Darren Berg was a very smooth talker. He was charismatic. He was friendly. He was outgoing. He tried to win people over in the very first meeting.
He was very polished and very well dressed, but he was dangerous in that he was an extremely quick thinker. Personal side he loved his dog. My staff teased that after reviewing the expenses they would like to come back as Berg’s dog. But he was a professional liar.
My first meeting with him he had a picture of a woman and two kids on his curtains in the back. By night he was a different man or woman depending upon the night.
Internally within his company he flew off the handle from time to time, he would scream at staff, he’d throw things at them, staplers, coffee mugs, a cell phone, a laptop, and he truly intimidated his staff, which helped him continue the Ponzi.
But externally he was calm. He was a poster child. He was very articulate and very smooth in what people needed to hear.
Who is Darren Berg?
It seems like this did not begin as a good guy gone bad. In looking into his background this started maybe in childhood, but definitely as early as his time at the University of Oregon and then in his earlier career perhaps in Oregon before he moved to Washington.
I know we encounter him in the early 2000s in this case but even before then he had a twenty year history. He did have a father that had an alcohol problem and there were certain abuse issues at the home. He did have an issue with his fraternity as he was the treasurer and twenty one thousand dollars went missing.
He did have an issue with kiting and with Nordstrom on not paying some bills and so on and so forth. But you know he kind of ramped up over time and he really ramped it up when he got Meridian going.
Bus Company Venture and Trustee Appointment
He did love buses not like love buses. He pulled about forty five million out of the Meridian funds to build the bus company. He had the best the state of the art oak floors in them. They were Prevost. They were high quality.
All the pro teams used them. All the high end college teams used them, but it came from his grandfather. Since he didn’t have a relationship with his father he had a very close relationship with his grandfather. His grandfather would come in from a trip driving for Greyhound and would share stories.
Berg ended up setting up probably the best bus company in the United States that money could buy and did buy in that he wouldn’t let the buses go in snow.
He wouldn’t let the buses go on gravel roads. All his bus drivers were suited up by Nordstrom with uniforms and so on. And it was a three hundred person firm. I mean it was a real company. It just didn’t make any money.
I mean I grew up in Oregon. I think that listeners of the podcast will know that I’ve mentioned it before. And I actually think I kind of remember when going back seeing these buses around. It wasn’t an uncommon thing. They were all over the place.
Mark did actually meet with Mr Berg a number of times and the first one was more interesting than a typical first meeting. There was a few trustees looking to be appointed. I was fortunate enough to be appointed.
I had the signed court order in my top suit pocket, and I walked over to his office about two blocks from mine and pushed the button for the nineteenth floor and it did not light up.
I stood there for a minute and thought I could go get security but I waited. I stayed in the elevator, ended up getting to the nineteenth floor.
When I got off there were glass doors locked on each side. I walked over and knocked on the door and the receptionist said we’re not accepting anybody we’re closed you can’t come in and you need to leave. I said but I was appointed by the court to be a trustee.
She said no you need to leave. Mr Berg’s not taking any people today. I stepped back by the elevator and waited for an employee to come out, and I went in. At that point she was scared to death. She was literally trembling that you have to leave.
She’d worked her best to get me to leave. I shared the court order and said no I’m not leaving and in fact I’m taking over. She finally called Berg and Mr Berg came out and probably didn’t hear what she had to say because he started yelling at me.
He started yelling and screaming and just went crazy for about five minutes until I reached into my pocket and said he kind of said he was going to call security. I said you can call security but they’re going to remove you not me because here’s the court order that says I’m appointed.
At that point he was a chameleon. He changed to be nice. He said let’s go back to my office and talk a little bit. He immediately disclosed that yeah there were some issues and there were some problems but happy that he had me there and looked forward to working through things together.
So let’s take a step back to how that order came about. The bankruptcy portion of this started in mid two thousand ten with involuntary proceedings over some of his entities followed shortly thereafter by voluntary proceedings in his entities as well as his own voluntary petition.
Sometimes it takes judges a little while to agree that maybe we should put a chapter eleven trustee in place. It took about a week or a month for the appointment to come through.
Once appointed we quickly pulled bank statements, realized there was a fraud, and when there’s a fraud you go back to bank statements first because they’re the most reliable documents you can get. We dropped them into Dropbox and sent them to India to get re key punched.
We took all the bank statements for the ten year period assigned to our receivership. As more funds got shipped to us we put more into Dropbox and sent more to India. We got data back within about three days on the initial funds of where money came and went.
Based on that and additional funds we were able to track money between the funds and then money leaving the funds to third parties.
There were about eight funds, twenty something other entities, and up to fifty bank accounts. That group in India put fifty key punchers on it and basically key punched bank statements quickly.
With that data it mushroomed into money being transferred between groups between bank accounts and money leaving that really helped us focus on the airplanes, boats, car leases and buses.
Establishment of Professional Partnerships
Mr Berg engaged Deloitte Financial Advisory Services and formed alliances with Kimball and Prentiss as well as Cornerstone. He created a professional office environment that resembled a bank.
With these credentials in place he began accepting capital to buy mortgages that appeared both legitimate and attractive to investors.
Early Fund Operations and Misappropriation
By 2003 he had already begun diverting money out of those mortgage funds.
Despite presenting valid loan origination documents and running the funds through reputable advisors he concealed loan payoffs on the books and siphoned proceeds into separate accounts.
This tactic kept the performance metrics intact while enabling ongoing misappropriation.
Fund Suspension Strategy and Investor Returns
To sustain demand he periodically closed subscriptions citing a lack of suitable investments and then reopened the funds when investor interest peaked.
He maintained interest rates at moderate levels that justified discounted mortgage purchases and ensured monthly distributions arrived like clockwork.
When two initial funds reached their term he used fresh inflows from newer vehicles to redeem obligations in the earlier funds which reinforced confidence and encouraged most investors to roll their principal into subsequent offerings.
Financial Scale and Investor Impact
Over the life of the scheme he collected roughly 120 to 130 million in direct contributions. Because most investors elected to reinvest their distributions total fund liabilities swelled to over 250 million.
Although about seven hundred individuals participated over time only 562 remained as creditors when the bankruptcy case was filed. Subsequent clawback actions brought additional recoveries from those who had profited early.