The "investment" money was used to pay for scores of luxury cars, homes, jewellery and other high-living.

The Securities and Exchange Commission has moved to stop three men's multi-million dollar scam to finance luxury spending, such as on cars, jewellery and homes.

The regulator has  obtained a court order to halt the Ponzi-style scheme that raised more than $345 million from over 230 investors across the US. The regulator also obtained an emergency asset freeze and the appointment of a receiver.

As revealed yesterday, the SEC alleges that Kevin B Merrill, Jay B Ledford and Cameron Jezierski attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios.

However, the "defendants were allegedly using a web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud". Instead of directing investor funds to acquire and service debt portfolios as they had promised, money was used to make Ponzi-like payments to earlier investors.

The SEC also alleges that Merrill and Ledford stole at least $85 million of the investor funds to maintain "lavish lifestyles", such as spending $10.2 million on at least 25 high-end cars, $330,000 for a 7-carat diamond ring, $168,000 for a 23-carat diamond bracelet, millions of dollars on luxury homes, and $100,000 to a private fitness club.  

"The defendants touted their purported investment expertise to siphon millions of dollars from unsuspecting investors," Stephanie Avakian, co-director of the SEC's Division of Enforcement, said.

"We allege that the defendants engaged in a brazen fraud, deceiving investors to perpetuate their wrongdoing and line their pockets with ill-gotten gains," Kelly L Gibson, associate regional drector of the SEC's Philadelphia regional office, said.

"Investors should be warned that low-risk, high-return investments that never lose should be a red flag," Gibson added.

In a parallel action, the US Attorney's Office for the District of Maryland announced that it had pressed criminal charges against Merrill, Ledford, and Jezierski. The SEC's complaint, filed on Sept 13 in the federal district court in Maryland, charges Merrill, Ledford, and Jezierski, along with their entities, Global Credit Recovery, LLC, Delmarva Capital, LLC, Rhino Capital Holdings, LLC, Rhino Capital Group, LLC, DeVille Asset Management LTD, and Riverwalk Financial Corporation, with violations of the anti-fraud provisions of the federal securities laws.

The court granted the SEC's request for an asset freeze, temporary restraining order, and the appointment of a receiver. The SEC seeks disgorgement of allegedly ill-gotten gains and pre-judgment interest, and financial penalties against the defendants.