A Towson man is facing 40 years in prison after pleading guilty in federal court Thursday to his role in a $550 million Ponzi scheme.
Kevin B. Merrill, 53, pleaded guilty to conspiracy and wire fraud in connection with a company that invited investors to purchase consumer debt portfolios and falsely told them they would make money by collecting on the debts or selling them to third-party buyers.
Merrill and Jay B. Ledford, of Westlake, Texas, were accused of lying 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, according to a news release from the U.S. Attorney’s Office in Baltimore. Prosecutors say they created companies and false portfolio overviews as well as fake bank wire transfers and bank statements to conceal the scheme.
A third defendant, Cameron R. Jezierski, of Fort Worth, Texas, was an employee of the defendants’ entities and operated or owned several. He previously pleaded guilty to his role in the scheme and is awaiting sentencing.
“Kevin Merrill lured investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme,” U.S. Attorney Robert K. Hur said in a statement. “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.”
The Securities and Exchange Commission, which filed a parallel civil complaint, alleged the defendants used “a web of lies, fabricated documents and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud.”
Merrill and his co-conspirators defrauded investors out of more than $394 million and Merrill used the proceeds to purchase or renovate five homes, gamble at casinos, purchase luxury cars and jewelry, and buy a share in a jet plane, according to the U.S. Attorney’s Office release. He is required to pay full restitution to the victims.
As a part of his plea, Merrill also admitted to obstructing justice by lying to investigators and providing false documents to the FBI. He also admitted to having his wife remove assets from their Florida home after his arrest.
Merrill will be sentenced Sept. 19 in Baltimore.
The case is United States v. Merrill et al., 1:18-cv-00465.