A bogus investment scheme that entrapped hundreds of individuals and corporate investors and might involve as much as a half-billion dollars has unraveled in guilty pleas for wire fraud and conspiracy from a Maryland man who prosecutors say amassed a fortune in luxury cars, costly wines and other high-end possessions with his illicit gains.
In a federal courthouse in Baltimore, Kevin Merrill pleaded guilty Thursday to two felony counts; 13 other counts he faced are expected to be dismissed at sentencing in September. He initially pleaded not guilty to defrauding investors hoping to profit from consumer debt portfolios. But prosecutors announced this week he'd be arraigned again, signaling a change in plea.
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Prosecutors say Merrill and co-conspirators enriched themselves with investors' money in a Ponzi scheme that operated from 2013 until September 2018. A judge had issued a restraining order barring the 53-year-old from selling his five properties, expensive watches and Louis Vuitton clothes. He also had a taste for rare wine, casino gambling and artwork featuring Rich Uncle Pennybags, the mustachioed mascot of the Monopoly board game.
But his apparent obsession was high-end cars: The college dropout from Towson, Maryland, had a fleet of luxury vehicles resembling something out of a James Bond movie. Among his cars were multiple Lamborghinis, Ferraris, Rolls Royces and even a Bugatti Veyron, among one of the world's fastest street-legal cars with a top speed of 255 mph (408.84 kph) and a seven-figure price tag.
A divestment team is working to sell his abundant possessions to pay back defrauded investors. In his plea agreement, Merrill said an estimated loss figure over $250 million and less than $550 million for the overall investment scheme was reasonable.
"Kevin Merrill lured investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme," said U.S. Attorney Robert Hur in Baltimore. He described the scam as one of the largest ever charged in Maryland.
Essentially, Merrill duped clients into forking over savings to invest in consumer debt portfolios, bundles of defaulted loans for things like education and automobiles. With collection businesses he owned, including Delmarva Capital and Global Credit Recovery, Merrill convinced investors he'd make them money by collecting payments others made on their debts or "flipping" debt portfolios for a profit to other third-party buyers.
Among over 400 victims were Choice Bank in Belize, investors in Singapore and a California woman who invested $150,000 she was hoping to grow to pay for her grandkids' college tuitions.
At Thursday's court hearing, Merrill admitted that he and his co-conspirators falsely represented who they were buying the debt portfolios from, how much they were paying for them and their track record of success. U.S. prosecutors said he even lied to the FBI, voluntarily seeking them out in October 2017 and handing over falsified documents in a desperate attempt to deflect their suspicions after an investor told him that a federal agent had been asking questions about him.
Earlier this year, prosecutors alleged that the jailed Merrill planned to tell his 30-year-old wife to drink the "good wine," stash cash and hide and sell valuables. Guards apparently found a note with these instructions to his wife stuffed in his sock before a jailhouse visit. He planned to hold it up to the glass.
His spouse, Amanda Merrill, has been charged with conspiracy, obstruction and other charges in the investigation. She attended Thursday's hearing along with her husband's parents and his brother. They all declined to speak to reporters.
Prosecutors say co-defendant Cameron Jezierski, a 28-year-old resident of Fort Worth, Texas, has already pleaded guilty to his role in the bogus investment scheme. The U.S. Securities and Exchange Commission has filed a parallel civil complaint in the matter.
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