U.S. prosecutors charge three men in $364 million Ponzi scheme

WASHINGTON (Reuters) – Federal prosecutors have accused three men of portraying themselves as investment professionals and using a phony portfolio of consumer debt to defraud hundreds of unwary investors out of tens of millions of dollars as part of a $364 million Ponzi scheme.

Kevin Merrill of Maryland, Jay Ledford of Texas and Nevada, and Cameron Jezierski of Texas, misused millions of dollars to maintain a lavish lifestyle, according to an indictment unsealed on Tuesday in a federal court in Baltimore.

The indictment charged the three with wire fraud, identity theft and money laundering. Lawyers for the defendants could not be identified as of Wednesday.

The indictment says that from 2013 onward, the men offered individuals, family offices and funds an opportunity to invest in consumer debt portfolios which they claimed generated profits by collecting debt payments or by selling the debt to third parties. Prosecutors say that instead of deploying the investments as promised, the defendants made payments to earlier investors while funding their own lavish lifestyle.

Merrill and Ledford spent tens of millions of dollars on luxury cars, jewelry, houses, boats, private jets and gambling at casinos, according to the indictment.

The men operated an elaborate network of entities and shell companies, including Global Credit Recovery LLC, Delmarva Capital LLC and Rhino Capital Holdings LLC, to convince investors that they were receiving payments from third parties, the indictment said.

The men face a potential jail sentence if convicted.

The U.S. Securities and Exchange Commission (SEC) brought a parallel civil complaint against the men in the same court, alleging violations of federal securities laws.

The SEC has obtained a temporary restraining order freezing assets and has appointed a temporary receiver, according to a separate complaint.

Reporting by Michelle Price; Editing by David Gregorio

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