September 15, 2010
SHAWN MERRIMAN SENTENCED TO FEDERAL PRISON FOR MAIL FRAUD
DENVER – Shawn Richard Merriman, age 47, of Aurora, Colorado, was sentenced late yesterday by U.S. District Court Judge Marcia S. Krieger to serve 151 months (over 12 years) in federal prison for implementing a mail fraud Ponzi scheme that defrauded 67 investors. Judge Krieger also ordered Merriman to pay $20,124,183.13 in restitution to the victims of the crime. Merriman, who appeared at the hearing in custody, was remanded.
As part of today’s sentence, Merriman was ordered to forfeit to the United States interests in all property constituting and derived from any proceeds that he obtained directly and indirectly as a result of the crime. A money judgment will then be entered against Merriman in the amount of the proceeds obtained by him from such offense less the amount of funds recovered from assets and property that have already been forfeited, criminally or civilly, and that were directly traceable to proceeds obtained from the criminal conduct. The U.S. Attorney’s Office will then petition the Department of Justice to remit the forfeited funds to compensate crime victims.
On April 8, 2009, U.S. Marshals and U.S. Postal Inspectors seized Merriman’s assets as part of an ongoing investigation. Merriman was then charged by Information on August 19, 2009. He pled guilty before Judge Krieger on December 2, 2009. He was sentenced yesterday, September 14, 2010.
According to the Information as well as the stipulated facts contained in the plea agreement, from about June 1, 1994, through February 24, 2009, Shawn Richard Merriman devised and intended to devise a scheme to defraud investors by obtaining their money by means of materially false and fraudulent pretenses, representations, and promises. As part of the scheme, Merriman, operating under the names of Mountain Springs Partners, L.P., and the limited liability companies LLC-1, LLC-2, Marque LLC-3, LLC-4, and LLC-5, represented to investors that he would use their money to buy and sell securities and would return profits from such trading to them.
As part of the scheme, Merriman accepted millions of dollars from more than one hundred individuals and entities but failed to use a lot of that money to buy and sell securities, instead converting most of that money to his own use and benefit. Merriman made misrepresentations to the investors, including misrepresentations that he had used their money to buy and sell securities and that his trading resulted in profits for the investors. He included those misrepresentations in fraudulent account statements that he mailed. The defendant also responded to investors’ requests for the return of the money that they had invested or the money that they believed they had earned by transferring to those investors money that he had received from others. Investors included members of his family, neighbors, acquaintances and others who were referred to him. In some cases investors used money from family trusts and individual retirement accounts.
Between about 1995 and about 2004, Merriman used some of the investors’ money to buy and sell stock, although he did not often do so. He did not inform the investors of this and instead misrepresented to them that he had used their money to trade stocks and that the trading had resulted in profits. Beginning in about 2004, Merriman completely stopped trading. He nevertheless continued until February 24, 2009, to accept funds from investors and continued to misrepresent to the investors that he was buying and selling stocks and that their investments were growing.
“The U.S. Attorney’s Office stands with the victims of Shawn Merriman’s crime,” said First Assistant U.S. Attorney David Gaouette. “Our goal now is to obtain as much money as possible from the liquidation of Mr. Merriman’s assets so as to return as much money as possible to the victims of his crime.”
“The United States Postal Inspection Service is pleased with the outcome of this investigation,” said U.S. Postal Inspector in Charge of the Denver Division Thomas Noyes. “Inspectors of the Denver office worked diligently to ensure this investigation was thorough and complete in an effort to bring Merriman to justice and compensate his victims. We would further like to thank the victims for their assistance and the United States Attorney’s Office for their efforts in this prosecution.”
The following assets were seized from Merriman during the investigation, and will be sold to compensate victims of his crime.
* 157 pieces of Old Masters Fine Art, located at Merriman’s residence in Aurora
* 170 pieces of contemporary art, also located at Merriman’s residence
* 43 pieces of framed fine art, 4 bronze busts, and one acrylic sculpture, located at Merriman’s residence
* Merriman’s residence, located in Aurora, Colorado
* Other real property, located in Island Park, Idaho
* Numerous conveyances, including vehicles, collectible cars, motorcycles, a boat, a motor home, trailers, and a John Deere Bobcat
* 8 E*Trade securities accounts
* Sports memorabilia
* Firearms
* Taxidermy
* Other personal property, including exercise equipment, arcade games, tools, hunting paraphernalia, safes, and a pitching machine
Merriman possessed an art collection, including works by Rembrandt, and a classic car collection, including a 1930 Lincoln. The seized and forfeited assets will be used to compensate the victims of this crime.
This case was investigated by the U.S. Postal Inspection Service. The U.S. Marshals Service has provided substantial assistance in the seizing, cataloging, and storing Merriman’s assets.
This case was prosecuted by a number of Assistant U.S. Attorneys, including Tim Neff, with James Russell, and Tonya Andrews handling the asset forfeiture.
Today’s sentencing is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
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