Two local men, one from Fort Worth and another from Westlake, have been indicted in an investment fraud scheme that allegedly bilked people out of more than $364 million, the U.S. Department of Justice announced on Wednesday.
Cameron R. Jezierski, 28, of Fort Worth, Jay B. Ledford, 54, of Westlake and Las Vegas and Kevin B. Merrill, 53, of Maryland, were named in an indictment that accused them of luring “investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme,” according to U.S. Attorney Robert K. Hur.
“Most of these investors are just learning that they have been victimized,” Hur said in a news release from the U.S. Department of Justice. “The effects of this kind of fraud can be devastating.”
The indictment said that Merrill, Ledford and Jezierski personally enriched themselves and hid their diversion of $73 million of investors’ funds to purchase and renovate high end homes in Texas, Maryland, 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.
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The indictment seeks to forfeit nine properties, 26 luxury cars, one boat, interest in an aircraft, a life insurance policy, seven and 9 carat diamond rings, and a 23 carat diamond bracelet, which were allegedly purchased with money made from the fraud scheme, according to the release.
Merrill and Ledford invited investors to join them in purchasing consumer debt portfolios, which are defaulted consumer debts to banks, credit card issuers, student loan lenders, and car or truck financiers that are sold in batches called “portfolios” to third parties that attempt to collect on those debts.
The defendants lied to investors and said they would use the investors’ money to buy consumer debt portfolios and make money for them by either collecting the payments that people made on their debts or by selling the portfolios for a profit to third party debt buyers in a practice called “flipping.”
According to a related complaint filed by the Securities and Exchange Commission, the victims included small business owners, restauranteurs, construction contractors, retirees, doctors, lawyers, accountants, bankers, talent agents, professional athletes, and financial advisers, located in Texas, Maryland, Washington, D.C., Northern Virginia, Las Vegas and elsewhere.
The indictment alleges that in order to induce investors to participate, the defendants lied about 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.
Sometimes the defendants did not buy any debt portfolios with the investor money, the indictment alleges. The defendants created sham companies with names similar to actual consumer debt sellers or brokers and opened bank accounts in the names of those sham companies to maintain the illusion they created, according to the indictment.
In addition, to lend credibility to the transactions, the defendants created financial documents that 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, according to the release.
The indictment also alleges that the defendants lied about the money they paid to investors and said the money was from proceeds from collection efforts and from flipping debt portfolios, when in fact, the money was provided by other investors.
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 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.
Merrill and Ledford also face a mandatory two years in prison, consecutive to any other sentence, for identity theft.
Anyone who thinks they may be a victim is urged to contact the FBI at MerrillLedford@fbi.gov, Hur said.