, of Fort Worth, Texas, previously pleaded guilty to his role in the scheme and is scheduled to be sentenced 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.

# # #

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.

# # #

 

Baltimore, Maryland – Amanda Mahlstedt Merrill, age 30, of Towson, Maryland, pleaded guilty today to the federal charge of conspiracy to remove property to prevent seizure, obstruct justice, and disobey court orders. 

The guilty plea 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. 

“This prosecution demonstrates our commitment to the integrity of the judicial process.  When the district court enters an order in a case, we expect the affected persons to abide by the order, not conspire to remove and hide assets,” said U.S. Attorney Robert K. Hur.  “We will prosecute those, like Amanda Merrill, who hide assets which are subject to seizure, who obstruct justice, and who attempt to keep ill-gotten gains for their own benefit rather than restoring them to the victims of fraud.”

According to her plea agreement, on September 11, 2018, Amanda Merrill’s husband, Kevin Merrill, was indicted on federal charges of conspiracy to commit wire fraud, identity theft, money laundering conspiracy, and money laundering, in connection with a $394 million Ponzi scheme.  The indictment included a forfeiture allegation for $39 million, six real estate properties, 25 cars, a boat, an interest in an aircraft, an insurance policy, and jewelry.  The properties to be forfeited included the Merrills’ residence in Towson and a home on Spyglass Lane in Naples, Florida.  On September 13, 2018, the Securities and Exchange Commission (SEC) brought a civil enforcement action against Kevin Merrill, other persons and entities, and Kevin Merrill’s companies.  The Court issued a temporary restraining order freezing assets and granting other emergency relief and appointed a temporary receiver.  Anyone receiving notice of the receivership order who possessed property, business books, records, accounts, or assets of the receivership parties was directed to provide those items to the receiver.

On September 18, 2018, Kevin Merrill was arrested at his residence in Towson and agents seized jewelry, his watch collection, cars, and over $520,000 in cash, mostly from a safe.  Kevin Merrill was subsequently ordered to be detained pending trial as a risk of flight and a risk of obstruction of justice.  FBI Special Agents provided Amanda Merrill with a receipt of items taken and asked her to disclose any information to assist agents in locating items not collected at the residence.  Amanda Merrill was counseled by the FBI agents to be completely truthful in her answers and was warned against attempting to hide or move assets.  Amanda Merrill’s counsel was also provided with a copy of the restraining order and the receivership order.

Nevertheless, beginning on October 3, 2018, Amanda Merrill redeemed the points on an American Express business credit card belonging to Kevin Merrill, even though she was not an authorized user.  Amanda Merrill received 127 gift cards worth $26,075 for retail businesses such as Target, Home Depot, Nordstrom, Sephora, and Starbucks. 

On October 13, 2018, Amanda Merrill and another individual traveled by plane to Naples, Florida, to the Spyglass Lane property, which the Merrills had purchased earlier that year for $10 million.  The Merrills were captured on several recorded jail calls that day discussing Amanda Merrill’s trip to the Florida property, which they referred to in coded language as “the restaurant.”  On the recorded jail calls, Kevin and Amanda Merrill discussed how to open the safe at the property.  Amanda Merrill removed cash and other items from the home, which she placed into her purse, two large suitcases, and a carry-on bag.  She told the other individual who accompanied her on the trip that she intended to tell her attorney that she had found the safe unlocked and empty.  Video footage from BWI Airport security for October 13, 2018 shows Amanda Merrill returning from Florida rolling a carry-on bag and holding a large purse.  Video footage revealed that Amanda Merrill also retrieved two large suitcases from the baggage carousel.  American Express statements for Kevin Merrill’s business card (for which Amanda Merrill was not an authorized user) also show the purchase of plane tickets for Amanda Merrill and her companion, and payment for a rental car.  Amanda Merrill’s American Express statement shows two airline charges of $75 each for two pieces of luggage, each of which was over the 50-pound limit, for the trip from Ft. Myers, Florida to BWI.

On October 30, 2018, counsel for Amanda Merrill e-mailed a letter directed to “Government, SEC, and Receiver,” which stated, among other things, that Amanda Merrill and her companion had gone to the house in Naples, Florida and “the unlocked safe at the house was empty,” and that they had removed six boxes of children’s clothing and personal items.  The statement was false because Amanda Merrill misrepresented what had happened in Florida to her counsel and omitted the cash, the over-weight-limit suitcases, and the carry-on luggage in talking with her attorney.   

In early November 2018, FBI Special Agents executed search warrants at the Merrill homes in Towson and Naples.  In the Towson home, agents discovered approximately $15,378 in cash, $8,878 in a purse in Amanda Merrill’s bedroom, with the remainder in a closet drawer.  Agents also located the two large suitcases, which were still tagged from the trip, but were empty, as well as the six boxes of children’s clothing and personal items in the Towson home.  In the Florida home, agents used the transcription of the recorded jail call to gain access to the safe, which was empty.

According to the plea agreement, at sentencing the government will recommend that Amanda Merrill serve 12 months on electronic home monitoring with work release and restitution.  U.S. District Judge Richard D. Bennett has scheduled sentencing for January 22, 2020 at 3:00 p.m.

Kevin Merrill, age 54, of Towson, previously pleaded guilty to conspiracy and wire fraud arising from his role in a $394 million investment fraud scheme that operated from 2013 through September 2018.  Merrill faces a maximum of 40 years in prison for the wire fraud conspiracy and for wire fraud, as well as a possible fine of $500,000, or twice the gross gain, at his sentencing hearing scheduled to begin on October 10, 2019.

United States Attorney Robert K. Hur commended the FBI in Baltimore 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.

# # #

 

Baltimore, Maryland – Jay B. Ledford, age 55, of Westlake, Texas and Las Vegas, Nevada pleaded guilty today to conspiracy to commit wire fraud, aggravated identity theft, and a money-laundering transaction in excess of $10,000, arising from a $550 million investment fraud scheme that operated from 2013 through September 2018.  Co-defendants Kevin B. Merrill, age 53, of Towson, Maryland, and Cameron R. Jezierski, age 28, of Fort Worth, Texas, previously pleaded guilty to their roles in the scheme.  The U.S. Securities and Exchange Commission (SEC) has filed a parallel civil complaint in this matter.             

The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Special Agent in Charge Jennifer L. Moore 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. 

“Jay Ledford created false documents to help lure 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.  “The effects of this kind of fraud can be devastating.  As a result of this scheme, a number of victims have lost their life savings.  I am proud of the work of federal prosecutors, FBI agents, and our SEC partners whose efforts interrupted this ongoing fraud scheme before the defendants could victimize even more people.”

According to his plea agreement, Ledford was a certified public accountant in Texas, starting his own practice in Amarillo in 1996 and later expanding to Dallas, Texas.  In 1999, Ledford met Kevin Merrill in Dallas, when Merrill was a salesman for a Baltimore company that sold supplies for X-ray machines for hospitals and doctors’ practices.  Ledford and Merrill became friends, attending sporting events and visiting casinos together.  Ledford prepared Merrill’s taxes for several years.

As stated in his plea agreement, in 2001, Ledford began purchasing consumer debt portfolios, forming a company which did business as Platinum Capital Investments, to hold the 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 that attempt to collect on the debts.  Ledford also solicited investors to supply capital to buy a portfolio or invest in his company.  After learning of Ledford’s financial success with Platinum Capital, Merrill expressed interest in getting started in the business.  Ledford sold Merrill a few credit portfolios and introduced Merrill to his contacts with the debt reporting services.  Merrill formed his own debt collection business, had capital investors, and purchased debt portfolios.

Beginning in January 2013, Ledford and his co-conspirators perpetrated a Ponzi scheme to defraud investors of more than $394 million.  Specifically, Ledford and Kevin Merrill invited investors to join them in purchasing consumer debt portfolios.  Ledford provided fictitious sales agreements and other documents, including false tax returns, to Merrill, knowing that Merrill was using them to induce individuals to invest in 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 the related complaint in the civil action 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, Denver, Texas, Chicago, New York, and elsewhere.

At today’s hearing, Ledford admitted that to induce investors to participate, he 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 the plea agreement, sometimes there was no underlying debt portfolio purchased with the investors’ money.  To conceal the truth, Ledford, Merrill, 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, 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 Ledford and Merrill added to the purchase price charged to investors for debt portfolios.

Further, Ledford admitted that he and Merrill 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 Ledford and Merrill created.  From 2013 - 2018, the scheme to defraud took in over $394 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 falsisfy records to the bank lender.  Ledford diverted fraud proceeds to purchase and renovate a home in Las Vegas, Nevada, to refinance a home in Texas, to gamble at casinos, purchase luxury automobiles, jewelry, and to support a lavish lifestyle.

As part of his plea agreement, Ledford is required to pay restitution in the full amount of the victims’ losses and to forfeit property acquired with the proceeds of the offenses.  The U.S. District Court has appointed a receiver to marshal the assets for the benefit of the victims.

Anyone who thinks they may be a victim is urged to contact the FBI at www.FBI.Gov/MerrillLedford  or e-mail MerrillLedford@fbi.gov.

Ledford faces a maximum of 20 years in prison for the wire fraud conspiracy; a mandatory two years in prison, consecutive to any other sentence, for aggravated identity theft; and a maximum of 10 years in prison for money laundering, as well as a possible fine of $250,000, or twice the gross gain, for each of the three counts.  U.S. District Judge Richard D. Bennett has scheduled sentencing for October 29, 2019, at 10 a.m.

Kevin B. Merrill, age 53, of Towson, Maryland, and Cameron R. Jezierski, age 28, of Fort Worth, Texas, previously pleaded guilty to their roles in the scheme.  Judge Bennett has scheduled sentencing for Merrill on October 10, 2019, at 9:30 a.m., and for Jezierski on August 12, 2019 at 3:00 p.m.  Kevin Merrill’s wife, Amanda Merrill, age 30 of Towson, Maryland, is charged with conspiracy to obstruct justice.  No court appearance is currently scheduled for Amanda Merrill.  Kevin Merrill and Ledford have been detained since their arrests 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.

# # #

Baltimore, Maryland – Kevin B. Merrill, age 53, of Towson, Maryland, pleaded guilty today to conspiracy and wire fraud arising from a $550 million investment fraud scheme that operated from 2013 through September 2018.  Co-defendant Cameron R. Jezierski, age 28, of Fort Worth, Texas, previously pleaded guilty to his role in the scheme.  The U.S. Securities and Exchange Commission (SEC) has filed a parallel civil complaint in this matter.           

The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Special Agent in Charge Jennifer L. Moore 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. 

“Federal prosecutors, FBI agents, and our SEC partners together interrupted an ongoing fraud scheme, with the potential to victimize even more people.  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.  “The effects of this kind of fraud can be devastating.  As a result of this scheme, a number of victims have lost their life savings.”

According to his plea agreement, beginning in January 2013, Merrill and his co-conspirators perpetrated a Ponzi scheme to defraud investors of more than $394 million.  Specifically, Merrill and a co-conspirator 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 that attempt to collect on the debts.  Merrill, using the names of collection businesses he owned, including Delmarva Capital and Global Credit Recovery, among others, falsely represented to investors that he 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 the related complaint in the civil action 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, Denver, Texas, Chicago, New York, and elsewhere.  As detailed in the plea agreement, Merrill admitted that the scheme caused financial hardship to at least five victims, and Merrill knew that at least one of those was a vulnerable victim.

At today’s hearing, Merrill admitted that to induce investors to participate, he 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 the plea agreement, sometimes there was no underlying debt portfolio purchased with the investors’ money.  To conceal the truth, Merrill, Jezierski, and others 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 statements and merchant account reports.

Further, Merrill admitted that he 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 provided monthly or quarterly reports to investors regarding the “purported progress of the portfolio and its recovery,” which he invented.  Merrill used the proceeds of the scheme to purchase and/or renovate five high-end homes in Maryland and Florida, gamble at casinos, purchase luxury automobiles, jewelry, artwork, collectibles such as comic books and sports memorabilia, and a share in a jet plane, and 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.

As part of his plea agreement, Merrill is required to pay restitution in the full amount of the victims’ losses and to forfeit property acquired with the proceeds of the offenses.  The SEC has appointed a receiver to marshal the assets for the benefit of the victims.

Merrill faces a maximum of 40 years in prison for the wire fraud conspiracy and for wire fraud, as well as a possible fine of $500,000, or twice the gross gain.  U.S. District Judge Richard D. Bennett has scheduled sentencing for Merrill on September 19, 2019, at 9:30 a.m., and for Jezierski on August 12, 2019 at 3:00 p.m.  Co-defendant Jay B. Ledford, age 55, of Westlake, Texas and Las Vegas, Nevada, is scheduled for a rearraignment on June 6, 2019, at 10:00 a.m.  Kevin Merrill’s wife, Amanda Merrill, age 30 of Towson, Maryland, is charged with conspiracy to obstruct justice.  No court appearance is currently scheduled for Amanda Merrill.  Kevin 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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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, age 53, of Towson, Maryland;

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

                Cameron R. Jezierski, age 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.

“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.”

“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.”

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.

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 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 and complete a brief questionnaire.  Your responses are voluntary.  You may be contacted by the FBI

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

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.

United States Attorney Robert K. Hur commended the FBI in Baltimore, Dallas, Las Vegas and Tampa, and the Federal Housing Finance Agency, Office of the Inspector General 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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