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Tag: Istvan Merchenthaler

  • ‘Phone Card’ Ponzi Schemer Caught With Pipe Bombs, IEDs And Thousands Of Rounds Of Ammunition Sentenced To Prison

    ponzinews1Istvan Merchenthaler, the “PhoneCard USA” Ponzi schemer who fabricated ties to Walmart and later was caught with pipe bombs, improvised explosive devices, a machine pistol and 16 other firearms spread across three states, has been sentenced to 140 months in federal prison.

    U.S. District Judge Robert F. Kelly of the Eastern District of Pennsylvania also ordered Merchenthaler to make restitution of more than $3.4 million, including more than $31,000 to the state of North Carolina “for the cost of a bomb-squad robot destroyed during an investigation of a storage facility containing several improvised explosive devices, Philly.com reported today.

    Prosecutors said yesterday that “several” IEDs linked to Merchenthaler in North Carolina exploded during a “render-safe” operation that resulted in damage to the robot and the storage facility.

    After the Ponzi case was brought in 2012, Merchenthaler jumped bail, stole two cars and fled from police. He later was captured in Maryland, investigators said.

    Here’s how prosecutors described the weaponry (italics added):

    Moreover, prior to and after jumping bail [in the Eastern District of Pennsylvania], Merchenthaler amassed approximately 17 firearms and over approximately 11,580 rounds of ammunition, as well as approximately 634 improvised explosive devices (“IEDs”), which he stored in Pennsylvania, North Carolina, and Maryland.  Approximately 67 of these IEDs were comprised of PVC pipe, almost all of which contained shrapnel in the form of nails, screws, or rocks.  The remaining approximately 567 IEDs were comprised of cardboard tubes in varying sizes and explosive power.  All of the IEDs – PVC and cardboard – were center primed with flash powder.  Merchenthaler drove these IEDs in his stolen vehicles to storage facilities in all three states.  During render safe procedures at a North Carolina storage facility, several of the IEDs exploded, resulting in damage to a bomb squad robot and the storage facility.




  • DEVELOPING STORY: Pipe Bombs Reportedly Found In Pennsylvania Storage Unit Rented In Name Of Man Arrested In Ponzi Scheme Case

    americaatrisk4DEVELOPING STORY: It is early and facts remain unclear. What’s known, according to local news reports, is that the FBI notified local police in the area of Chester County in southeastern Pennsylvania that agents would be operating in the region.

    Late yesterday  — sometime after 11 p.m. while some residents were sleeping — explosions were heard in the area of Valley Creek Park. The explosions appear to have been controlled detonations by law enforcement, which earlier had found dozens of pipe bombs in a storage unit near the town of Malvern. Members of bomb squads were seen in the area.

    The storage unit was rented in the name of Istvan Merchenthaler, an accused Ponzi schemer.

    From Malvern Patch (italics added):

    Around 8:30 p.m., bomb squads from Montgomery County and Philadelphia began hauling the explosives from the storage facility to nearby Valley Creek Park. The explosives were transported inside large metal containers on trailers, and each trip involved a convoy of fire engines, ambulances and police vehicles.

    From Chester County Daily Local News (italics added):

    The source, who asked to remain anonymous due to the ongoing and sensitive nature of the investigation, said that the storage locker was registered to 42-year-old Istvan [Merchenthaler], a Chester County man facing federal charges in connection to a Ponzi scheme that officials say defrauded investors of about $2 million over the past seven years.

    Officials close to [Merchenthaler]’s case said the suspect was connected to similar explosive investigations in other states, and added that he is facing charges in multiple jurisdictions throughout the east coast.

  • FEDS: Istvan Merchenthaler Charged In Alleged ‘Prepaid Phone Cards’ Ponzi Scheme That Stole More Than $2 Million From Investors

    EDITOR’S NOTE: If you’re keeping a “Bubba Blue” notebook on how to have your Ponzi scheme, this alleged caper in Greater Philadelphia involving prepaid phone cards and purported ties to major retailers perhaps merits an entry . . .

    A 42-year-old Pennsylvania man has been charged in an alleged “prepaid phone cards” Ponzi scheme that operated for more than five years and bilked more than 200 investors out of more than $2 million.

    Istvan Merchenthaler of Downingtown was indicted on four counts of wire fraud, one count of aggravated identity theft and two counts of money laundering, the office of U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania said.

    Merchenthaler also is known as Steve Merchenthaler, prosecutor said, alleging that the scheme operated “at least” between May 2006 and September 2011.

    The long-running scam involved a business known as PhoneCard USA of which Merchenthaler claimed to be the founder, prosecutors said.

    They described the scheme as one that duped investors by trading on fancy terms such as “exponential growth,” defining the market as a wide geographic expanse and fabricating ties to famous businesses to keep the Ponzi wheel greased.

    Merchenthaler positioned PhoneCard USA as a “premier distribution source” for phone cards and cell phones, claiming to have contracts with Walmart, 7-Eleven and BJ’s Wholesale Club, prosecutors said.

    It is common for scammers to purport to have ties to famous business entities — and that proved to be the case with Merchenthaler and his PhoneCard USA pitch, prosecutors said.

    “In reality, Merchenthaler had no such contracts with these major retail chain stores,” prosecutors said.

    Investors were drawn into the Ponzi morass in part through claims that the firm’s “lucrative contracts” with vendors covered “territories that span the east coast,” prosecutors said.

    “Merchenthaler claimed that these investments would finance the ‘exponential growth’ of PhoneCard USA and would provide investors with ‘generous returns’ on their investments,” prosecutors said.

    An investigation demonstrated that “Merchenthaler operated a ‘Ponzi’ scheme, stealing over $2 million from over 200 investors and using much of these funds for his own benefit and to perpetuate his scheme,” prosecutors said.

    The FBI and IRS led the probe.