The trustee of the Meridian Investors Trust has filed a lawsuit on behalf of investors of the failed Meridian Mortgage funds to recoup over $150 million relating to a Ponzi scheme using their money.
According to the lawsuit filed in King County Superior Court by Eagan Avenatti LLP, auditors Moss Adams LLP and Frederick Darren Berg were named as defendants for allegedly engaging in fraud that was designed to misappropriate millions of dollars from hundreds of investors in order to support their own lavish lifestyles.
The investors' money comes from both the Meridian Mortgage Investors Fund and Meridian Real Estate Opportunity Funds, the lawsuit said.
The complaint said that Berg, the founder of Meridian Mortgage investment funds that went bankrupt in 2010, allegedly raised more than $360 million from more than 1,000 investors over the last decade to support his Ponzi scheme.
The Seattle, Wash.-based auditing firm Moss Adams was hired by Berg to support the accuracy of the funds despite knowing that he was probably engaged in a fraudulent scam.
An additional allegation in the lawsuit is that the auditing firm failed to conduct basic tasks when conducting audits against Berg. The lawsuit claims that Moss Adams “purposely turned a blind eye to Berg's fraud in order to obtain more fees for the firm.”
“My sole objective from the beginning has been to maximize recovery of assets for the investors,” said Mark Calvert, the bankruptcy court trustee of the Meridian Investors Trust. “We have worked diligently to accomplish this goal and this lawsuit is a significant step.”
Los Angeles-based Eagan Avenatti believes that this Ponzi scheme is the largest to ever occur in the Northwest region.
Berg is currently being held in jail without bail while he awaits trial next year for related criminal charges of fraud and money laundering.
