In June 2010, Meridian Funds collapsed, exposing one of the largest Ponzi schemes in the history of U.S. District 9. The ten funds, with a principal value of $300 million, were managed by Darren Berg. Meridian offered investors returns between 5% and 12%, dependent upon risk appetite. The firm operated various funds tied to real estate contracts and real estate-owned (REO) properties.

Instead of investing funds as contracted, Berg used new investor money to pay returns to existing investors and to fund personal ventures including a bus company, luxury homes, yachts, and jets.

The scheme lasted over a decade before investor redemptions outpaced new contributions, triggering a liquidity crisis. The United States Bankruptcy Court for the Western District of Washington appointed Mark Calvert as Trustee when the entity was forced into bankruptcy. The core challenge was to prove in court that Meridian Funds was operating as a Ponzi scheme and to develop a plan for investor recovery and equitable distributions to creditors.

• Forensic Accounting & Legal Investigation: A team of forensic accountants and financial experts from Cascade Capital collaborated with legal professionals to trace funds across multiple entities. Given the falsified internal records and misleading audits, Cascade Capital subpoenaed bank statements and reconstructed the transactions into a centralized database. This was critical for validating creditor claims, identifying preference payments, uncovering fraudulent transfers, and locating hidden assets.
• Investor Communication & Oversight: The investors were the key stakeholders in the case, so Cascade Capital prioritized timely and transparent communication from day one. To this end, a highly capable and credentialed Investor’s Oversight Committee formed and worked closely with the Cascade Capital team in advocating for and providing regular updates and a sounding board to investors. Within the first month, a three-hour presentation to several hundred of the creditors provided information about the nature of the fraudulent scheme and outlined the intended resolution process for stakeholders.
• Fiduciary Oversight: The Meridian Funds case involved more than 1,550 claimants, consolidated into 650+ finally allowed claims. A structured algorithm was developed to ensure equitable distribution. For example, investors who had not received prior payments—such as IRA accounts—were prioritized over those who had. This approach helped ensure fair treatment for all.
• Institutional Clawbacks: Under a confirmed bankruptcy liquidation plan, Cascade Capital successfully clawed back funds from institutions, companies, and professionals who had benefited from the scheme. The claw back recoveries were obtained from parties who had recovered more than their principal investment and parties who had or should have had knowledge of the fraudulent scheme or insolvency of the funds. The clawback proceeds were returned to the estate for claimant distribution.
• Asset Recovery: Cascade Capital identified, reclaimed, and liquidated valuable assets—including a loan portfolio, REO properties, cash accounts, claims in the bankruptcy case of an affiliate company that operated a bus company, and various business ventures—to maximize returns for creditors.
• Professional’s Liability Recovery: Cascade Capital recovered significant funds for the liquidation estate through the prosecution of claims of professional negligence.