Mercer Island Man Pleads Guilty to Largest Ponzi Scheme in State's History

Federal prosecutors in Seattle announced Frederick Darren Berg, 49, of Mercer Island, Washington, pleaded guilty late Tuesday in U.S. District Court in Seattle to one count of Wire Fraud, one count of Money Laundering and one count of Bankruptcy Fraud.

Federal prosecutors have declared that Berg, with over $280 million in total assets involved, . Berg and prosecutors agreed to an 18-year prison term when he is sentenced by U.S. District Judge Richard A. Jones on Nov. 4, 2011. If Judge Jones rejects the 18 year prison term, both sides can withdraw from the plea agreement and proceed to trial.

Berg is the founder of the Meridian Group of investment funds. The funds represented that $280 million in investor money was invested in real estate contracts, however the funds were elaborate ponzi schemes. Berg used approximately $100 million from about 500 investors for his own expenses and to keep the fraud going. in his personal and corporate bankruptcies in an effort to help unravel his fraud schemes.

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 results in the bankruptcy fraud charge. in November 2010. His for $6 million — one of the most expensive real estate sales of 2010.

, and has been in federal custody ever since.

The case was investigated by the FBI, the Washington State Department of Financial Institutions and the Internal Revenue Service Criminal Investigation. The case was being prosecuted by Assistant United States Attorney Norman Barbosa.