Frederick Darren Berg of Mercer Island was indicted Nov. 18 by a federal grand jury for wire fraud, money laundering and bankruptcy fraud.
Berg operated a series of investment funds purportedly for investment in seller financed real estate contracts, hard money loans, real estate and mortgage backed securities all under the name of Meridian Group.
In the 12-count indictment, the grand jury charges that the funds were actually elaborate Ponzi schemes. Berg claimed he was cooperating with bankruptcy trustees in his personal and corporate bankruptcies but federal investigators learned he concealed approximately $400,000 from the trustees and later lied about the source of these funds when confronted by the trustee in his personal bankruptcy.
The bankruptcy fraud charges stem from the sale of a home he failed to disclose in his bankruptcy proceedings. He deposited those funds into a series of bank accounts he concealed from the trustee.
According to the indictment, Berg had established a trust in Belize and failed to disclose it and a related U.S. based company and bank account to the bankruptcy trustee overseeing the assets in the bankruptcy. His failure to disclose the off-shore trust prompted prosecutors to arrest Berg because he is considered a flight risk. The government is asking that he remain detained pending trial.
Berg was arrested in Los Angeles Oct. 21. He has been in federal custody ever since. He was transported to Seattle by the U.S. Marshal Service. He will appear in U.S. District Court in Seattle Nov. 19 at 2:30 p.m.
Losses attributed to the Ponzi scheme are estimated to be approximately $100 million. Hundreds of victims lost money in the scheme.
The case is being investigated by the FBI, the Washington State Department of Financial Institutions, and the IRS Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Norman Barbosa.