by Brian Mahany
Most people in Seattle know that Frederick Berg is accused of masterminding the largest Ponzi scheme case in the history of Washington State. Berg is currently in jail awaiting trial on multiple felonies. Prosecutors have also charged Berg with bankruptcy fraud. Why is this significant? If proven, it shows that Berg continued to lie and cheat even after he had been caught last year.
On July 27th of last year, Berg filed for bankruptcy after no longer being able to make millions of dollars in interest payments to his investors. Like most Ponzi schemes, Berg used the money from new investors to pay the old investors. It doesn’t take long before the pyramid simply grows too large.
Shortly after filing for bankruptcy, prosecutors and federal agents charged Berg with fraud. As eloquently stated by the U.S. bankruptcy trustee, Berg’s investment scheme was like the Wizard of Oz but with absolutely nothing behind the curtain.
The feds later charged Berg in a superseding indictment with bankruptcy fraud after the trustee discovered he diverted hundreds-of-thousands of dollars from the bankruptcy estate – money that was to have been returned to investors and creditors.
The trustee learned that Berg deposited $398,773.57 in a Bank of America account 2 days AFTER filing for bankruptcy. In a series of transactions designed to further conceal the money, he then transferred money from the Bank of America account to an Ameritrade account and then to a Union Bank account. None of the accounts were in his name, although he controlled them. None of the accounts were disclosed to the court either.
U.S. Bankruptcy court judge Karen Overstreet ordered the banks to turn over the money remaining in the accounts on December 27th. The amount remaining from the original $400,000? Just a few thousand dollars.
Berg went from his huge island mansion to a 96 square foot jail cell. He is unlikely to steal any more money while incarcerated. His theft from the bankruptcy estate, however, may land him a few more years in prison. No trial date has been set for the criminal cases.
Mahany & Ertl is a full service boutique law firm that assists victims of fraud recover their money. Our Milwaukee based asset recovery and fraud recovery lawyers have helped clients from Maine to Hawaii. We have successfully brought actions against lawyers, securities brokers and financial professionals for their negligence in a wide variety of frauds and investment schemes. From welfare benefit plans to Ponzi schemes to bad investment advice, we can help. In many cases we can recover your money from gatekeepers such accountants, auditors and financial profesionals who may have assisted you in investing your money.
For a no obligation, no nonsense review of your case, contact Brian Mahany directly at (414) 704-6731 or through the firm’s website at https://www.mahanyertl.com