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 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.
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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.