Darren Berg on the Run: Inside the Biggest Ponzi Scheme in Washington State History

He owned yachts and sped around the country in Lear jets—spoils from the more than $100 million he bilked from investors—before he was convicted and sent away to serve an 18-year sentence in federal prison. Then, late last year, Darren Berg disappeared.

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Every night at midnight, and again at 3 and 5am, corrections officers stroll by the dormitory beds where prisoners sleep two to a cubicle and count—four, six, eight, up to more than 100—to ensure all the men are there, snoring or lying quietly before breakfast starts at 6:30.

The inmates at this camp next to the U.S. Penitentiary in Atwater, California, about 130 miles southeast of San Francisco, serve their sentences apart from some 1,200 inmates at the high-security prison. Razor wire surrounds that complex, and six guard towers form a rectangle around the perimeter. The camp, meanwhile, has minimal fencing—and security—because the prisoners are considered so low risk. There are basketball courts and a track and field and a softball diamond. The men must keep books and other belongings inside their personal lockers—only one framed photo outside is okay—and they’re generally all required to work, serving food in the cafeteria or helping maintain the site for less than a dollar a day.    

Sentenced to 18 years in prison, Frederick Darren Berg had been at Atwater since 2016. He had pleaded guilty to wire fraud, money laundering, and bankruptcy fraud. Over the course of several years, Berg, now 55, cheated hundreds of investors out of more than $100 million through the Meridian Group, the company he ran in Seattle—crimes prosecutors say amounted to the biggest Ponzi scheme in Washington state history. Berg spent the money on cars, yachts, and a waterfront mansion on Mercer Island with a full-time staff. He flew between there and his homes in California on one of two private jets. He was always impeccably dressed. 

At Atwater, however, Berg was issued a green uniform, just like everyone else, and he made his bed each morning with a mandatory eight-inch collar. No belongings are allowed on the windowsills, nor dust, and the floors are swept, mopped, and buffed daily. The workday for many of the camp’s prisoners starts at 7:30am, with an hour break for lunch, and ends at 3pm. A half hour later, corrections officers conduct what’s called a stand-up count and the men must wait in their cubicles as guards stride by and add them to their tally. 

But on December 6, 2017, the count came up short. One of the inmates was missing. 

Darren Berg was gone. 

NEARLY NINE YEARS EARLIER, investors sat around a conference table, stemmed wineglasses in front of them, and gazed up at the man standing at the head of the room as he explained why his company was different—safer, more cautious—than other investment firms. 

“There’s no shortage of bad news on the doorstep,” he admitted, after tugging up the collar of a crisp white shirt. His brown hair was cut close to his head and he smiled winningly, hazel eyes crinkling behind wire frames. New York financier Bernie Madoff’s arrest a few months earlier had rattled Americans with savings entrusted to advisers like him. But Darren Berg reassured the men and women before him that day in March 2009 at Meridian’s office in downtown Seattle. “There’s no magic here,” he said. “You might think it’s magic, but it’s actually real meat and potatoes stuff.” 

Berg sounded confident as he answered their questions, waving his hands in the air to emphasize a point. He had been building this company for years, he said, one loan at a time. They didn’t need to worry about their money. 

Since 2001, Berg had created and operated a series of investment funds. He told investors he would use their money to buy real estate, mortgage-backed securities, and seller-financed real estate contracts, or private mortgages—all gambles he said would generate profits to repay them with interest. 

It was a risk hundreds of people were willing to take. Many of them were older and wanted to squirrel away some money for retirement. Through August 2010, from his office on the 19th floor of the Century Square building at Fourth Ave and Pike, Berg raised about $350 million from investors in about 20 states. 

He often met with one of them for lunch at the now-shuttered Sixth Avenue Bar and Grill, just a half mile away. Ron Neubauer first invested with Berg in the mid-2000s, after meeting him through a close friend who had been investing with Berg for several years. As Neubauer mulled whether to sink some of his own money into Meridian’s funds, Berg showed him audited financial statements. This guy was bright—glib even—Neubauer now recalls, and he found him trustworthy. The frankness with which Berg talked about his work was heartening. Neubauer felt safe. 

Berg always arrived at the restaurant—tony leather chairs, a fireplace that crackled in winter—with a check. Every month, Neubauer received a percentage of the money he had invested. The two men would order and then talk about business and, sometimes, the Mercer Island house Berg was remodeling. He had bought the mansion for nearly $5.5 million in 2007 and spent at least $5 million more renovating the 5,400-square-foot property, which had four bedrooms, four kitchens, a home theater, a pool, a deck and a dock, and a view of the Bellevue skyline gleaming on the east side of Lake Washington. The furniture, such as a king-size bed with a horse hair mattress, was custom made. A crane lifted mature trees and a stainless steel fire table into the backyard. Like his investors, Berg was profiting from the funds too. 

But unnerved by the Madoff scandal, one investor, a big one, wanted to cash out. Berg couldn’t pay. By June 15, 2010, a group of investors filed a petition to force several of the funds into bankruptcy. Neubauer read about the lawsuit in the Puget Sound Business Journaland, concerned, called Berg. Berg told him not to worry. Everything’s all right, he said. You’ve got another check coming. 

It arrived a few days later. Still, Neubauer was uneasy. Something seemed wrong.  
 

THOUSANDS OF BOSTONIANS clutching wads of money formed a line that stretched from city hall to the Niles Building, curling up the stairs and along corridors to the office of Charles Ponzi. He arrived there that morning on July 26, 1920, in a chauffeured car, biographer Donald Dunn writes in his book, Ponzi! The Boston Swindler. The Italian immigrant with a reputation for doubling investors’ money within three months raised an estimated $15 million in less than a year by convincing thousands of people to invest in an opportunity he promised would deliver big profits. All he had to do, he claimed, was buy discounted postal reply coupons and redeem them at face value. But in the schemes named for Ponzi, fraudsters pay existing investors with money collected from new investors, as opposed to investing their money and then paying them returns on that investment. The scam requires a constant flow of fresh cash to survive, and such schemes can collapse when enough investors seek their money back. 

After Bernie Madoff’s fraud collapsed in 2008, wiping out billions of dollars his customers had invested, he pleaded guilty to 11 counts of fraud, money laundering, perjury, and theft. It was the largest and longest Ponzi scheme in history, and in June 2009, he received the maximum sentence for his crimes, 150 years in prison. 

It was about a year later when Norman Barbosa, then an assistant U.S. attorney for the Western District of Washington, got a call about a possible significant Ponzi scheme in Seattle. The FBI and the state attorney general’s office were also getting reports from multiple sources. Darren Berg’s investors were among them. 

Barbosa worked on investment fraud and white collar crime cases in the U.S. attorney’s office, but as he and other federal authorities started investigating, it quickly became clear that this one was different. The scope—the amount of money involved—was bigger than any other case in his career. 

As investors succeeded in filing involuntary bankruptcies for some of Berg’s funds, though, the Mercer Island man seemed cooperative. His lawyer contacted the U.S. attorney’s office and asked for a meeting to discuss Berg’s involvement in investment fraud. Berg, said his attorney, Irwin Schwartz, wanted to come in “palms up,” and fully cooperate with any investigation. 

Barbosa, FBI agent Steve Rausch, and another assistant U.S. attorney met with Schwartz on July 16, 2010. (Schwartz declined to comment for this story, saying he doesn’t discuss people he’s represented.) According to court filings by the federal government, Schwartz explained that Berg had run a series of investment funds since the early aughts but that starting around 2008, when the market began to falter, he tried to keep his funds solvent by moving money around between them, his other businesses, and personal assets. Berg thought he could keep his funds afloat until the market stabilized, Schwartz said, at which point he could sell his other companies and pay off investors. 

A few days after that meeting, however, the U.S. Trustee’s Office appointed Mark Calvert, who runs investment banking firm Cascade Capital Group, to control the funds investors forced into bankruptcy. The trustee’s office interviewed multiple people for the job, Calvert recalls, choosing him for his depth and breadth of experience. Cascade Capital specializes in restructuring the finances and operations of businesses as well as bankruptcy proceedings. Calvert, who grew up in Seattle and earned a degree in finance and accounting from the University of Washington, started his career in Houston, where he worked as a CPA and a certified fraud examiner before heading to accounting firm Ernst and Young and then investment firm Alexander Hutton. 

Calvert, tall, with graying hair and a pair of black cowboy boots, remembers walking over to the Century Square building on a summer day in 2010 and riding the elevator until it opened on the 19th floor. As Calvert stepped out he saw a receptionist through a glass door, which required a key to enter. 

“I need to talk to Darren,” he said with a slight Texas drawl. 

“He’s not taking anyone,” she replied through the glass. Calvert stepped to the side, out of her view, and waited for an employee to leave. He caught the door before it snapped shut again and introduced himself to the receptionist as a court-appointed trustee. She picked up the phone and called Berg, who emerged and tersely told Calvert that he was going to call security to escort him out. When Calvert told him he had a court order, they went back to Berg’s office instead. 

Calvert took stock of the room, noticing on the credenza a photo of a woman and child he assumed were Berg’s wife and kid. The men spoke for almost two hours as Calvert explained what he was going to do, starting with taking over incoming mail—and mortgage payments—and then trying to determine what exactly had happened at Meridian. There were about 20 different bank accounts to parse and statements and files to review to determine if Berg had been stealing from investors, how, and for how long. 

But Calvert could already see how Berg was able to raise so much money. He was a charismatic, friendly, outgoing man who tried to win over anyone he encountered—including Calvert. As Calvert and his staff took over the Meridian office suite, they met with Berg regularly and Berg appeared candid about his missteps, and keen to help Calvert navigate the many records that would allow him to piece them together. 

Still, Berg refused to give up control of certain bank accounts and post office boxes, according to court filings. He provided incomplete access to banking records for his businesses, including MTR Western, a charter tour bus company. Calvert worried Berg was shielding assets from him.

Investors from another Berg fund, one that Ron Neubauer had invested in, were also wary. They presented what they knew to Randy Aliment, a Seattle attorney who specializes in commercial litigation. After reviewing the information, both lawyer and investors were sure Berg had defrauded them and that there was a good chance he’d skip town with the money he still had. Neubauer had stopped receiving checks, and he wasn’t the only one. Pressure was growing on Berg, and they worried the stakes were high enough he’d run. They sought permission from a judge to seize his assets and on July 27, 2010, accompanied by King County sheriff’s deputies, Aliment and his colleagues scattered to Berg’s Mercer Island house, Seattle office, and a downtown condo where Berg sometimes stayed. In case Berg had stashed artwork or other valuables in his yacht and planned to flee for a foreign port, Aliment had arranged for a helicopter to stand by. But as crews were dragging furniture out of Berg’s homes and business in the surprise raids, it became clear the helicopter was unnecessary. Berg showed up at his office and soon after filed for personal bankruptcy, putting the seizure on hold.

There was a third property in King County that Berg owned and that Aliment didn’t know about, though; a house in the Magnolia neighborhood. And the next day, Berg quietly sold it for nearly $400,000. Farther south, in Oregon, was yet another home that Berg had paid for. But this one he had built for his mother.

FREDERICK DARREN MUSKOPF was born in Ashland, Oregon, and grew up in Grants Pass, about an hour northwest, where he lived in a pink rambler with his mom, dad, and three siblings. He was the youngest—an obedient, outgoing, and industrious kid who patrolled the street on his Schwinn, sometimes pedaling to his neighbors’ homes to take care of their dogs or selling cherries in his grandfather’s yard.

His father, however, considered him a sissy. The family patriarch supported his wife and children as a butcher, and later as a car salesman and river guide, and, sober, he could be funny. But he drank too much, and turned mean. Though he saved his beatings for his two older sons, they took it out on the baby of the family. His mother and sister were the only ones who seemed to love the youngest Muskopf as he was.

He had few friends as a boy and when he was eight, he created an alter ego named Rod Taylor, a smart, invincible character who never failed—who was admired. He set up a desk and went into business running an imaginary bus company. His grandfather was a Greyhound bus driver, and he often talked about his work. Muskopf spent hours in his play world, away from the chaos of his real life. 

He was a teenager when his parents divorced in 1975, and after his mother remarried he changed his last name from Muskopf to his stepfather’s surname, Berg. A few years later he left Grants Pass for Eugene, where he enrolled in the University of Oregon.

After pledging to the Pi Kappa Alpha fraternity, Berg was elected treasurer. Michael Stone, an alumni adviser to the fraternity at the time, later described him to CNBC as a “ball on fire.” In college, Stone said, Berg had his own charter bus company—just like Rod Taylor. Among Berg’s duties as the fraternity’s financial guardian was collecting rent from his frat brothers, but Stone eventually got a call from the landlord; where was the money?

Berg, it seemed, had taken as much as $21,000 to fund his bus company. He sounded righteous denying the accusation in a letter to Stone.

“A word for the record,” Berg wrote. “I have, at no time, ever ‘embezzled’ any funds from Pi Kappa Alpha Fraternity. What an erroneous assumption. It’s for this reason that I welcome your audit. As always, you will find a reason for everything I have done. My bookkeeping will be no exception. Any money deposited into any account will have a tangible and reasonable explanation.” 

He left the fraternity, though, and dropped out of the university and made for Portland. A few years later, in the late ’80s, Berg was tangled up in criminal allegations again. He was convicted of bank fraud in the district of Oregon for stealing approximately $30,000 in a check kiting scheme, a kind of fraud that makes it look like there’s more money in a bank account than there really is so checks won’t bounce.

The judge didn’t give him any jail time; he was sentenced to probation. Berg kept heading north, to Seattle.

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  AS FEDERAL AUTHORITIES continued to investigate whether Berg had misappropriated money through his Meridian investment funds, Norman Barbosa, the U.S. assistant attorney, felt like he was working on a drug case, not a white collar crime. Fraud cases are generally slow, doddering toward a possible conviction. Berg’s unfurled fast.

Calvert was likewise startled by the sheer velocity with which money moved between Berg’s accounts. And some of the records were completely fabricated. 

Many of Berg’s investments, as he pitched them to investors, involved buying private mortgages and collecting the loan payments from borrowers. Moss Adams, which was auditing Berg’s funds, wanted to confirm borrowers’ identities by mailing loan confirmation letters. Only the borrowers weren’t real. Berg opened dozens of private post office boxes in August 2007 under fake names, listed the addresses on fake loan files, and forwarded any correspondence sent to the PO boxes to an address in Seattle. Then he completed the confirmations himself and mailed them back to the auditor.

Calvert’s forensic accounting of Berg’s business turned up other anomalies. More than $32 million of investors’ money was spent on MTR Western, the bus company. More than $11 million went to Meridian Greenfield, a construction company Berg owned, and his Mercer Island home. Over $5 million was spent on Lear jets, and approximately $3 million funded yachts.

As the summer of 2010 sped along, more of Berg’s funds were added to bankruptcy proceedings and a bankruptcy attorney was tapped to be the trustee for Berg’s personal estate, including MTR Western, subsidiary bus companies, and his homes.

Before his arrest Darren Berg enjoyed yachts and a $5.5 million Mercer Island mansion. 

On October 13, 2010, a consultant working for the trustee discovered a new bank account in Berg’s name, according to court records. He had opened it more than a month prior but, during a four-hour briefing with law enforcement on September 20, Berg didn’t mention it when asked to list all the bank accounts he continued to control.

The consultant noticed $145,000 had been transferred to the account days after Berg opened it from another account in the name of DB517 LLC. Berg had opened that account in February and not long after, $225,000 was wired to it. 

Berg explained that the money came from consulting work he started in early August 2010, after he declared personal bankruptcy. The court order in those proceedings entitled him to keep any money earned after the Chapter 11 filing.

Contracts for the consulting jobs showed the work was related to owning corporate jets. Investigators could only find one of the people who supposedly signed the agreements enlisting Berg for work. His name was spelled wrong and, the alleged consultee said, the signature was fake. The money was actually from the sale of the Magnolia house that initially escaped investigators’ notice, according to prosecutors, and Berg spent it on lease payments for two Porsches, 12 months advance rent on an apartment in Los Angeles, an Audi convertible, insurance on jet skis and a yacht—and a retainer for a criminal defense attorney.

Barbosa felt like he was working on a drug case, not white collar crime. Fraud cases are generally slow, doddering toward a possible conviction. Berg’s unfurled fast.

Prosecutors charged Berg with nine counts of wire fraud and one count of money laundering. On October 21, 2010, he was arrested. The government asked the judge to detain him before trial. They worried he was a flight risk. Authorities had discovered evidence that Berg had tried to establish an offshore trust in Belize. He said he had been exploring ways to protect the assets in his bus company—to insure them—but prosecutors pointed to the move as proof Berg was trying to run.

Berg had claimed he wanted to give the government a full accounting of his investment fund activity, to cooperate. But, a detention motion states, “Since that time, Mr. Berg’s cooperation has been inconsistent and manipulative.”

The judge ordered Berg to stay behind bars, and the defendant pleaded not guilty to all allegations. On November 18, a new indictment came down with additional charges: another count of money laundering and one count of bankruptcy fraud. 

Berg insisted that his business had been legitimate, but that by 2008, he was in “survival mode.” The crumbling economy led him to act out of desperation to salvage Meridian and keep investors satisfied, he said.  

Barbosa had heard that argument before. Often, he says, fraudsters will focus on their activity that wasn’t illegal, as if that honesty will tip the scales again in their favor.

“You can’t tell lies in order to get people to part with their money,” he says. “And throughout the whole scheme, Berg was lying aggressively about the nature of investments, quality of investments, and strength of the funds.”

The two sides reached a plea agreement nearly a year later. On August 2, 2011, Berg pleaded guilty to one count of wire fraud, one count of money laundering, and one count of bankruptcy fraud. He was sentenced to 18 years in federal prison the following year.

 

RON NEUBAUER WAS SURPRISED when he realized Berg had probably defrauded him, and then he felt angry. More than five decades ago, Neubauer was an assistant U.S. attorney prosecuting people accused of running Ponzi schemes. But Berg never roused his suspicions. Even today, among all the people he’s made investments with, Berg was the most convincing and seemed the most trustworthy. Then again, Neubauer says, “I never met a sociopath I didn’t like.”

He was in Kane Hall at the University of Washington on August 30, 2010, when Calvert assembled more than 500 investors for a meeting and revealed to many for the first time that he thought they had invested in a Ponzi scheme. Berg’s business didn’t start out as a Ponzi, Calvert explained, and there were even some funds that appeared lawful. But, he said, Berg had been making unauthorized loans from the funds they had invested in to pay for interest payments, MTR Western and the subsidiary bus companies, lavish parties for his employees, and more.

Some investors cried sitting in the auditorium that morning. Calvert estimated that, on average, they could recover between 9 and 20 percent of the original amount of money they handed over to Berg. As of March, that’s looking more like 26 to 28 percent. Calvert continues to liquidate assets. Still, some investors had to go back to work. Others have died. Berg’s Ponzi lasted longer than most because about half of the cash invested was retirement money. His clients were older. They were also successful, intelligent business people and professionals. And yet, Berg duped them.

Sitting in a coffee shop in Bellevue in January 2018, Craig Edwards, dressed in a red plaid shirt and slacks, recalls how Berg said he was a law school graduate and how that legal background helped him in the real estate business. Edwards had friends who invested with Berg; people and companies he trusted associated with him. One of the country’s largest accounting firms was auditing the company. Edwards invested $50,000 as a trial. He wanted the money in a conservative fund. Soon, he was receiving monthly checks for about $300, or 7 percent of that principal amount annually.

In a letter to a U.S. District judge, sent before Berg was sentenced, Berg’s mother wondered what responsibility her son’s investors bear in all this—and how they couldn’t suspect something was amiss. “They too must be culpable for a small percentage of the guilt, as savvy investors, for letting their greed overtake their reason,” she said.

A former employee who worked for Berg for four years, however, says his former boss kept people in silos. Everyone had to communicate through him. And, suspects the employee—who asked to remain anonymous for fear of reprisal—Berg tailored his persona to each individual, sizing them up and deciding how he needed to act to get what he wanted.

His image was important to him, the employee said. In 2008, he rented out the then EMP Sky Church during a Professional Convention Management Association event to woo business for his bus company, paying Ben Folds and John Mayer to perform at the intimate gathering. (Mayer seemed to later wink at the moment in the movie Get Hard, in which he performs at the birthday party of Will Ferrell’s fraudster character, who is arrested midset.)

Berg also fussed over the appearance of his buses, those once imaginary vehicles under the care of Rod Taylor that were now real, ferrying professional sports teams like the Seattle Seahawks. He took pride in those buses, refusing to let them travel on gravel or in snow. They had oak floors, and the drivers, among about 300 employees Berg had hired, were dressed in fine Nordstrom uniforms. But in the downtown Seattle office, his behavior was not always so polished. 

He threw office supplies, like staplers, and his cell phone when he was upset, busting them so badly they needed to be replaced. He kept the staff off balance and he often seemed stressed, and angry. After such outbursts he would never admit he was wrong, the anonymous employee said. “He would just defend.”

As of publication, Darren Berg is on the run from U.S. Marshals after escaping a California federal prison in December 2017. 

ON DECEMBER 7, 2017, the U.S. Marshals Service issued a wanted poster for Frederick Darren Berg. The Federal Bureau of Prisons had alerted the agency about Berg’s escape, and the deputies tasked with tracking down the country’s fugitives asked residents in California, Oregon, and Washington with any information about his whereabouts to contact them. As of press time, Berg is still missing.

He was working on the grounds when he walked away, bringing the number of prisoners to escape from the facility since 2011 to eight, according to the bureau. The agency declined to answer questions about Berg, who transferred to Atwater from a low-security facility in Lompoc, California, where he served the first part of his sentence. The U.S. Marshals deputy leading the investigation into Berg’s disappearance had little to add about Berg’s possible location. 

Some investors have wondered if, eight years later, he finally made it to Belize, or somewhere else abroad. It’s possible he liquidated assets that escaped the attention of the bankruptcy trustees and authorities.

“He is an incredibly intelligent person,” Barbosa says. “I have no doubt that he thought long and hard about this and had a plan that he executed over a number of years.”

News of Berg’s escape rankled his investors. They had wanted a tougher prison sentence. Many of them had to delay retiring, take additional jobs, and sell their homes. Prosecutors expected that some of them would be forced into their own bankruptcies because of Berg. At Berg’s sentencing hearing in February 2012, Richard Jones, the judge, described a “reckless disregard for his victims.” One investor puts his feelings more bluntly: “I hope he’s hiding out, wracked with paranoia in some rat-infested mosquito-ridden dung hole fearing for his shitty life!” 

But Calvert expects Berg’s escape was extremely well orchestrated, and he doesn’t think Berg’s whereabouts will be discovered unless Berg wants them to be known. Others aren’t convinced that he won’t make a mistake and accidentally reveal himself.

In some ways, the speculation is an extension of the uncertainty that surrounded Berg when he was under investigation, when prosecutors wondered if he was really cooperating or just pretending. Maybe everything he disclosed to authorities, lawyers, and trustees was intentional, carefully laid tracks leading them where he wanted. Or maybe he just got caught and divulged more about his crimes than he realized.

Berg did do something wrong, his mother said recently, though she didn’t want to say much else when I called her one evening this winter.

“My experience has been no matter what’s said, the news twists it around to be what they want to make it more sensational,” she said. “No comment.”

She later sent me a book Berg wrote in prison titled My Apologies, a more than 300-page work in progress. The book, dedicated to his mother and sister, opens with a quote from Oscar Wilde’s The Importance of Being Earnest: “The truth is rarely pure and never simple.”

While Berg had fraught relationships with some employees and family members, he seemed to cherish his mother and sister. He doted on his sister’s children, she wrote in a letter to the judge before Berg was sentenced. And they worshipped him.

She recalled a moment in their childhood when Berg was three, chairs flying as their father raged, sirens blaring in the distance, and her brother oblivious, curled in bed asleep.

“I know now that this was the beginning of his mind shutting down,” she said. “The world we inhabited was too scary for him to navigate, so he went somewhere he could be safe.” He invented Rod Taylor, she says, and he never really let him go.

Frederick Darren Berg, mastermind of Washington state’s biggest Ponzi scheme, escapes from California prison

Berg was sentenced to 18 years in prison in 2012 after pleading guilty to defrauding hundreds of investors of more than $100 million.

 Frederick Darren Berg, the man responsible for the biggest Ponzi scheme in Washington history by bilking nearly $100 million out of investors, has walked away from his 18-year sentence at a federal prison in California. (Facebook, undated)

Frederick Darren Berg, the man responsible for the biggest Ponzi scheme in Washington history by bilking nearly $100 million out of investors, has walked away from his 18-year sentence at a federal prison in California. (Facebook, undated)

Frederick Darren Berg, the man who bilked investors out of more than $100 million in Washington’s biggest Ponzi scheme, has walked away from his 18-year sentence at a federal prison in California, according to the U.S. Marshals Service.

The U.S. Bureau of Prisons said Berg, 55, of Mercer Island,  was discovered missing around 3:30 p.m. Wednesday from a 130-inmate, minimum-security work camp adjacent to the U.S. Penitentiary in Atwater,  a maximum-security facility in Central California that holds about 1,200 male inmates. The bureau said an internal investigation was underway, and declined additional comment.

A deputy supervisor in the U.S. Marshal’s office in Fresno, Calif., confirmed that Berg is considered a fugitive after walking away from the work camp on Wednesday afternoon. The supervisor declined to give his name, saying he was not authorized to speak publicly about the matter.

Berg is listed as “escaped” on the bureau’s Inmate Locator site.

The U.S. Attorney’s Office in Seattle, which prosecuted Berg, said Thursday said it was confident he would be recaptured.

“More than 800 victims suffered losses from Berg’s schemes – losing dreams of retirement, home ownership or educational opportunities for children and grandchildren,” said spokeswoman Emily Langlie.

“Darren Berg will be captured, held to account and returned to federal custody” to serve out his sentence and whatever additional time he might get for escape, which carries a penalty of up to five years in federal prison, she said.

Berg is the third inmate to escape from Atwater prison facilities this year, according to the Merced Sun-Times.

Berg was sentenced to 18 years in prison in Seattle in 2012 after pleading guilty to defrauding hundreds of investors of more than $100 million through the Meridian Mortgage investment funds he ran for nearly a decade.

According to court documents and evidence presented during bankruptcy proceedings, Berg’s life as a con man began when he was an undergraduate at the University of Oregon in the 1980s, where he was accused by fraternity officials of embezzling as much as $21,000 from the fraternity to fund a charter-bus venture. He was never charged. Later, he was convicted of a check-kiting scheme, again involving a bus company.

Berg moved to Seattle in 1989 and spent the next decade building a business that bought and sold mortgages. He launched Meridian Mortgage in 2001.

Federal prosecutors would allege that he diverted as much as $45 million of investor’s money to start a luxury bus line that served tour groups and sports teams, including the Oregon Ducks and the Seattle Seahawks.  After his arrest and the collapse of the Ponzi scheme, bankruptcy officials obtained about $8 million for the bus operations.

Court documents showed that, starting around 2001, Berg was stealing tens of millions of dollars every year from investors, many of whom were friends, to keep his fraud afloat and fund a lavish lifestyle. His victims included mystery writer and part-time Seattle resident J.A. Jance.

For more than a decade, the FBI said, Berg used investor money for the purchase of  a $1.95 million condominium in Seattle; a $1.25 million house in La Quinta, Calif.; a $1.4 million condominium in San Francisco; and a $5.475 million waterfront home on Mercer Island, on which Berg spent another $5 million to remodel.

The FBI said he spent at least $5.5 million to buy and fly two Lear jets and at least $3.6 million on the purchase, operation and frequent modification of several yachts. He spent another $45 million on a failed bus line.

Berg’s exploits were featured in an episode of the CNBC television series, “American Greed” entitled “Seattle Roasted,” and which begins with the narrator introducing Berg as a conman who traveled from the “Frat house to the Big House.”

In 2010, while he claimed to be cooperating with the bankruptcy trustees, the FBI learned he had concealed more than $400,000, which he used to make lease payments on his apartment and a pair of Porsche sports cars.

Panama Papers: On the Run with Fugitive Gambling Czar Calvin Ayre

Update: Ayre pleaded guilty in July 2017 to a single federal misdemeanor, accessory after the fact to a violation of the Wire Act. He was sentenced to one year of unsupervised probation and a $500,000 fine. Prosecutors dropped all other charges. He also paid $100,000 to reacquire the domain name bodog.com, which had been seized by prosecutors.

  Calvin Ayre poses with women in Antigua in an image posted to his Facebook page

Calvin Ayre poses with women in Antigua in an image posted to his Facebook page

Ayre made the cover of Forbes magazine as the first billionaire impresario of the online gambling world, landed on People magazine’s “Hottest Bachelors” list and took “MTV Cribs” on a long, televised tour of his over-the-top, $3.5 million estate in Costa Rica. Playboy covered his massive birthday bash in Prague in 2010 and called it “a surreal party with a bizarre mix of … European models, midgets and live pigs.”

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He is always surrounded by fawning women in bikinis, servants offering champagne and caviar, and has armed bodyguards and bulletproof limos at the ready, at least according to his own torrent of promotional videos, news releases and social media that tout his “Play Hard” lifestyle.

"Long Weekend, Antigua Style"

In 2012, Ayre achieved a different kind of notoriety when the U.S. government indicted him and three alleged associates on charges of conspiracy to launder money and illegal gambling, since most on-line gaming is illegal in the U.S. and a huge chunk of Bodog’s customers were American. Suddenly, there was a new photo of Ayre on-line, as one of the Department of Homeland Security’s 10 Most Wanted fugitives.

Four years later, Ayre, 54, is still eluding his pursuers from the Justice Department and the IRS, moving himself and, authorities believe, large sums of ill-gotten gains, from one exotic tax haven to another – and documenting his travels on social media.

“Long weekend, Antigua style,” he wrote in one beach-side May 2 Facebook post with a winking smiley face emoji, two bikinied and beer-drinking women on his lap, his tongue thrust out and both hands raised with the two-finger victory salute. “Opted for some extra leg room on the flight home,” he said on another post last month, with photos of a private jet with red carpet rolled out, and Ayre seated with another beauty on his lap.

In the searchable version of the massive Panama Papers database made public today, Americans won’t find U.S. links to the same kind of bold-face names –- top politicians, athletes and entertainers –- that have surfaced overseas as secret owners of offshore companies used to stash millions in ill-gotten gains, commit crimes or evade taxes.

What they will find is a lively assortment of con artists, scammers and alleged criminals like Ayre who have had accounts at the now-notorious Panamanian law Mossack Fonseca while allegedly engaging in nefarious activities in the U.S.

A review of the law firm’s internal files by the International Consortium of Investigative Journalists and other media partners, including NBC News, has identified companies tied to at least 36 Americans accused of fraud or other serious financial misconduct. Some have been convicted of fraud or other crimes, while others have been sued in civil cases launched by securities regulators or private plaintiffs.

Authorities have put many of the perpetrators out of commission. Some are in prison, or already out after serving their time. Others, like Ayre, are still in the wind, though unlike him they aren’t sending virtual postcards to their pursuers via Facebook.

Over the years, the feds believe they have come close to catching Ayre on several occasions. They have even pursued a negotiated settlement with his lawyer, since Ayre is a Canadian citizen and the Canadian government has made it clear that it won’t extradite him, according to a U.S. law enforcement official familiar with the long-running investigation. A Canadian law enforcement official told NBC News that per government policy, she could not discuss any ongoing investigation into a Canadian citizen including whether authorities have received or can act on a request for arrest or extradition.

Authorities also believe that Ayre and his associates have successfully used layers of offshore companies to hide potentially hundreds of millions of dollars in illicit earnings from them. They are still trying to get their hands on that loot, on top of the $68 million they say they’ve already seized.

And they believe that information from the massive trove of leaked offshore company documents known as the Panama Papers can help them accomplish that. In all, a still-unidentified person obtained 11.5 million documents that comprise the entire client files of one of the world’s largest “offshoring” companies – the Panamanian law firm Mossack Fonseca – and leaked them to the German newspaper Süddeutsche Zeitung, which in turn shared them with ICIJ.

  Calvin Ayre's YouTube channel featured an "Ask Calvin" series where viewers submitted questions online to Calvin.

Calvin Ayre's YouTube channel featured an "Ask Calvin" series where viewers submitted questions online to Calvin.

In reams of court documents and seizure orders, U.S. authorities have made it clear that they know a lot about the complex web of offshore companies used by Ayre and associates over many years. The 2012 indictment accuses four of them of moving $100 million from accounts in Canada, Malta, England, Switzerland and elsewhere into U.S. accounts to pay illegal winnings to American bettors, and another $42 million to pay for advertising.

But authorities confirmed that they were not aware of another offshore company that Ayre created in the tax haven of Tortola in the British Virgin Islands, and controlled from 2007 to early 2013. They believe that company and others revealed by the Panama Papers could help them connect the dots between Ayre and potentially dozens of other associates as he expanded his gambling, betting and alleged money-laundering operations to the Caribbean, Europe and Asia and even a Canadian Indian reservation a short drive from the U.S. border.

“Let’s just say we are very eager to see what’s in the documents,” the U.S. law enforcement official said, speaking on the condition of anonymity because of the ongoing investigation. “Any information that would help us … locate accounts, or funds or investments of any kind, is something (authorities) would be interested in.”

“When you look back at the files, you see that [the U.S.] seized a lot of money,” the official said. Asked if he believed Ayre and his associates had stashed significantly more money that is still out there, he said, “Yes.”

NBC’s research suggests that the amount of money could be substantial based on how much money Bodog.com was making from Americans betting on everything from sporting events to card games and even U.S. elections.

$24 Billion in Bets

Ayre himself, always eager to stay in the public limelight, boasted to reporters that his personal net profit was about $55 million just in 2005 alone, based on $214 million in revenue that Bodog.com took in that year. The next year, when Forbes put Ayre on the cover of its annual “Billionaires” edition, he boasted of even bigger earnings. He said Bodog’s business was tripling in volume every year, and that he wasn’t paying personal or corporate U.S. income tax on any of it.

By 2007, as online gambling exploded in popularity in the United States, Ayre stated that Bodog handled almost $24 billion in bets and earned $640 million in revenues, which would mean $160 million in profits based on earlier ratios. He declined to say how much of that was from U.S. bettors. He also boasted that he’d begun snapping up other online gambling-related companies at fire sale prices, including $9 million for a U.S.-focused business, Betcorp. And Ayre had expanded the business into Bodog Entertainment, adding a TV unit, music label, conferences and contests and even a charitable foundation.

The documents shared with NBC News show that many of those individuals in the Panama Papers with a U.S. connection have been accused, indicted or convicted of various kinds of fraud or serious financial misconduct. The documents open a window on how some of these individuals used offshore entities to engage in, or hide a variety of criminal activities, while others used them to move money around clandestinely.

The documents also contain information about how at least two other significant operators in the online gambling world were using offshore companies, although –- as in Ayre’s case –- they do not suggest any kind of illegal or improper activity.

One is Gary Stephen Kaplan, the founder of a rival site called BetOnSports.com, who pleaded guilty in 2009 to charges related to illegal gambling and racketeering, forfeited more than $43 million and was sentenced to four years in prison. Another is Michael Flynn III, also known as Mickey Richardson, an American who oversaw the sprawling BetCRIS offshore sports gambling operation. He was indicted in April 2010 along with 27 other people in a wide-ranging enforcement action, and was last seen in Costa Rica. Like Ayre, he remains a fugitive.

Efforts to reach both men or lawyers for them were unsuccessful.

In his manifesto last Friday, the leaker said one major reason that he or she leaked the Panama Papers was because so much of the offshore activity “is legal and allowed in this system. What is allowed is indeed scandalous and must be changed.”

The ICIJ has said it has no plans to share the files with law enforcement agencies, providing access to the documents only to specially selected media organizations around the world so they can investigate abuses of offshore entities in their home countries.

But in a much anticipated move, ICIJ today is publicly uploading a searchable version of the Panama Papers database. It will not include the underlying documentation reviewed by NBC News and other ICIJ partners, including company records and emails and other communications. But it will contain basic information such as the secret owners of the more than 214,000 offshore entities found in Mossack Fonseca’s files for investigators, victims, jilted associates and family members and others to search.

And in his manifesto, the leaker announced that he “would be willing to cooperate with law enforcement to the extent that I am able.”

“In the end, thousands of prosecutions could stem from the Panama Papers,” the leaker said, “if only law enforcement could access and evaluate the actual documents.”

Reached through his U.S. lawyer Barry Boss, Ayre had no comment about his dealings with Mossack Fonseca, or the cat and mouse game he has played with the feds all these years. “I think we are going to decline your request for an interview at this time,” Boss told NBC News.

Mossack Fonseca also has strenuously denied any wrongdoing, saying it relies on middlemen that it refers to as its “clients” – bankers, lawyers and other operatives that feed it business – to make sure that people who get offshore companies through the law firm aren’t involved in criminal activity.

Building an Offshore Empire

By the time Ayre entered the online gambling scene in the early 1990s, he had already been banned from the Canadian stock exchange for 20 years for stock-trading offenses, and was also linked to a brazen marijuana smuggling operation that snared his father and other acquaintances.

The son of grain and pig farmers, Ayre (pronounced AIR) launched Bodog.com in 2000, and built the brand aggressively on the carefully cultivated image of him as the embodiment of the flamboyant “billionaire bad boy.”

From the beginning, Ayre also seemed to market himself as something else – a renegade who picked fights with the authorities who were already cracking down on online gambling as fast as its U.S. business was expanding.

Ayre would later tell a reporter his inspiration for an online gambling empire came from a newspaper story about Ronald “the Cigar” Sacco, the U.S. bookie and reputed mob affiliate who set up a similar operation in the Dominican Republic to avoid felony charges in the U.S.

By 1994, Sacco had moved his operation to Costa Rica and pleaded guilty to money-laundering charges that ultimately sent him to prison. Undeterred, Ayre set up shop there too in 1996, working on some of the first online gambling efforts before launching Bodog.com. He started with sports betting and then casino games and online poker, taking bets via credit cards and online checks.

In its March 2006 cover story, Forbes opened with the scene of Ayre lounging poolside at his then-new Costa Rica estate, hung over and in a bathrobe, surrounded by servants. By then, his defiance of U.S. law enforcement was already so much a part of the narrative that the piece was titled, “Catch Me If You Can: Calvin Ayre has gotten very rich by taking illegal bets over the Internet.”

Ayre said that what he was doing was legal because of a complex series of financial transactions using advertisers, money transmitters and payment processors on three different continents.

"We run a business that cannot actually be described as gambling in each country we operate in,” he said. “But when you add it all together, it's Internet gambling."

Authorities had a different opinion, a Justice Department official told Forbes: “Online gambling, whether it is located offshore or not, is illegal when it comes to the United States and its citizens.”

But because Ayre –- and his assets –- were safely offshore, Forbes said, “It remains to be seen whether IRS agents could make Ayre pay, assuming they could get their mitts on either him or his money.”

The night after the Forbes article was published, Costa Rican authorities raided his mansion during one of many parties there. Six months later, Congress passed legislation that targeted enterprises like Bodog. It barred U.S. banks and credit card companies from processing payments to online gambling businesses outside the country.

Before that, online gambling proponents like Ayre said they had some leeway because the existing law barring it -- the 1961 federal wire act –- was too vague. The new law prompted some operators to shut down or seek clients outside the U.S., and some big players were even arrested, including one when his plane en route to Costa Rica had a layover in Los Angeles.

Ayre continued to promote Bodog, and even appeared to be doubling down on its stateside business, according to his comments and media reports at the time. "Our position has always been that we are operating legally in all of the jurisdictions that we are in,” he said. “And we don't operate in the U.S."

Just to be safe, Ayre stopped traveling to the United States, as evidence mounted that the feds were targeting him. In 2008, the same year MTV showcased his Costa Rica mansion, the IRS seized more than $24 million from several of Bodog’s alleged payment processors in three separate enforcement actions.

Ayre denied the processors were directly linked to Bodog, but by then, he’d already shifted at least some operations to the gambling-friendly island of Antigua. He publicly announced that he had retired from his position as CEO of Bodog. And he said he’d transferred ownership of Bodog’s North American operation to the Morris Mohawk Gaming Group, which was based at the Kahnawake Mohawk reserve just south of Montreal and ran the new business under the name Bovada.lv.

But authorities say they think Ayre stayed in the game, and was busy expanding Bodog’s gambling operations into Asia and Europe. At the time, they believe, he and his associates created more and more offshore companies, and moved money in and out of them.

Elegant Step

The documents in Mossack Fonseca’s database pertain to only one of many dozens of offshore entities that authorities say Ayre set up over the years through a complicated web of transactions. They don’t show any wrongdoing by Ayre, as it is not necessarily illegal to have offshore companies.

But authorities who were provided details about the company by NBC News said they raise additional questions about whether Ayre has benefited improperly from offshore tax strategies and whether his interests have been fully disclosed.

“He was setting up [offshore] companies, and he’d set them up and change them quite frequently,” said the U.S. official familiar with the long-running Bodog investigation.

When U.S. authorities seized some Bodog bank accounts in Switzerland and the Cayman Islands, the official said, Ayre and associates moved the money elsewhere.

“There are places like Liechtenstein and Tortola [in the British Virgin Islands] that have secrecy laws and regulations that can protect peoples’ interest in things,” the official said. “People like Calvin have criminal exposure and use these because they want to hide something.”

The Mossack Fonseca documents show that Elegant Step Group Limited was created on Nov. 26, 2007 by Calvin Wilson and Anita Rose Ayre. U.S. authorities confirmed to NBC News that Wilson was a known alias of Ayre, and that Anita Rose Ayre is his sister.

In the documents, Calvin Wilson gave a passport number saying he was a national of St. Kitts but that he resided in the Philippines. Anita Rose Ayre gave a Costa Rica address. They declared that the company itself was based in Phuket, Thailand, even though it was technically an offshore entity with a registered office in Tortola. In an email, one intermediary told another it was designed for real estate purchases in Thailand.

Over the next few years, the documents show, Ayre and his sister would issue various shares in the company, and withdraw or invalidate others.

On May 3, 2008, the company held a shareholders meeting at Portcullis TrustNet in Tortola. According to minutes of the meeting, contained in the Panama Papers, it was attended by the company’s two principals, Calvin Ayre and his sister Anita, and a witness. The meeting had one agenda item: electing Calvin as chairman so that Anita could resign as a company director and transfer her stake in the company – described as one share –- “to the remaining shareholder,” Calvin Wilson.

According to the minutes, “the chairman made a closing statement” and the documents were signed. All told, the meeting lasted 30 minutes.

Shares of Elegant Step were also moved from one entity to another, according to the Panama Papers. In August and October of 2011, all shares of the company were issued to an entity known as Trustco Trust, which in turn was the registered trustee of another entity, the Del Rey Trust. In November 2012, all shares were shifted again to Incom Trustees Limited, which itself was a trustee of a New Zealand trust called Adaman Trust, the documents show.

By then, Ayre had been replaced with employees of the controlling trust. Then, in January 2013, Elegant Step was transferred again, this time to Mossack Fonseca’s British Virgin Islands subsidiary.

NBC News could not reach representatives of Elegant Step or Anita Rose Ayre for comment, but she has been listed in filings and social media as an associate of Ayre’s, including the Calvin Ayre Foundation. She has not been accused of any wrongdoing.

The U.S. official familiar with the Bodog investigation said that kind of shifting of funds was a common practice of Ayre and his associates to stay one step ahead of the law, and the taxman.

They were able to do so, in part, the official said, because the Justice Department and IRS would have to get permission from authorities in the host country in order to seize Bodog accounts –- and the information would always seem to leak out.

“Whenever we got close, and were about to seize something, they would go dark and move the money so we couldn’t seize it,” said the official. “When we forced them to take one [entity] down, they would have two or three other sets of bank accounts that they just would move their money into. For them it was like flipping a switch.”

In one case, authorities traveled to Switzerland to seize a particular set of Bodog funds.

“By the time we got to Switzerland, it moved to Panama and then to the British Isles. But we finally did catch up with [that set of funds]."

In many other cases, the official said, Ayre and his associates moved the funds around so much that the Justice Department and IRS have no idea where some of the cash is, or how much might be stashed away. “He kept things, and operated, in places that were out of our reach,” he said.

Closing In

The IRS Criminal Investigation division began interviewing people associated with Ayre back in 2003, and by 2006 at least one undercover federal agent had opened accounts to place bets at Bodog to understand how it was using various third-party firms to camouflage its U.S. activities, IRS Special Agent Randall Carrow said in an affidavit.

In January 2009, IRS investigators filed more court documents, this time alleging that Bodog used companies on the island of Malta to circumvent U.S. regulations barring payouts to American players.

By then, Ayre was reportedly residing “in various countries in Africa and Asia that do not have extradition treaties with the U.S,” one newspaper reported at the time.

After the 2012 indictment, Ayre denounced the charges via his website CalvinAyre.com as politically motivated, and an "abuse of the U.S. criminal justice system for the commercial gain of large U.S. corporations."

“We will all look at this and discuss the future with our advisors, but it will not stop my many business interests globally that are unrelated to anything in the U.S. and it will not stop my many charity projects through my foundation,” Ayre added.

He has also denied playing any role in any Bodog-related successor firms engaged in illegal gambling, but authorities believe he is still somehow involved.

That’s especially the case due to all of the new variations of the Bodog domain name –- including Bovada –- that have popped up, and the different locations where they’ve been registered, including Europe and Asia.

Philippine authorities raided a Manila location that they said was part of Ayre’s expanding Bodog Asia operation in November 2013. One police official told reporters that authorities thought Ayre would be there, and that the call center was taking illegal bets from international clients linked to the Bovada address.

“Aside from the fact that Calvin Ayre A.K.A. Wilson is one of the most wanted persons in the U.S., we have also gathered substantial proofs that he has been living in Manila for several years now,” the official told reporters. “Local police are now working with the FBI, to get to the bottom of Calvin’s illegal operations.”

In 2014, more than two years after indicting Ayre, federal prosecutors filed papers saying they continued to pursue extradition, but asking for the case to be administratively closed while those proceedings play out.

Meanwhile, Ayre and the three other Canadians indicted with him remain at large. All are believed to be in Canada, at least some of the time. Ayre continues to travel the world, using CalvinAyre.com, his Facebook page and Twitter feed to comment on all things online gambling related.

After the Panama Papers stories were published, one of his frequent contributors to the site gave Ayre’s followers some advice: “Diversify Your Legal Representation” and “Optimize your Risk Management Strategies.”

DEA Arrests French Dream Vendor “OxyMonster”

According to DEA Special Agent Austin Love, probable cause existed to arrest a French citizen who has travelled to the United States to compete in a beard contest. The suspect, 38-year-old Gal Vallerius had landed at the Atlanta International Airport when law enforcement agents conducted a border search of Vallerius’s laptop. His laptop contained a private PGP key that belonged to a Dream Market and Traderoute Market vendor, Dream login credentials, and $500,000 in Bitcoin.

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His interception in Atlanta was not a stroke of luck after the random search of an international traveler. The Drug Enforcement Administration had targeted Vallerius as early as January 2017, according to the criminal complaint filed on September 1 of this year. In Miami, Florida, the DEA targeted numerous Dream vendors. The criminal complaint named three vendors investigated in the operation: ReximusMaximusDigitalPossi2014, and MethForDummies. After those three, the DEA agent wrote, focus shifted towards a vendor known as OxyMonster.

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After an unusually brief investigation, the DEA connected OxyMonster to Gal Vallerius. The investigation began on the Dream Market homepage where Agents observed a link titled “forum.” Love described what happened after clicking the link, it “took them to a Tor website called Dream Market Forum.” Then, while browsing the Dream Market Forum, agents navigated to a topic called “Official Staff.” The post:

Anyone that’s claiming to Mod or Admin who ‘s not on this list – should be reported
immediately.

Admin: Speedstepper
Senior Moderator: OxyMonster
Moderators: Quasimodo, FriedTheChicken
Ticket conductors: Xray, Spanishconnect ”
Senior Moderator @ Dream Market [Dream Market onion link]

Several months later, in June, they discovered that OxyMonster also sold “Schedule 11 controlled substances.” (Yes, they claimed that it had taken months to connect the forum profile to the vendor profile). On OxyMonster’s vendor profile, the vendor provided the Bitcoin address for “Dream Team Staff” (lDREAMv7kl6T8bMyE7ghe4nLQVSdBbPJAe). He also linked to his TradeRoute profile.

On his TradeRoute vendor profile, he wrote that he had moderated on the Evo marketplace and that he currently functioned as an admin on the Dream Market.

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To make a long and ultimately painful story short, officers traced the Bitcoin payments made to the allegedly official “Dream Team Staff” tip jar. The money eventually connected to a LocalBitcoins account with the username “vallerius.” The DEA searched social media (and undoubtedly elsewhere) for matches against Vallerius. And from this point onwards, the case unfolds look so many recent cases where compartmentalization seemingly slipped the vendor’s mind. His Instagram account, Twitter account, several random social media accounts, the URL “vallerius.com,” all provided investigators with information needed to connect Gal Vallerius to the LocalBitcoins account that connected to the OxyMonster Dream account.

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The criminal complaint described how investigators compared the writing styles of OxyMonster and Vallerius. “Agents discovered many similarities in the use of words and punctuation, including: the word ‘cheers,’ double exclamation marks, frequent use of quotation marks, and intermittent French posts.”

When arrested at the Atlanta International Airport, en route to a beard competition in Texas, he carried all the evidence needed to further connect him to the darknet vendor. He had his pgp keys, 99.98 Bitcoin and 121.98 Bitcoin Cash wallets, his Dream login, and a Tor installation. He did not contest his identity or detention in an Atlanta court and will soon be transferred to Miami to face a drug dealing conspiracy indictment.

Cyber Criminals Top Secret Service Most Wanted List

Sophisticated criminal schemes employing the most current technologies have overtaken the traditional check washing and counterfeiting operations of the past. The majority of fugitives on the Secret Service's top ten most wanted list can be described as "cyber criminals" who employ information technology related skills and methodologies in the commission of their alleged crimes.

The prevalence of suspects wanted for computer-based crimes reflects a fundamental societal shift to dependence on IT systems for both business operations and in the everyday lives of the ordinary citizen. While the objective of the criminal element remains the same, the ubiquity of the digital systems that pervade every aspect of our culture present a new set of challenges for law enforcement.

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The Secret Service most wanted list includes the following:

Dzmitry Valeryevich

  • Dzmitry Valeryevich Burak is the subject of charges in the federal district of the Southern District of California and also the State of New York. In California, Burak and others who were involved in an international criminal group used the internet to traffic in stolen and counterfeit credit cards. An investigation of Burak's e-mail accounts uncovered more than 55,000 stolen credit card account numbers, which were associated with more than $21 million in actual losses. In New York, New York, Burak sold thousands of stolen credit card numbers and other personal identifying information online. During a five year period, Burak accessed or sold more than 9,000 stolen credit card numbers, more than $4 million worth of stolen property and defrauded credit card companies for more than $1 million.

James Wan Shing Kong

  • The United States Secret Service and the Internal Revenue Service identified James Kong as the primary suspect in an investigation of fraudulent transactions through a consumer credit card service for health consumers. The investigation determined that Kong used his knowledge of the targeted company's customer service support center's computer systems to steal the account numbers of 1,000 customers and 95 participating service providers. Kong made fictitious and unauthorized charges to customer accounts and posed as health service providers to redirect payments into bank accounts in Asia. On December 3, 2008, a 76 count federal indictment and arrest warrant was issued for Kong for Bank Fraud, Wire Fraud, Access Device Fraud, Computer Fraud, Identity Theft and Money Laundering by the Grand Jury of the United States District Court for the Southern District of Ohio.

Walid Osman Turk

  • On May 22, 2008, Walid Osmond Turk and Yasmeen Assaf Turk were indicted by federal grand jury in Syracuse, New York for conspiracy to traffic in counterfeit goods and fraudulent use of access devices. The Turks were involved in schemes that used fraudulent account numbers to ship counterfeit merchandise purchased via the internet, resulting in a loss of $9.9 million and a potential loss of $25 million. The couple travels frequently outside the United States to China, Japan, Qatar, Singapore, Jordan, UAE, Canada, St. Maarten, France, Great Britain and Germany. Yasmeen Assaf Turk is also known by the alias Nada Assaf.

Sean Lamar Gauthia

  • On September 21, 2011, a federal grand jury indicted Sean Lamar Gauthia for conspiracy to commit bank fraud, five counts of bank fraud and three counts of aggravated identity theft. Gauthia has knowledge of computers and has the ability to obtain personal identifying information. He then used those identities to remain undetected from law enforcement. Gauthia is knows to have connections and family members in Los Angeles, Las Vegas and Houston. Suspect is a violent offender with convictions for rape, manslaughter. He is wanted by the Los Angeles Police Department for failure to register as a sex offender. Gauthia also trains dogs and owns an attack-trained black German Shepherd.

Oladipo Sowunmi Coker

  • Oladipo Sowunmi Coker has been identified as part of a criminal enterprise targeting financial institutions in Minneapolis and throughout the United States. On March 8, 2011, an arrest warrant was issued following Coker’s indictment by a grand jury for the U.S. District Court for the District of Minnesota on 57 counts of bank fraud, bank fraud conspiracy, aggravated identity theft and money laundering. The suspect may be in Nigeria, but is known to travel between Nigeria and the United Kingdom. Information obtained that the suspect may be traveling to Mexico and attempt to enter the United States through Mexico. He has extensive knowledge of computers and travels with an iPad to conduct his fraudulent activities.

Juegers Veloz

  • Juegers Veloz has been identified as a suspect in a $250 million cell phone cloning scheme. Those participating in the scheme allegedly stole information from cell phone accounts and used this information to run a lucrative black market in international calling. He has a history of regular travel between the Dominican Republic and the U.S., and connections to others under investigation in this case in Boston, Philadelphia, Scranton, Wilmington (DE) and Miami.

Where abouts of fugitive financiers still mystery

If you had $100-million and a dream of a new life, where would you go? How would you get there? Could you slip into Panama by yacht? What would you do when you arrived?

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These are questions being asked about Ron and Loren Koval, who are accused of one of the biggest frauds yet carried out in Canada without the aid of the stock market.

The couple, both 49, have managed to stay out of sight for more than three weeks despite the efforts of Toronto police, Interpol and the U.S. Coast Guard, among other agencies.

On slim evidence, police have speculated that they went to Florida and acquired a powerboat big enough to cross the Caribbean, possibly en route to luxurious exile in Panama. They are nowhere to be seen right now in this muggy, bank-infested nation of 2.8 million, which doesn't mean they are not here.

Elsewhere, a forensic accountant who knows the outlines of the case nominated Costa Rica, next door to Panama, as an attractive hideout for such people. The Kovals are known to have made inquiries about marinas in Costa Rica in the months before they disappeared.

In Panama, their situation was the subject of merry debate on the weekend in places as diverse as the terrace of a fashionable Panama City apartment, a yacht basin on the Panama Canal and a seaside bar at the end of a bad dirt road on the country's stunning Caribbean coast.

There was no consensus on whether Panama is still so openly corrupt that rich fugitives could buy citizenship outright, although it certainly once was.

"I've been around a few places in my life, but I've never been in a place where I've heard more adventures, more amazing stories, than in Panama," said David Smale, 44, a retired U.S. Air Force chief master sergeant who stayed behind after being stationed here.

The lines of discussion included these:

Could the Kovals have come here by yacht? Easily. People with money and know-how could buy an inconspicuous 15-metre cruiser on the U.S. East Coast and drive it to Panama without leaving a paper trail or hiring a professional crew, yacht sailors said.

These are questions being asked about Ron and Loren Koval, who are accused of one of the biggest frauds yet carried out in Canada without the aid of the stock market.

The couple, both 49, have managed to stay out of sight for more than three weeks despite the efforts of Toronto police, Interpol and the U.S. Coast Guard, among other agencies.

On slim evidence, police have speculated that they went to Florida and acquired a powerboat big enough to cross the Caribbean, possibly en route to luxurious exile in Panama. They are nowhere to be seen right now in this muggy, bank-infested nation of 2.8 million, which doesn't mean they are not here.

Elsewhere, a forensic accountant who knows the outlines of the case nominated Costa Rica, next door to Panama, as an attractive hideout for such people. The Kovals are known to have made inquiries about marinas in Costa Rica in the months before they disappeared.

In Panama, their situation was the subject of merry debate on the weekend in places as diverse as the terrace of a fashionable Panama City apartment, a yacht basin on the Panama Canal and a seaside bar at the end of a bad dirt road on the country's stunning Caribbean coast.

There was no consensus on whether Panama is still so openly corrupt that rich fugitives could buy citizenship outright, although it certainly once was.

"I've been around a few places in my life, but I've never been in a place where I've heard more adventures, more amazing stories, than in Panama," said David Smale, 44, a retired U.S. Air Force chief master sergeant who stayed behind after being stationed here.

The lines of discussion included these:

Could the Kovals have come here by yacht? Easily. People with money and know-how could buy an inconspicuous 15-metre cruiser on the U.S. East Coast and drive it to Panama without leaving a paper trail or hiring a professional crew, yacht sailors said.

Other moorings, such as Jose Pobre, a hard-to-find hamlet reached by dirt road northeast of Colon, would be convenient mouseholes for fugitives who made arrangements to be met by Panamanian help.

Even so, there was no sign that the Kovals passed this way in recent weeks. A day spent showing their photo around the coast yielded just one possible hit. Marcus Konrad, a Swiss who runs a small inn and marina for yachts at Jose Pobre, said Ron Koval looked like a man who visited about four years ago, although he did not recall him as having extensive acne scars, one of Mr. Koval's distinguishing features.

Farther along the coast, there are idyllic places with no roads but regular flights to the capital -- domestic flights without immigration control.

Sailors stressed that the Kovals almost certainly would not try to reach the Pacific via the canal, a trip that would require them to show documents and take aboard a pilot and line-handlers.

What crimes are they accused of?

In part, they are alleged to have looted the King's Health Centre, a glitzy downtown Toronto medical clinic they helped to found, of several million dollars.

That is the least of it, however.

In the days after their disappearance, police estimates of the amount of money involved ballooned from $3-million to $12-million to $50-million to $100-million.

The big losses appear to have been suffered by financial institutions that bankrolled the Kovals' medical-equipment leasing business, which was supposed to buy big-ticket items such as magnetic resonance imaging scanners and lease them to hospitals.

They are accused of writing fictitious leases involving non-existent equipment and somehow contriving to grab the money and run. This is a feat equivalent to taking out a mortgage on a house without showing the bank the title.

How likely is it they came to Panama, by sea or otherwise?

The odds may be against it, but few other places seem as good a bet. Among the rival possibilities: Belize, Brazil, the Cayman Islands, Costa Rica and various South Sea islands.

Panama has more banks than are strictly required to meet the needs of its people and a reputation as a money-laundering centre for criminals. A government brochure calls it "a safe international haven for money attracted by tax exemptions and the absence of exchange restrictions and controls."

Mr. Koval is believed to have visited both Panama City and Miami earlier this year, possibly to arrange money transfers.

He is known to have had dealings with an obscure Caribbean bank that is formally barred from doing business in Panama. Whether it obeys that rule is unclear, but Panama City is home to one of the guiding minds behind the bank, which also has low-profile representatives in Miami.

Panama also has a large foreign community, chiefly American, and more modern amenities -- at least for those with money -- than many parts of Latin America.

On the other hand, the Kovals appear to have laid a series of false trails, making phony hotel reservations, lending a friend a credit card to use in Jamaica and so on. Any clues pointing to Panama may have been planted to point away from their real destination.

What kind of official reception would they get, and what kind of safety could their money buy?

With scores of millions to play with, the Kovals presumably would not wish to spend the rest of their lives hiding. Canada has no extradition treaty with Panama, but a Canadian fugitive could not count on being allowed to stay indefinitely. A Panamanian citizen could.

Almost no one here doubts that the Kovals could bribe mid-level government officials to give them authentic-looking passports and other identification if they had the right contacts. The question is whether they could get real citizenship that would hold up in court if the documents were challenged.

Under light-fingered dictators from the late 1960s to the late 1980s, Panama's five-year waiting time for citizenship could be miraculously shortened for enough cash. Opinion is divided on whether that is still the case. Expatriates tend to say yes, Panamanians no.

Name of fugitive businessman who once travelled in federal Conservative circles emerged during U.S. drug probe

APTN National News has been investigating threads emerging from a 2008 police investigation by the name of Operation Cancun. Cancun targeted a drug smuggling network operating through the Mohawk territories of Kahnawake and Akwesasne. Many of these threads led from a man identified by the RCMP as “the banker” who entered the orbit of some high profile Conservatives. Now, a U.S. investigation alleges two individuals associated with “the banker” laundered money for a Montreal organization involved in the importation of cocaine into Canada.

  (  Michael Chamas speaks at a Conservative fundraiser in 2008. APTN/File Photo)

(Michael Chamas speaks at a Conservative fundraiser in 2008. APTN/File Photo)

At an airport northeast of Boston, on a Wednesday in October, a private jet waited for the arrival of two Montreal men carrying a pair of suitcases stuffed with $1.7 million US in cash.

The jet was used on private charter flights between the Boston area, New York City and Las Vegas by two Montreal men, Nicolas Anthis and Nicholas Sotiriou, who were allegedly involved in the purchase of millions of dollars worth of cocaine for importation into Canada, according to U.S. court documents.

Anthis and Sotiriou were two of six Canadian men recently indicted by U.S. authorities for allegedly laundering drug money for a Montreal-based organization that financed cocaine purchases for importation into Canada with proceeds from the sale of Quebec-grown marijuana to a Massachusetts-based criminal network.

None of the allegations contained in U.S. Federal Court documents have been proven in court.

Anthis is currently in U.S. custody and Sotiriou is wanted on an arrest warrant.

Both Anthis and Sotiriou appeared on RCMP radar screens during 2008’s Operation Cancun, which targeted a marijuana smuggling ring that used the Mohawk territories of Kahnawake and Akwesasne to smuggle the contraband into the U.S.

They were both associated with a Lebanese-Canadian businessman named Michael Chamas who the RCMP alleged was “the banker” for the marijuana smuggling ring.

Before he became entangled with the RCMP, Chamas entered the orbit of some prominent Conservatives.

Chamas is wanted in Canada after he fled the country to avoid facing trial on charges of possessing unregistered weapons stemming from an Operation Cancun raid on his home on March 26, 2008. Chamas says he is currently in Dubai.

Now, APTN National News has learned that U.S. agents came across Chamas’ name during their investigation of the Massachusetts network that led to the money laundering indictment of Anthis and Sotiriou.

MEETING WITH AN ALLEGED KING PIN

Chamas told APTN National News in an interview that he twice met Safwan Madarati, the alleged king pin of the Massachusetts network, according to U.S. court documents.

Chamas said Madarati would often come to Montreal to visit a girlfriend. Chamas said he met Madarati through another individual who was also arrested and charged during Cancun.

APTN National News could not reach the person and decided to not publish the name.

Chamas said he wanted to flee Canada and Madarati offered to help him get a Green Card in the U.S. Chamas said he gave Madarati two passport photographs and $2,000. He said he never heard back.

“(Madarati) claimed he needed a deposit for an attorney, he took my pictures and social security number,” said Chamas. “He said he would arrange to get my Green Card…He said, ‘I have friends in the police.'”

A Watertown, Mass., police officer named Roberto Velasquez-Johnson, aka George Diamond, was allegedly working for Madarati and feeding him information about police investigations, according to U.S. court documents.

A TANGLED WEB

One of the threads of evidence used by U.S. authorities in weaving their case against Anthis and Sotiriou came from that Wednesday on Oct. 27, 2010, when Massachusetts State Police agents followed Garabet Jartidian, one of the six Canadians indicted, and a second man, who has not been charged, to the Hanscom Airport in Bedford, Mass. Jartidian is now considered a fugitive by U.S. authorities.

The agents stopped the two men before they could reach the private jet and seized the cash. Jartidian said the money was for Anthis and a Montreal lawyer named Ilias Kaperonis, according to court documents. Jartidian said Anthis and Kaperonis were part of a company called Ghanadian Trading.

Kaperonis has also been indicted and is wanted by U.S. authorities.

When the agents checked the jet’s flight manifest they found the names of Anthis and Sotiriou. A third name was also found but that individual has not been charged.

“The investigation further revealed that this money was the proceeds of marijuana trafficking in the Northeast that was being transferred to California for the purchase (of) cocaine for the organization in Montreal,” according to one court document

Three years earlier, On Dec. 6, 2007, Anthis, Sotiriou, Chamas, and Chamas’ former assistant Juanita Cree, sat in the sixth floor offices of the Montreal police’s fraud unit in a meeting with one RCMP officer and two Montreal police detectives.

The quartet claimed that Chamas had been defrauded out of $3 million by a Toronto man in a botched $750 million deal to buy an island in Mexico, according to an RCMP account of the meeting.

RCMP surveillance also showed numerous meetings between Chamas and Anthis during the course of the Cancun investigation. Anthis had his cell phone tapped and at one point an investigator visited his Montreal home.

During one instance, on March 3, 2008, officers watched Anthis hug Chamas goodbye at Montreal’s Pierre Elliot Trudeau airport.

BEVERLY HILLS COPS’ INFORMANT

Two years later on October 22, 2010, five days before Massachusetts State Police agents intercepted the men with cash-stuffed suitcases heading for the private jet, Drug Enforcement Administration investigators and Beverly Hills police detectives set up surveillance on a hotel in California

A Beverly Hills police controlled informant supplied information that a money courier for a drug organization in Canada was about to receive an installment of cash in Ontario, Calif.

The agents saw Anthis outside the Ayres Inn & Suites at about 12:55 p.m. standing near a grey Mazda sedan. Then the agents watched as a Hispanic man named Felipe drove up beside the Mazda in a grey Ford sedan. Anthis opened the trunk of the Mazda, pulled out a “weighted” black duffle bag and gave it to Felipe who put it in the trunk of his Ford. Anthis then took a light green duffle bag from the Ford’s trunk and walked into the hotel.

Anthis and Felipe barely spoke during the transaction, according to a court document.

After waiting for about an hour, Anthis again emerged from the hotel talking on a cellular phone. He was then approached by local uniformed Ontario police officers who detained Anthis. The officers found $497,955US cash inside the light green bag and a police dog detected traces of narcotics on the bills.

“The bag was filled with a large amount of U.S. currency in a manner consistent with the bulk smuggling of narcotics proceeds,” authorities state in a court document. “Some of the cash was vacuum sealed in plastic bags and some of the stacks…were wrapped in rubber bands.”

Anthis claimed that the money was for the purchase of gold and that he was vice president of company Ghanadian Trading and that Kaperonis was its president. Anthis claimed he gave Felipe, who he referred to as “Sam,” $20,000 and paperwork related to Ghanadian Trading, according to court documents.

Chamas said he was surprised to hear that Anthis had been implicated in laundering drug money. He said Anthis never spoke about drugs when they were together.

“Is this guy Nick Anthis capable of this? Absolutely not,” said Chamas. “I could understand if it was money he was moving around selling gold…I’m shocked.”

FRIENDS NO MORE

Chamas said the latest developments in the U.S. have blindsided him. He said he had no idea any of the people around him were involved in any illegal activity and he strenuously maintains he has never had any involvement in the drug trade.

“I have seen a lot of things happening in Canada. Everyone one around me were thieves and liars,” said Chamas. “I have no friends.”

There was a time when Chamas could boast of having high-placed contacts within the Conservative Party in Canada. Among them was current Lieutenant-Governor of Newfoundland and Labrador John Crosbie and fundraiser David Bernstein, a former Tory candidate in the late 1970s and 1980, who died from cancer last year.

Crosbie and Bernstein, along with former Tory MP John Reynolds, who co-chaired the Conservative’s 2006 election and Prime Minister Stephen Harper’s 2004 leadership campaign, were involved in the early stages of a failed plan to purchase the Quebec-based Laurentian bank with financing provided by Chamas.

Crosbie also represented Chamas in the businessman’s battles with Revenue Canada and once wrote a letter to former Conservative immigration minister Monte Solberg advocating for Chamas’ wife who was about to be deported from Canada. Chamas’ wife remained in Canada for an additional two years.

Chamas was a guest speaker during a 2008 fundraiser for the Conservative candidate in the Papineau riding which also featured former foreign affairs minister Maxime Bernier. Chamas donated $5,000 to the riding and the federal NDP has since asked Elections Canada to investigate the contribution.

Past catches up with Australian FBI fugitive Bruce Sholtz Macedo in Brazil

An Australian fugitive who taunted the FBI about his life on the run has come unstuck in Brazil where he has been convicted of using a fake passport.

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Sydney-born Bruce Sholtz Macedo is a wanted man in the US where he faces dual manslaughter charges and 20 years behind bars if convicted over a 2008 car crash in which he allegedly killed two men and left a woman seriously injured while drink-driving in Florida.

Seven years after he fled the US using false travel documents, Macedo was found by Fairfax Media last year, hiding out in Minas Gerais, a south-eastern state of Brazil – where he owns a retail aquarium shop, selling goldfish for a living.

Believing there to be no extradition treaty in place between Brazil and the US, Macedo goaded the FBI by declaring there was "no chance" of him ever returning to America to face justice.

In a further insult to the families of the two crash victims, he boasted about his life of freedom in South America, adding he "could not have chosen a better country to be stuck in".

But in an ironic twist, authorities in his apparent safe haven have now prosecuted him over the forged passport he used to enter the country, following his escape from the US.

He received a three-year and 97-day prison sentence to be served in the community with additional community service hours, but on appeal in January had it reduced to two years and 10 days, with additional restrictions yet to be determined."There is a zero per cent chance of me ever doing [jail] time in Brazil," the 39-year-old said when approached by Fairfax Media last week.

"Let me put it this way. For you to go to jail in Brazil, you have to be poor. You have got to be broke ... which thank God I ain't," he said.

Lawyers for Macedo had added financial difficulty to their list of reasons for an appeal, but the judge dismissed the request saying proof for such difficulty was not presented.

Macedo was raised in Paddington and attended Rainbow Street Public School and Catholic secondary school Marcellin College, both at Randwick. He spent his summers surfing at Maroubra and is an avid Wests Tigers fan.

By 2008, he was living in Palm Beach County, Florida, where he worked as a car salesman. On September 14 that year, he spent the day drinking at a friend's barbecue and was later observed climbing into the driver's seat of a car with friends Claudio Da Silva, Maria Nunes and Charles De Souza occupying the passenger seats.

The FBI has been chasing Bruce Sholtz Macedo since 2008 when he fled dual manslaughter charges. Photo: Supplied

A short time later, their vehicle smashed into a tree, killing De Souza and Da Silva instantly. Ms Nunes was rushed to a nearby hospital, as was Macedo who sustained concussion, a punctured lung and nine broken ribs.

In his interview with Fairfax Media last March, Macedo claimed all he could remember from that day were "flashes" but insisted he "wasn't the driver".

"I don't remember the crash, I don't even recall getting in the car but I'm certain I wasn't behind the wheel," he claimed. "I got scared. I was looking at a minimum sentence of 22 years – so I bolted."

According to the official police report, Macedo's injuries were "consistent" with being seated in the driver's position and the surviving passenger, Nunes, identified him as having been behind the wheel. When toxicology tests confirmed his blood-alcohol level had been over the legal limit, Macedo was charged with two counts of manslaughter and a third charge of contributing to serious bodily injury.

"I didn't want to put my life in the hands of the jury so I decided it would be best to flee," Macedo told Fairfax Media.

After paying $2000 for a fake passport, he hatched a plan to bypass the nearby airport at Miami and instead chance his luck with a departure from Daytona.

"The passport was really bad," he recalled. "It fooled the American officials but I ended up getting busted as soon as I stepped through Brazilian customs."

Following his arrest, he claims he told them "the whole story ... the truth ... that I was facing charges for something I did not do ... that I would have spent ... my life stuck in a Florida jail so I left".

But to his frustration, the Brazilian authorities never let the crime go.

Now he awaits a new hearing to confirm the reduced appeal sentence and its restrictions.

Despite having avoided jail, Macedo is destined to remain a virtual prisoner in Brazil, with an Interpol red notice ready to be enforced any time he sets foot in an airport outside Brazil or attempts to return to Australia.

"I miss that place," he said of Sydney, where his family are still based. "I would love to come back and visit."