Three men were indicted for an alleged $364 milion investment fraud scheme.
A federal judge found Kevin B. Merrill to be a flight risk and ordered the wealthy Towson businessman to remain locked up until his trial for allegedly running a $364 million Ponzi scheme.
In his order Thursday, Magistrate Judge A. David Copperthite said he found strong evidence that Merrill, 53, doctored bank records and swindled investors.
“The documents are incredibly strong. People may not tell the truth, but documents can’t lie,” the judge said. “This is perhaps, and I think I’m pretty secure in saying this, the largest Ponzi scheme ever prosecuted in this court.”
Tall and thin, Merrill was led into U.S. District Court in Baltimore in handcuffs. He wore eyeglasses and a maroon prison jumpsuit. He did not address the judge.
Federal prosecutors say he ran the elaborate Ponzi scheme over the past five years, duping investors around the country and using their money to buy himself million-dollar homes, exotic sports cars and luxury watches.
Kevin Merrill was arrested Tuesday at his $1.06 million home in Towson. He and his business partner, Jay Ledford, 54, of Texas and Nevada, have been indicted on federal charges of wire fraud, identity theft and money laundering. Both men face more than 200 years in federal prison.
Merrill and Ledford amassed at least 400 investors, including retirees, small-business owners, bankers, lawyers and doctors, the prosecutors say.
These investors believed their money was buying bundles of debt on student loans, credit cards and car loans known as “consumer debt portfolios.” Instead, prosecutors say, the businessmen were funneling money from new investors to their previous investors. Sometimes, the prosecutors say, the partners paid an investor with that person’s own money, only returning the funds under the guise of profits.
A third man, Cameron Jezierski, 28, of Fort Worth, Texas, has been indicted for wire fraud.
Attorneys for Ledford and Jezierski were not listed in online court records.
On Monday, a federal judge granted a restraining order barring the men from selling the cars and homes. Officials could auction the assets to repay investors if the men are convicted.