The Securities and Exchange Commission (SEC) obtained a court order halting an ongoing Ponzi-like scheme that bilked pro athletes, retirees, and even financial advisors. The pyramid raised more than USD 345 million from over 230 investors across the U.S. The SEC also obtained an emergency asset freeze and the appointment of a receiver.
The SEC’s complaint, filed on September 13, 2018 in federal district court in Maryland, charges Merrill, Ledford, and Jezierski, along with their entities, Global Credit Recovery, LLC, Delmarva Capital, LLC, Rhino Capital Holdings, LLC, Rhino Capital Group, LLC, DeVille Asset Management LTD, and Riverwalk Financial Corporation, with violations of the antifraud provisions of the federal securities laws.
As in any other Ponzi-like scheme, its alleged organizers attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. The structure was relying on a web of lies, fabricated documents, and forged signatures to entice investors and perpetuate the fraud. However, rather than investing the funds in the acquisition and servicing of debt portfolios as promised, the defendants allegedly used the funds to make payments to earlier investors of the scheme. Reportedly “defendants used a total of approximately 30 interrelated corporate entities and over 55 bank accounts to move investor money, deceive investors, and continue their Ponzi-like scheme that has survived only with the influx of greater and greater sums of cash”. Aside from luring investors, two of the alleges Kevin B. Merrill and Jay B. Ledford are facing an accusation of stealing at least USD 85 million of the investor funds to maintain lavish lifestyles.