Crime

Inmate who defrauded investors more than $100 million escapes Atwater prison

Frederick Darren Berg, 65, was found missing from U.S. Penitentiary Atwater Satellite Prison Camp Wednesday, Dec. 6, 2017, at 3:30 p.m. Berg was convicted and sentenced to 18 years in prison for defrauding investors of more than $100 million.
Frederick Darren Berg, 65, was found missing from U.S. Penitentiary Atwater Satellite Prison Camp Wednesday, Dec. 6, 2017, at 3:30 p.m. Berg was convicted and sentenced to 18 years in prison for defrauding investors of more than $100 million. Courtesy of U.S. Penitentiary Atwater Prison

An inmate who was responsible for one of the largest Ponzi schemes in Washington state history has escaped from the U.S. Penitentiary Atwater Satellite Prison Camp, prison officials said.

Frederick Darren Berg, a 55-year-old Washington state resident serving 18 years for wire fraud, money laundering and bankruptcy fraud, was discovered missing from the prison camp at about 3:30 p.m., according to an Atwater prison news release.

The release did not detail how Berg escaped. Calls to prison officials weren't immediately returned Wednesday night.

Merced County Sheriff Vern Warnke said he received immediate notice of the missing inmate Wednesday from the U.S. Marshals Service.

"We offered our assistance, but they assured us he was probably already out of the area," Warnke said, noting that Berg didn't have a violent record and wasn't considered a danger to society.

Warnke said his office has put out a "be on lookout" notice for Berg.

Berg, the founder of the Meridian Group of investment funds, on Feb. 9, 2012 was convicted in U.S. District Court in Seattle of swindling more than $100 million of investors' money in a Ponzi scheme, according to the FBI.

A Ponzi scheme is "an investment fraud that pays existing investors with funds collected from new investors," according to the U.S. Securities and Exchange Commission. Instead of investing the money to generate earnings, perpetrators continue recruiting new investors eventually leading to a collapse.

The Seattle Times reported that Meridian Group funded Berg's "lavish" lifestyle through unauthorized withdrawals.

Berg's exploits were reportedly highlighted last year in an episode of "American Greed," a CNBC show that explores high-profile white-collar crime.

Berg is the third inmate to have escaped from Atwater prison facilities this year.

Eric Pree, who was sentenced to eight years and five months for conspiracy to commit mail fraud, walked away from a minimum-security camp at the prison Jan. 29. He hasn't been found.

Another inmate, 26-year-old Guaymar Cabrera-Hernandez, escaped on May 12 but was apprehended the next day.

Berg was described by prison officials as a 6-foot tall white male with brown hair and green eyes weighing about 170 pounds.

Authorities are asking anyone with information on his whereabouts to contact the U.S. Marshals Service at 559-487-5600.

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