Ponzi Schemer Used Clients’ Millions|To Buy Rembrandts, SEC Says

DENVER (CN) - "Investment adviser" Shawn Merriman and his company Market Street Advisors, took more than $17 million in a 15-year Ponzi scheme, the SEC says in Federal Court. Merriman, 46, of Aurora, didn't even bother to invest after his first year, but offered "rebates" to keep money coming in, and bought a Rembrandt, cars and other stuff with the money, the SEC says.

The SEC also sued Merriman's other enterprises, including LLC-1, LLC-2, Marque LLC-3, LLC-4, and Impressions Everlasting, "established by Merriman to purchase fine art using proceeds from Merriman's Ponzi scheme."

The SEC says Merriman lost $400,000 in 1995, when he started the scam, and that "Rather than reporting those losses to investors, Merriman started another fund to receive new investment monies that would cover any withdrawals by investors from the first fund.

"Merriman subsequently started a third and a fourth fund, and used new investment

monies to pay investors who were requesting withdrawals and, eventually, to support his lavish lifestyle.

"While Merriman traded some securities initially, he stopped doing so after about one year and, subsequently, all investor proceeds were used to pay other investors and for his personal expenses.

"Between 1994 and 2009, Merriman raised at least $17-20 million from at least 38 investors. The investors, many of whom appear to have been family friends of Merriman and some of whom were seniors, resided in multiple states, including Colorado, Minnesota, and Utah.

"On several occasions, in an effort to perpetuate his Ponzi scheme, Merriman set up programs to try to entice existing investors to invest additional sums of money. For example, on at least one occasion, Merriman attempted to entice investors to invest additional funds by offering an 11% 'bonus' or 'rebate' on additional funds invested, up to a certain amount. ...

"(C)ontrary to his representations, Merriman used investor funds to pay out withdrawals by other investors, to pay for his personal expenses, and to support his lavish lifestyle. Among other things, Merriman used investor money to purchase classic cars, motorcycles, motor homes, a cabin in Idaho, and fine art collections, including works by Rembrandt that are worth millions of dollars."

The complaint does not state which Rembrandt(s) Merriman bought.

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