SEC Obtains Preliminary Injunction in Alleged $345 Million Fraud
Litigation Release No. 24313 / October 11, 2018
Securities and Exchange Commission v. Merrill, et al., Case No. RDB-18-2844 (D. Md.)
The Securities and Exchange Commission today announced that on October 4, 2018, United State District Judge Richard Bennett entered a preliminary injunction against defendants Kevin B. Merrill, Jay B. Ledford, Cameron Jezierski, and several entities they control in connection with the SEC's charges that they operated a Ponzi-like scheme that raised more than $345 million from over 230 investors across the United States.
On September 13, 2018, Judge Bennett granted under seal the SEC's request for a temporary asset freeze and restraining order, and the appointment of a receiver. The preliminary injunction order continues this relief pending final adjudication of the SEC's charges against the defendants.
The SEC's complaint, filed in federal district court in Maryland, alleges that Merrill, Ledford, and Jezierski attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. But in fact, the defendants were allegedly using a web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud. Rather than direct investor funds to the acquisition and servicing of debt portfolios as promised, the defendants allegedly used the funds to make Ponzi-like payments to earlier investors. The SEC also alleges that Merrill and Ledford stole at least $85 million of the investor funds to maintain lavish lifestyles, spending millions of dollars on luxury items. Defendants were charged with violations of the antifraud provisions of Section 17 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks disgorgement of allegedly ill-gotten gains and prejudgment interest, and financial penalties against the defendants.
For more information about this case, see https://www.sec.gov/news/press-release/2018-201.