Ponzi Scheme Perp Sentenced to 14 Years in $345 Million Fraud Case
One of the alleged perpetrators of a Ponzi-like scheme that raised more than $345 million from more than 230 investors across the United States, Jay Ledford, has been sentenced to 14 years in prison for conspiracy to commit wire fraud, aggravated identity theft, and money laundering.
One of the perpetrators of a Ponzi-like scheme that raised more than $345 million from more than 230 investors across the United States, Jay Ledford, has been sentenced to 14 years in prison for conspiracy to commit wire fraud, aggravated identity theft, and money laundering.
Ledford’s co-conspirator, Kevin Merrill, was sentenced to 22 years in prison last month by U.S. District Judge Richard Bennett after pleading guilty to conspiracy and wire fraud. Judge Bennett told Merrill during sentencing that he was on his way “to becoming the next Bernie Madoff.”
From at least 2013 to 2018, Ledford and Merrill attracted investors by making false statements about how their money would be used and propped up their misstatements by creating sham entities and fraudulent documents.
Rather than use investor funds to acquire and consumer debt portfolios as promised, the defendants used the money to make Ponzi-like payments to investors and to fund Merrill’s and Ledford’s extravagant lifestyles. Another co-defendant, Cameron Jezierski, entered a guilty plea in a parallel criminal case and is awaiting sentencing.
“Jay Ledford created phony documents and operated a debt collection center to provide credibility to Kevin Merrill’s false claims to investors, duping them into paying millions of dollars into this Ponzi scheme,” said U.S. Attorney Robert K. Hur. “The effects of this kind of fraud can be devastating and a number of victims have lost their life savings. This sentence sends a strong message that law enforcement will root out, prosecute, and send to prison criminal fraudsters like Jay Ledford and his co-conspirators.”
Ledford admitted that to induce investors to participate, he and his co-conspirators falsely represented 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.
According to the plea agreement, sometimes there was no underlying debt portfolio purchased with the investors’ money. To conceal the truth, Ledford, created imposter companies with names similar to actual consumer debt sellers or brokers and opened bank accounts in the names of those imposter companies.
In addition, to lend credibility to the transactions, Ledford created false portfolio overviews, sales agreements which used the names and forged signatures of actual employees of the sellers, created false collections reports, and falsified bank statements and merchant account reports.
Further, Ledford admitted that he and Merrill falsely represented that the monies the conspirators paid to investors were “proceeds” from collections and/or flipping debt portfolios, when in fact, the proceeds were paid from funds provided by other investors.
From 2013 to 2018, the scheme took in more than $396 million; the co-conspirators spent only 14 percent on purchasing consumer debt portfolios. At the time of their arrests, the co-conspirators were attempting to obtain an additional $260 million from investors.
Ledford assisted Merrill to divert investors’ funds to purchase a home in Naples, Florida, and also helped Merrill falsify records to the bank lender. Ledford himself diverted fraud proceeds to purchase and renovate a home in Las Vegas, to refinance a home in Texas, to gamble at casinos, to purchase luxury automobiles and jewelry, and otherwise to support a lavish lifestyle.
At the hearing, the government presented evidence that over the course of the scheme, Ledford used more than $42 million in investors’ funds to gamble at casinos throughout the United States.
In addition to his sentence, Ledford was also ordered to repay the full amount of the victims’ losses, and while the exact amount will be determined on a later date, it is estimated to be close to $190 million.
Co-conspirator, Jezierski, is scheduled to be sentenced on November 14, 2019, while Merrill’s wife, Amanda, pleaded guilty to conspiracy to remove and conceal assets in violation of court orders, and is scheduled to be sentenced on January 22, 2020.
