Meridian's Berg writes book to ask forgiveness, spread blame
Frederick Darren Berg, who pleaded guilty in August to defrauding investors of approximately $100 million in a Ponzi scheme, has writing a book while in prison.
Seattle Times deputy business editor
Frederick Darren Berg's prologue to book about collapse and bankruptcy of Meridian Mortgage
Frederick Darren Berg, who pleaded guilty in August to defrauding investors of approximately $100 million, has been busy during his 14 months in federal custody.
While waiting to be sentenced next month for what prosecutors called the largest Ponzi scheme in state history, the founder of the Meridian Mortgage investment funds says he's written more than 350 pages of a planned e-book "to make some sense of the financial carnage I caused."
The prologue, which Berg provided to The Seattle Times, asks for forgiveness and hints at periods of deep depression.
But it also lashes out at the Meridian Mortgage bankruptcy trustee and unnamed others, asserting they made the financial collapse worse to "feather their own nest or further their own agenda."
Berg writes that he "learned first hand just how dangerous it can be to spend time alone with a self you hate." Later he declares: "I humbly and respectfully seek understanding and forgiveness from those I've wronged." And he invokes his 14-year-old golden retriever Tawny, writing that "if she could, she'd want you to know that I'm more than just the evil incarnate this spectacular mess has made me out to be."
Much of the 1,800-word prologue, however, is devoted to explaining that his book will expose improper actions by others.
Berg compares himself to an arsonist — "yes, I lit the match" — but he claims that others let the fire burn to "artfully pull their own scam."
"The investors in Meridian were victimized repeatedly. First by my own megalomania and then, later, by a dysfunctional bankruptcy process, a perversely incented criminal-justice system and ... by a daft and disgruntled former employee seeking his own 15 minutes of fame."
The prologue offers no specifics to support those claims.
Prosecutors and Mark Calvert, the bankruptcy trustee for a dozen funds created by Berg, have said he diverted tens of millions of dollars for a lavish lifestyle that included a Mercer Island mansion, two yachts and two jets. It's also alleged Berg took about $45 million from the funds to build a luxury bus line, MTR Western; Meridian's bus assets were sold in bankruptcy court for about $6 million.
The indictment charged Berg with faking an elaborate paper trail to deceive investors and auditors, going so far as to rent dozens of post-office boxes from which he could answer the queries of the CPA firm that was trying to verify the mortgages Meridian claimed to own.
Calvert recently estimated that Meridian creditors could recoup at least 10 percent of their original investment.
The 49-year-old Berg, who faces a recommended sentence of 18 years behind bars, writes that he won't discuss his personal relationships. "My family, my friends, my former domestic partner, they're also victims and, as such, they deserve privacy."
He says he'll give the full story of the company "I toiled for more than 20 years to build," and later asks rhetorically: "How could someone as smart as me have been blinded by an endless — and completely irrational — confidence in a positive outcome despite odds longer than winning the lottery?"
The sentencing hearing, scheduled for Jan. 20, will include an opportunity for victims to address the judge. Berg can do the same, either in writing or in person.
In an email, Berg said the defense's preparations for that hearing have been hampered by inadequate access to the financial data compiled by the prosecution and Calvert. That, he asserted, is interfering with his effort to prove that "Meridian wasn't a purely fraudulent Ponzi scheme from its beginnings but that, rather, it was a legitimate business enterprise that later degraded into an illegitimate one."
The book, to be called "My Apologies," is intended as a more detailed account than he'll be able to give in court, Berg wrote.
After he is sentenced, a free digital copy will be sent to anyone requesting one at email@example.com, he said in the email. It will also be available for download from Amazon for 99 cents — the minimum price for the company's Kindle Digital Direct program. "I get nothing from a sale at that price," he wrote.
Jane Pearson, attorney for the committee overseeing the payment of bankruptcy proceeds to the Meridian funds' creditors, said Berg agreed that his debts wouldn't be erased in bankruptcy, "so anything he earns is going to be pursued by the U.S. Attorney's Office and the creditors, for the rest of his life."
Craig Edwards, a Meridian investor and chairman of the oversight committee, said he'd seen no evidence of anything improper in the bankruptcy proceedings. "I don't know how Mark Calvert could have made the bankruptcy process any more open or accommodating to the investors," he said. When creditors voted on the bankruptcy plan, he noted, "There were no 'no' votes."
In his email providing the beginning of his book, Berg wrote: "Please help me get this message to my victims."
But two investors shown the prologue said they weren't impressed.
"While he's trying to say he's sorry and whatnot, he seems to really be wanting to blame others," said Drew Thoreson, of Bellevue, one of the investors who first filed involuntary bankruptcy petitions against three Meridian funds in July 2010. "I think he's trying to deflect the blame."
Thoreson put about $30,000 of retirement money into Meridian in 2003, reinvested the reported earnings, and thought his money had nearly doubled by 2010; his mother invested as well.
He said he's curious to see Berg's full account "just to see how he supports all his accusations here and see how his mind works."
Catherine Cesaro, whose mother was defrauded, said reading the first segment "did nothing to change my opinion of him."
He comes across as "a narcissist" and "a guy who still doesn't get it," she said.
Cesaro seemed especially put off by mention of Berg's dog, which he called "a loyal old companion that I shall never again see alive."
That's not comparable, she said, to "the trauma, heartbreak and betrayal he foisted on his unsuspecting human victims."
Rami Grunbaum: 206-464-8541 or firstname.lastname@example.org
On Twitter: @rgrunbaum