Darren Berg loses attempt to be free while awaiting trial
Darren Berg, charged with 12 counts of wire fraud, money laundering and bankruptcy fraud in connection with the demise of the Meridian funds, was deemed a flight risk by the judge.
By Seattle Times business staff
A federal judge Wednesday rejected a bid by Frederick Darren Berg to be released from custody pending his trial on charges of orchestrating a Ponzi scheme that allegedly cost investors more than $100 million.
U.S. Magistrate Judge Mary Alice Theiler, after noting that Berg is presumed innocent, said he posed a flight risk that could not be overcome by Berg's offer to post a bond secured by his sister's home in Oregon. If the allegations against him are true, she said, he could have the means to flee, and "the potential penalty is very serious" so he would have a motivation.
Theiler cited "some admission that he had not been completely candid" with the squads of officials looking into his collapsed empire. Those include two bankruptcy trustees, federal prosecutors, and investigators from the FBI, the IRS and the state Department of Financial Institutions.
Berg is the founder of Seattle's Meridian Group and creator of a dozen real-estate investment funds that raised more than $280 million during the past decade.
A federal grand jury in Seattle indicted him Nov. 18 on 12 counts of wire fraud, money laundering and bankruptcy fraud in connection with the demise of the Meridian funds. Berg, wearing prison khaki, entered the courtroom with a smile and waved to family members seated nearby in the crowded courtroom. But he sat tight-lipped through most of the argument, only occasionally whispering a comment to his attorneys.
Berg's attorney, public defender Erik Levin, argued that Berg had "deep roots in the Pacific Northwest," with family in Oregon and a longtime partner in the Seattle area. He said Berg only has access to a small amount of money and has cooperated with the government and the two court-appointed trustees in the parallel bankruptcy cases for the Meridian funds and for his personal assets.
As the expectation of criminal charges against him increased from August on, "at no time in that three months did he attempt to flee" even though he still had access to a boat and cash, said Levin.
Assistant U.S. Attorney Norman Barbosa responded that Berg had deceived officials about his finances, including $400,000 from the sale of a house after filing for personal bankruptcy in July.
"He lied flat-out to the trustee about those funds," Barbosa said.
Barbosa said Berg had made preparations to shift assets to Belize, and said Meridian employees reported that he "made troubling comments about sailing away."
Levin countered that the effort was intended to establish a captive insurance company to protect the assets of Meridian's bus company, MTR Western, from civil liability that Berg might face from Meridian' collapse.
Berg's trial has been set for Jan. 24.