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$345 Million Ponzi-Like Scheme Shut Down by SEC

$345 Million Ponzi-Like Scheme Shut Down by SEC

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On September 19, 2018, the Securities and Exchange Commission announced that it has obtained a court order halting an ongoing Ponzi-like scheme that raised more than $345 million from over 230 investors across the U.S. The SEC also obtained an emergency asset freeze and the appointment of a receiver.

An SEC complaint unsealed yesterday alleges that Kevin B. Merrill (“Merrill”), Jay B. Ledford (“Ledford”) and Cameron Jezierski (“Jezierski”) attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. Allegedly, the defendants, however, were using a web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud. Rather than direct investor funds to the acquisition and servicing of debt portfolios as promised, the defendants, allegedly, used the funds to make Ponzi-like payments to earlier investors.

The SEC also alleges that Merrill and Ledford stole at least $85 million of the investor funds to maintain lavish lifestyles, spending millions of dollars on luxury items, including $10.2 million on at least 25 high-end cars, $330,000 for a 7-carat diamond ring, $168,000 for a 23-carat diamond bracelet, millions of dollars on luxury homes, and $100,000 to a private fitness club.

In a parallel action, the U.S. Attorney’s Office for the District of Maryland announced criminal charges against Merrill, Ledford, and Jezierski.

The SEC’s complaint, filed in United States District Court in Maryland, charges Merrill, Ledford, and Jezierski, along with their entities, Global Credit Recovery, LLC, Delmarva Capital, LLC, Rhino Capital Holdings, LLC, Rhino Capital Group, LLC, DeVille Asset Management LTD, and Riverwalk Financial Corporation, with violations of the antifraud provisions of the federal securities laws. The Court granted the SEC’s request for an asset freeze, temporary restraining order, and the appointment of a receiver. The SEC seeks disgorgement of allegedly ill-gotten gains and prejudgment interest, and financial penalties against the defendants.

Source: SEC.gov

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