The Allmand Law Firm, PLLC Difference

Unlike most bankruptcy firms in the Dallas / Fort-Worth area, Allmand Law Firm, PLLC spends the time to understand the complete financial picture for every one of our clients. We provide resources, tools and advice to address the unique needs of North Texans.

Alleged Wrongdoer Paid To Investigate In Meridian Group Bankruptcy

Posted By admin || 17-Sep-2010

MeridianBanner

Bankruptcy Trustee Mark Calvert had the unenviable position of informing hundreds of Meridian Group investors that they had sunk their money into a Ponzi scheme and that the alleged head of the scheme, Darren Berg, would be paid $14,000 a month for five months to help unravel what happened to more than $200 million he raised for nine of the funds now in bankruptcy.  Bankruptcy trustee Calvert is quoted as saying that the Meridian funds may not have started out as a Ponzi scheme but ended up as one and that hiring Berg to investigate what happened to the missing money was the most efficient way to get to the truth.

The 600 to 700 individuals and entities who invested in the high-yield Meridian Mortgage funds had little advance warning of trouble, he said, because "from 2001 through (early) 2010, they never missed a payment" of interest, supposedly earned from the mortgages purchased by the funds.

But Calvert said the Meridian funds functioned like a classic Ponzi scheme: "an investment fraud that pays existing investors purported returns by bringing in new investors."

The investigation has already uncovered that Berg had diverted much of the money for his own personal use, channeling at least $32 million to finance the luxury bus company he owns, and diverting additional money for other personal uses.  The extent of how much of the investment money was used personally by Berg is unknown; but the bankruptcy trustee hopes that the investigation will uncover more.  And while it may seem unusual or even unjust to hire an alleged wrongdoer to investigate the disappearance of money in this bankruptcy, it is not so unusual at all.  Participants in a bankruptcy case are required to cooperate with the bankruptcy courts requests.  Failing to do so can end with a prison term, which is exactly what happened to Bernie Madoff when he refused to cooperate with bankruptcy authorities.

Blog Home