The Securities and Exchange Commission has obtained final judgments against eight of the defendants involved in a $345 million Ponzi scheme that defrauded 230 investors, the agency announced today. The judgment totals almost $190 million and involves two of the scheme’s three creators, all of whom have already been sentenced to jail time for the fraud, which prosecutors said allowed its creators to misappropriate millions to fund lavish lifestyles with cars and jewelry.
The investment scheme was pitched to investors as a way to purchase consumer debt portfolios. The three fraudsters and their businesses were originally named in the SEC complaint in 2018, and shortly thereafter, two of the defendants’ wives were also named as relief defendants when the agency said the women had received millions in proceeds from the fraud.
Two of the original defendants are the subject of today’s judgment, as well as six of the businesses and one of the wives (as a relief defendant).
The Ponzi scheme operated from at least 2013 until September 2018, at which point the SEC filed an emergency civil injunction against two of the operators and a handful of their businesses. The scheme involved, “among other things, securities offerings rife with misrepresentations, fake debt, forged signatures, fabricated wire transfers, the movement of millions of dollars into personal accounts, and an elaborate scheme wherein defendants offered and sold investments in the same (and often fictitious) debt and/or debt portfolios, to multiple victims,” the SEC said in its September 2018 complaint against the three fraudsters. The complaint was filed in the U.S. District Court for the District of Maryland.
The complaint was filed against the scheme operators, Kevin B. Merrill, Jay B. Ledford and the businesses they controlled, as well as Cameron Jezierski and all three were named in a parallel action by the U.S. Attorney’s Office. Amanda Merrill and Lalaine Ledford were later named as relief defendants by the SEC.
Kevin Merrill and Jay Ledford had been working together since 2013 to offer and sell purported investments in consumer debt portfolios, the SEC says. Merrill is from Towson, Md., while Ledford lived in Westlake, Texas and Las Vegas. Jezierski is from Fort Worth, Texas.
Guilty Pleas
Merrill, Ledford and Jezierski pled guilty for their roles in the scheme in federal court, and they were sentenced October 30, 2019. Kevin Merrill is now serving 22 years in prison and Ledford 14 years in prison for their role in the fraud. Jezierski served two years in prison and has already been released. Merrill’s wife, Amanda Merrill, served six consecutive weekends in the Howard County, Md., county jail, according to the Department of Justice. Lalaine Ledford, the subject of today’s judgment, is operating as a real estate agent in Las Vegas.
The scam centered around the performance and sale of shares in grossly overvalued or nonexistent debt portfolios that were marketed to financial advisors, bankers, accountants and retirees, according to DOJ.
“Specifically, the conspirators falsely represented to investors that they would use the investors’ money to buy consumer debt portfolios and make money for them by collecting the payments that people made on their debts or selling the portfolios for a profit to other third-party debt buyers, in a practice called ‘flipping,’” the agency said.
Besides handing down prison sentences, the U.S. District Court for the District of Maryland also ordered both Merrill and Ledford to pay $189,166,116 in restitution. The court ordered Jezierski to pay $45,093,384 in restitution.