The Securities and Exchange Commission moved Thursday to shut down an alleged Ponzi scheme based in Colorado that includes victims from Minnesota and Utah as well as Colorado.
The SEC charged Aurora, Colo., businessman Shawn Merriman and his company Market Street Advisors with fraudulently obtaining $17 million to $20 million from at least 38 investors in those three states to support a luxurious lifestyle.
According to the SEC, Merriman used the money to buy millions of dollars worth of classic cars, motorcycles, motor homes, sports memorabilia, firearms, a cabin in Idaho and fine art.
According to documents the government filed in a related forfeiture complaint, Merriman had about 157 pieces of fine art, including numerous works by Rembrandt and Albrecht Dürer, plus a couple of Picasso's pieces, a lithograph by Wassili Kandinksy and Anthony Van Dyck's "Descent from the Cross." His sports collection included gloves signed by Lou Gehrig and Josh Gibson, and jerseys from Willie Mays, Cal Ripken and Hank Aaron.
Documents filed by the SEC in a federal court in Colorado list only a few individual investors by name. "We don't have good numbers yet and we don't know all of the connections," said Donald Hoerl, director of the SEC's Denver regional office.Most came to Merriman by word of mouth, the government said. Investigators interviewed some others who had met Merriman at classic car shows.
Funding a lavish lifestyle
Hoerl said Merriman "repeatedly deceived investors, many of whom considered him a personal friend," by sending them fictitious account statements that showed their investments earning returns of 7 to 20 percent.
The SEC complaint, which was filed in Colorado federal court, said Merriman, 46, started his investment program in 1994 but quickly lost $400,000. Rather than inform investors of the losses, Merriman started a second fund with new investors and used that money to cover withdrawals from the first fund, the SEC said. He later started two more investment funds to raise more money.
On several occasions, according to the SEC, Merriman offered "rebates" to investors "to entice them" into investing more money with him.
"Merriman represented to investors that he would make all investment decisions and claimed that all investor funds had been, were, or would be pooled to purchase securities," the government asserted.
Instead, Merriman used the money to repay earlier investors and support his "lavish lifestyle," the government charged.
The SEC wants a judge to freeze Merriman's assets and will seek to recover, or disgorge, any "ill-gotten gains."
In a parallel investigation by the U.S. Attorneys Office for Colorado and the U.S. Postal Inspection Service, U.S. marshals descended on Merriman's house Thursday to seize assets, including his home, artwork, sports memorabilia and vehicles.
Staff writer Dan Browning contributed to this report. David Phelps • 612-673-7269
