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Saturday
Jan052019

Accused Ponzi Schemer Caught Passing Note To Wife Urging Her To Hide Assets And Replace Good Wine With "Sh-t Wine"

“Have your dad take my golf clubs...Hide cash or checks … drink good wine in sub zero’s, replace with sh-- wine in basement...F--- them. They have taken enough! Get stuff out..."

- Letter allegedly written by Kevin Merrill and intercepted by prison guards

Facing an asset freeze and stuck behind bars pending trial on charges he masterminded a $354 million Ponzi scheme, a Maryland man's attempt to surreptitiously slip his wife a note urging her to conceal and dispose of assets ended in disaster when authorities intercepted the note and filed criminal charges against the wife. According to authorities, Kevin Merrill and his wife, Amanda Merrill, communicated over several months about hiding and disposing of certain luxury assets that were subject to a court-ordered asset freeze. The scheme ultimately culminated in prison officials' discovery of a note in Kevin Merrill's sock during a jailhouse visit containing directions for his wife to dispose of golf clubs, hide cash, and to substitute high-end wine with "sh-- wine in [the] basement."  Amanda Merrill was subsequently charged with conspiracy, obstruction, disobeying a court order, and removing property to prevent its seizure.

The Scheme

Kevin Merrill and two business partners were the subject of civil and criminal charges in September 2018 for what authorities alleged was a massive Ponzi scheme touting outsized returns from a purported consumer debt operation. Authorities alleged that Merrill, Jay B. Ledford, and Cameron Jezierski operated a number of entities including Global Credit Recovery, LLC; Delmarva Capital, LLC; Rhino Capital Holdings, LLC; Rhino Capital Group, LLC; DeVille Asset Management LTD; and Riverwalk Financial Corporation (the "GCR Entities").  The GCR Entities allegedly solicited investors through promises of steady returns from the deeply-discounted purchase of consumer debt portfolios.  Consumer debt, including automobile, credit card, and student loan debt, is often bundled into portfolios and sold in bulk to investors, which the GCR Entities told investors they were purchasing for their benefit.  While the scheme involved the actual purchase of some debt portfolios, authorities allege that the vast majority of purported debt purchases were fraudulent and that the actual purchases of debt portfolios were used as part of the scheme to solicit more investors. 

Using a dizzying array of interwoven entities and bank accounts, the trio allegedly solicited both individual and institutional investors across the nation through the provision of documentation describing the investment structure and presentations offering projections about the anticipated investment returns.  These promises included offering some investors 100% of collections of up to 25% of their principal investment annually - meaning those investors were offered annual returns of up to 25% along with the option for even higher returns.  Potential investors also received "due diligence" documents prepared by Ledford or Jezierski providing a supposed analysis of the portfolio(s) they were purchasing as well as the anticipated purchase price. In total, the GCR Entities are believed to have raised over $345 million from at least 230 investors. 

But authorities allege that the GCR Entities had not been in the business of buying consumer debt since 2014, and that the purported investment opportunity was a giant Ponzi scheme that used new investor funds to pay returns to existing investors.  Approximately $197 million was paid out as purported remittances, collections, or profits, meaning that investors are facing total losses of roughly $150 million.  Unfortunately, authorities believe that a significant portion of those losses were diverted to sustain the trio's extravagant lifestyles.  The indictment alleged that investor funds were used to buy over 20 high-end automobiles, at least nine houses, and over $8 million in jewelry, as well as at least $25 million in casino gambling. 

Merrill's Vast Assets

Merrill was apparently not frugal with the riches generated from the alleged scheme, with authorities seeking to forfeit a stunning array of real estate, luxury goods, and automobiles that were purportedly purchased with scheme proceeds.  In addition to a $10 million waterfront residence, a brand new 35' boat, an interest in an Gulfstream aircraft, and a 9+ carat diamond ring, Merrill also accumulated more than two dozen luxury automobiles that includes four Lamborghinis, two Rolls-Royces, and four Ferrarris.  Prosecutors also claimed that Merrill spent nearly $1 million at luxury goods retailer Louis Vuitton over a five-year period and was also an avid collector of red wine.

Following Merrill's arrest in September, authorities claim that he conspired with his wife to conceal and dispose of assets in violation of the Court's orders during coded jailhouse phone calls that included reference to their $10 million waterfront Florida home as the "restaurant."  Apparently unbeknownst to the pair, authorities were recording those calls.  During one of the calls, Merrill allegedly provided his wife with the code to a safe at their Florida home after which Amanda Merrill flew back to Maryland with two oversized suitcases.  Authorities later found $15,000 in cash at Amanda Merrill's residence and were then able to open the Florida safe using the code provided by Merrill to his wife. 

Agents later found a note in Merrill's sock prior to a scheduled jailhouse visit that contained instructions to sell his golf clubs, drink his high-end wine and replace it with "shit" wine, and to "get stuff out."  Amanda Merrill was then charged with multiple criminal counts in a December 10th complaint including conspiracy and removing property to prevent its seizure.  She was released without bail the following day.  

A link to the SEC's Complaint is here.

A link to the Indictment is here.

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