One of the defendants charged criminally in a $364 million Ponzi scheme is asking a federal judge to dismiss the Securities and Exchange Commission civil complaint or transfer the case to a different court.
Jay B. Ledford is one of three defendants in the criminal and civil actions filed in U.S. District Court in Baltimore in September alleging they defrauded investors of millions of dollars. In addition to asking for the case to be dismissed, Ledford alternatively asked the court to transfer the entire case or just claims relating to him to Texas, where he is from, because the SEC failed to demonstrate a basis for its claims against him in Maryland.
Ledford is accused of working with Kevin B. Merrill, of Towson, to invite investors to join them in purchasing consumer debt portfolios and falsely telling them they would make money by collecting on the debts or selling them to third-party debt buyers.
The defendants allegedly lied to investors about whom they were buying debt portfolios from and how much they were paying, whether they were investing their own funds and their track record. They allegedly created companies and false portfolio overviews as well as fake bank wire transfers and bank statements to conceal the scheme.
Along with Cameron R. Jezierski, an employee of the defendants’ entities who operated or owned several of them, Ledford and Merrill were charged with wire fraud and money laundering. The SEC’s complaint, filed Sept. 13, charged them and their entities, several of which are based on Maryland, with violations of the anti-fraud provisions of federal securities law.
The SEC action is currently stayed while the criminal case moves forward.
But Ledford’s motion to dismiss, filed Monday, claims the SEC’s complaint repeatedly “lumps” him in with Merrill and Jezierski “without setting forth what each particular defendant is alleged to have done or said.” The complaint acknowledges at times that Ledford did not have contact with investors and did purchase some debt files with investor money.
The “group pleading” present in the complaint “does not place Defendants on notice of the claims against each of them,” the motion contends.
Ledford also criticizes the SEC for failing to serve him with the civil complaint for several weeks, which hindered his ability to respond to already pending motions and obtain counsel while he was in federal custody for the criminal case.
The case is Securities and Exchange Commission v. Kevin B. Merrill et al. 1:18-cv-02844.