Ponzi Scheme and Bankruptcy Fraud Leads to Arrest of Mercer Island Man
A Mercer Island man was arrested for his alleged involvement in a
Ponzi scheme and for bankruptcy fraud. Frederick Darren Berg, 48, was arrested in Los
Angeles, California, on Monday, October 25, 2010, and charged with wire
fraud, money laundering and bankruptcy fraud.
According to federal prosecutors, Mr. Berg, founder of Meridian Mortgage, orchestrated a series of fraudulent investment funds in an elaborate Ponzi scheme involving more than 1,000 unsuspecting investors and over $350 million.
Investors were under the impression that their money was going to be invested in real estate contracts. Prosecutors contend that Mr. Berg was actually using the money to live a life of luxury, which included several yachts, private jets and luxury automobiles. They also accuse Mr. Berg of using money from newer funds to make interest payments on existing funds.
In addition, Mr. Berg has been accused of secretly transferring approximately $100 million to an offshore trust in Belize for the purpose of fleeing prosecution. Assistant U.S. Attorney Norman Barbosa has requested that Mr. Berg be held until the conclusion of the criminal case.
"The weight of evidence against Mr. Berg is incredible," Barbosa said in court documents. "He has fully admitted to his massive fraud scheme and provided an extensive recorded confession to the government."
Mr. Berg has been charged with nine counts of wire fraud and one count of money laundering. The FBI is investigating the case.