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SEC Targets One More Suspect in $345M Scheme

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The Securities and Exchange Commission on Monday filed a subpoena enforcement action against another individual it said it believes to have been involved in a Ponzi-like scheme that raised more than $345 million from over 230 investors, some of whom were current and former pro athletes, retirees and financial advisors.

The Monday action against Michael Staisil of New York was filed by the SEC in U.S. District Court for the Southern District of New York, seeking an order directing him to comply with an investigative subpoena for testimony.

According to the SEC’s application, its investigation concerned the same alleged Ponzi-like scheme that led it, on Sept. 13, 2018, to file an emergency action in federal district court in Baltimore against Kevin Merrill, Jay Ledford, Cameron Jezierski, and certain entities owned or controlled by Merrill or Ledford to halt the scheme.

In its ongoing investigation, the SEC now “has reason to believe that Staisil may have worked on behalf of Merrill in raising millions of dollars from numerous individual and institutional investors,” the SEC said Tuesday.

The SEC is investigating whether Staisil “engaged in deceptive or other unlawful conduct in raising money from those investors,” the regulator said.

In July 2019, the SEC issued a subpoena to Staisil requiring him to appear for investigative testimony. After Staisil failed to appear, in November 2019, the SEC issued a second testimony subpoena to Staisil, which Staisil also ignored, the regulator said.

The SEC’s application seeks an order compelling Staisil to comply fully with the subpoena. Meanwhile, the SEC is “continuing in its fact-finding investigation and, to date, has not concluded that anyone has violated the law other than the individuals and entities that have previously been charged,” it said.

In its initial 2018 complaint, the SEC claimed Merrill, Ledford and Jezierski attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. In a parallel action, the U.S. Attorney’s Office for the District of Maryland announced criminal charges against the three of them.

From at least 2013 to the present, the trio operated the Ponzi-like scheme that involved, among other things, “securities offerings rife with misrepresentations, fake debt, forged signatures, fabricated wire transfers, the movement of millions of dollars into personal accounts, and an elaborate scheme wherein defendants offered and sold investments in the same (and often fictitious) debt and/or debt portfolios, to multiple victims,” the complaint stated.

Of the $345 million raised, more than $90 million was invested by over 200 individual investors; approximately $52 million by family offices; and nearly $203 million by feeder funds, largely made up of groups of individuals.

The individual investors included small-business owners, restaurateurs, construction contractors, retirees, doctors, lawyers, accountants, bankers, talent agents, current and former professional athletes and financial advisors.

The SEC also alleges that Merrill and Ledford stole at least $85 million of the investor funds to maintain lavish lifestyles, spending millions of dollars on luxury items, including $10.2 million on at least 25 high-end cars, $330,000 for a 7-carat diamond ring, $168,000 for a 23-carat diamond bracelet, millions of dollars on luxury homes, and $100,000 on a private fitness club.

— Check out FINRA Orders Pershing to Pay $5.6M to More Stanford Victims on ThinkAdvisor.