AURORA, Colorado – A former bishop in The Church of Jesus Christ of Latter-day Saints allegedly operated a pyramid scheme from his suburban Denver home for about 15 years, bilking investors out of millions of dollars to collect religious art and classic cars.
A lawsuit filed Tuesday in U.S. District Court in Denver by the Securities and Exchange Commission alleges Shawn Merriman, an unlicensed broker, collected up to $20 million from investors in several states to support a lavish lifestyle.
Merriman has not been charged with a crime but the matter remains under investigation, said Jeff Dorschner, spokesman with the U.S. attorney's office.
Authorities say Merriman had several classic cars — including a silver Aston Martin, 1932 and 1936 Auburns and a 1932 Ford Highboy — guns, taxidermy and artwork that included Rembrandts and other Old Masters. Federal marshals Wednesday were freezing bank accounts and seizing cars, guns, artwork and a home in Aurora, two properties in Idaho, and artwork from a home in Alpharetta, Georgia.
Merriman, a former stock broker, allegedly began an investment fund in 1995 that employed an aggressive strategy, but he quickly lost $400,000. He allegedly started other funds to hide his losses and cover withdrawal requests.
A message left for Merriman at his Aurora home Wednesday was not immediately returned, and court records did not list an attorney for him.
The U.S. attorney's office, which moved to seize Merriman's assets earlier this month in an effort to preserve as much money as possible, said Merriman attracted investors through friends and business associates. Thirty-eight people or groups in Colorado, Minnesota and Utah, as well as other states invested money with Merriman.
Merriman showed investors a single-page document and promised annual returns of 7 to 20 percent, according to court documents. He also allegedly fabricated monthly statements for investors.
"On March 18, 2009, Merriman confessed to criminal authorities that he had been engaging in a" pyramid scheme, according to a court document recently filed by the SEC. The document also said Merriman claimed he had about $7 million in assets left, mostly in investment-grade art.
Authorities were moving to freeze bank accounts for companies established by Merriman, including Market Street Advisors, Mountain Springs Partners, and Impressions Everlasting, a company formed to invest in art.
Among the 370 works of art sought by federal authorities are Rembrandt's 1633 "Descent From the Cross: The Second Plate" and 1654 "The Entombment"; two works by Picasso; four bronze busts; and an acrylic sculpture.
Merriman told the Deseret News in March 2008 that he had collected 56 of Rembrandt's 70 religious prints, some which were on display throughout The Church of Jesus Christ of Latter-day Saints buildings in Denver last year. LDS spokeswoman Kim Farah said Merriman has served as a bishop in the church, but she did not say when or for how long. Bishops lead neighborhood congregations, similar to pastors in other faiths, LDS spokesman Marc Stevens said.
Dorschner said investors in pyramid schemes usually recover less than 5 percent of their money.
Neither Merriman nor his companies were licensed brokers, said Fred Joseph, commissioner of the Colorado Division of Securities. Joseph said scams are on rise as people search for investments outside the stock market or bank accounts.
"People just want to believe, and in some cases, even when the scam is exposed, they don't want to talk to us because they believe the guy instead," Joseph said. "The guys who do these things are very smooth, very convincing."