Have You Seen This Man? Washington’s Biggest Convicted Ponzi Schemer Is Still On The Lam 18 Months After Escape
Back in 2011, a Washington man dubbed “Seattle’s Mini Madoff” stood in a Washington federal courtroom and pleaded guilty to charges including wire fraud and bankruptcy fraud stemming from his operation of a $120 million Ponzi scheme that ranks as the largest such scheme in Washington state history. After receiving his 18-year prison sentence, Darren Berg led a relatively quiet life as Inmate #17950-086 until one day in December 2017 when he simply hopped a fence at a Satellite Prison Camp in Atwater, California and is believed to have walked to an adjacent airport and onto a private jet headed overseas. In the ensuing time since his escape, U.S. Marshalls have zeroed in on Berg’s boyfriend after signs pointed to his potential involvement. But more than 18 months after the escape, Berg remains on the lam and holding the title of the largest Ponzi schemer to escape prison.
After Berg’s college education at the University of Oregon abruptly ended amidst questions over missing funds from his tenure as fraternity treasurer, Berg eventually ended up in Seattle where he founded the Meridian Mortgage group of investment funds in Mercer Island. Approximately 1,000 investors ultimately sunk over $350 million into the Meridian family of funds, which purported to invest in real estate contracts, mortgage-backed securities, and hard money loans. Berg took elaborate steps to conceal the fraud, including the creation of false records for many of the contracts or loans, which often included fake appraisals and title reports. Berg also opened dozens of PO boxes in the names of illusionary borrowers in order to deceive an independent auditor. In reality, Berg used investor funds to make payments to earlier investors in the funds, as well as misappropriate funds for personal and business expenses that included the creation and operation of a luxury bus company, the purchase of multi-million dollar yachts and private jets, and personal automobiles.
After the scheme collapsed and Berg filed bankruptcy, he offered to cooperate by purportedly assisting the overseeing bankruptcy trustee in understanding the complex business empire. While altruistic at first glance, Berg’s true intentions were revealed when authorities discovered he was attempting to wire $400,000 from his estate into a previously undisclosed account in Belize. While Berg had claimed that the account contained post-bankruptcy income he was entitled to keep, the truth was that the funds were from a house Berg had sold in a fire sale that had not been disclosed to authorities. There was also evidence that Berg had tried to establish an offshore trust in Belize - another event Berg tried to explain away as innocent asset protection for a bus company he had operated. He was subsequently arrested in October 2010 where a federal judge rejected at least three attempts by Berg’s attorneys to allow him to remain on bail pending a trial based on a prescient assessment that Berg was a flight risk - including denying his request to stay at his sister's house in the months leading up to trial.
Berg pleaded guilty to three counts and received his 18-year prison term, but not after his own mother sent a letter to the sentencing judge wondering just what share of blame his investors should share for their greed:
“They too must be culpable for a small percentage of the guilt, as savvy investors, for letting their greed overtake their reason,”
Berg served his first six years at various minimum-security institutions throughout California. But it was at a satellite prison camp in Atwater, California where Berg plotted his early release. The camp had relatively minimal security due to its population of inmates deemed low risk. Inexplicably, an airport was located just beyond Atwater’s perimeter fences. Then, one day in December 2017, Berg became one of 8 people since 2011 to escape from the facility when apparently hopped a fence and boarded a private jet at the airport next door. The trail apparently soon ran cold.
In recent months, authorities have reportedly focused on Berg’s boyfriend, Darrell Ray Blankenship, a flight attendant with international connections and apparent access to a private jet. Authorities pointed to multiple suspicious links between linking Blankenship to Berg, including:
Photos posted by Blankenship weeks after Berg’s escape of several men in Brazil, one of whom had a similar hairline to Berg’s;
A message sent by Blankenship to Berg’s mother at the same time saying, “Hello from Rio”;
A message sent to a tarot card reader in early 2018 signed “Darrell and Darren”; and
Instagram messages sent from Blankenship to a mutual friend saying he had “just heard from Darren.”
Despite this evidence and authorities obtaining a warrant for Blankenship’s electronic communications, Berg remains on the run. If caught, he could face up to an additional five-year prison term for escaping in addition to the remainder of his 18-year term.
If you have information on Berg’s whereabouts, contact the U.S. Marshals at 1-800-336-0102.