Baltimore, MD – A hard-hitting five-year sentence has been meted out to Mervyn A. Phelan, Sr., 74, of Newport Beach, California, by U.S. District Judge J. Frederick Motz for masterminding a $17.4 million investment fraud scheme in Maryland.
Phelan was sentenced today for his role in a conspiracy that involved wire fraud and obstruction of justice. He was ordered to pay $17,414,000 in restitution. The federal case was led by United States Attorney Rod J. Rosenstein, with support from the FBI and IRS Criminal Investigation units.
According to court documents, Phelan was part of a fraudulent scheme orchestrated by Brian McCloskey and Patrick Belzner. They deceived private lenders into providing funds for the McCloskey Group, LLC, under false pretenses of cash reserves for real estate development projects. Phelan’s company, IAG Underwriters, facilitated this deception.
The scheme involved making false representations about the placement of funds in escrow accounts and lying to lenders to dissuade them from demanding their money back when promised project financing did not materialize. Phelan, along with his associates Gregory Grantham and Sean Krondak, played key roles in disseminating misinformation.
Belzner and McCloskey then siphoned off the stolen funds to repay earlier loans, meet business expenses, and support Belzner’s lavish lifestyle. The total losses from this elaborate fraud were staggering.
This sentence sends a strong message that fraudulent schemes will be met with severe penalties. Phelan’s conviction underscores the justice system’s commitment to protecting investors and holding financial criminals accountable.
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Key Facts
- State: Maryland
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes|White Collar Crime|Organized Crime
- Source: Official Source ↗
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