FREDERICK DARREN BERG, 48, of Mercer Island, Washington, was indicted today by a federal grand jury for Wire Fraud, Money Laundering and Bankruptcy Fraud. BERG is the founder of the Meridian Group of investment funds. The funds represented that investor money was invested in real estate contracts. In the twelve count indictment, the grand jury charges that the funds were elaborate ponzi schemes. BERG claimed he was cooperating with bankruptcy trustees in his personal and corporate bankruptcies in an effort to help unravel his fraud schemes. Federal investigators learned that he had 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. Further investigation revealed the funds came from the sale of a home he had failed to disclose in his bankruptcy proceedings and the funds were deposited into a series of bank accounts he concealed from the trustee. Failure to disclose those assets to the trustee is now charged in the case as bankruptcy fraud. The indictment was returned by the grand jury late today.

BERG was arrested in Los Angeles on October 21, 2010. He has been in federal custody ever since, and was transported to Seattle by the U.S. Marshal Service. BERG is scheduled to appear in U.S. District Court in Seattle for arraignment tomorrow, Friday November 19, at 2:30.

According to the indictment, BERG had established a trust in Belize and failed to disclose this off shore trust and a related U.S. based company and bank account to the bankruptcy trustee overseeing the assets in the bankruptcy. The existence of the account and BERG’s failure to disclose it prompted prosecutors to move to arrest BERG because of a risk he could attempt to leave the country to avoid prosecution. The government is asking that BERG remain detained pending trial.

According to the indictment, investigators are just still uncovering the magnitude of the alleged fraud. BERG took in more than $280 million, with the losses attributed to the ponzi scheme estimated to be approximately $100 million. Hundreds of victims have lost money in the scheme.

The case is being investigated by the FBI, the Washington State Department of Financial Institutions (DFI) and the Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorney Norman Barbosa.

Press contact: Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, (206) 553-4110 or Emily.Langlie@USDOJ.Gov

(Download Indictment )

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