A recent interim distribution of $50 million represents a key milestone in one of the 20 largest Ponzi schemes in U.S. history.
Gregory S. Milligan of Harney Partners has served as Court-Appointed Receiver for approximately 40 individuals and entities since 2018 in one of the largest securities Ponzi schemes in U.S. history, which included parallel criminal proceedings that resulted in the successful prosecution and conviction of defendants Kevin B. Merrill, Jay B. Ledford, and Cameron R. Jezierski by the U.S. government. From 2013 to 2018, Merrill, his co-conspirators, and their affiliated entities took in more than $394 million from more than 230 investors to purportedly purchase consumer debt portfolios. The recovery of the stolen money began in earnest on September 13, 2018, when Milligan was appointed Receiver by the United States District Court for the District of Maryland at the request of the Securities and Exchange Commission.
Merrill and his co-conspirators returned some $248 million to investors prior to their arrest, churning the monies in Ponzi-like fashion while claiming the returns were the result of debt portfolio collections and sales. The majority of investors, at least 160, lost 50% or more of their principal investment, with 74 investors losing 100% of their investment. By one expert analysis, the investment fraud perpetrated by Merrill and his co-conspirators ranks among the largest 20 such schemes in U.S. history.
Just before Christmas, Milligan made an interim distribution of $50 million to victims of the scheme after his distribution plan was approved by the Court on November 15, 2022. This interim distribution represents a 50% return to investors and Milligan expects to make one more distribution at the time the case is closed to further increase investor recoveries. A 50% recovery in a fraud of this manner and magnitude is remarkable.
“Too often, in a Ponzi situation there is very little or nothing to recover for the victims. The money is simply gone,” said Milligan. “In this case, there were multiple operating businesses with significant value as well as other assets including 11 real properties, 34 vehicles, fine art, watches, other jewelry and luxury goods which formed the basis of a very large recovery and monetization strategy.”
In support of the recovery, Milligan retained the law firm of Husch Blackwell, led by partners Lynn Butler, Buffey Klein, and Jameson Watts, who assisted Milligan in all aspects of asset administration, claims processing, plan development, and numerous litigation matters.
Milligan has also been assisted by others at Harney Partners including Jim Keane, Bill Patterson, Karen Nicolaou, Erik White, Wade Horst, and Davis Jackson.
This case is one of several high-profile fraud matters in which the Harney Partners team, including Greg Milligan, has led in recent years.
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Harney Partners is a corporate advisory firm that provides independent, multi-disciplinary solutions for middle-market companies and their stakeholders. The firm specializes in restructuring and turnaround advisory (both bankruptcy and out-of-court), fiduciary services, transaction advisory, interim management, forensic accounting and fraud examination. They serve clients nation-wide from offices in Austin, Chicago, Dallas, Houston, and Madison.