Pipe bombs linked to suspect in Ponzi scheme

The curious case of Istvan Merchenthaler has gotten odder still.

The 42-year-old Chester County man, who allegedly stole more than $2 million from about 200 investors in a Ponzi scheme, has now been linked to 60 pipe bombs discovered Thursday in a storage locker in Malvern.

The locker, at a facility on Lancaster Avenue, was rented by Merchenthaler, authorities said. The bombs were crafted out of 12-inch-long sections of PVC piping capped at both ends, officials said. They were in a foot-locker-size container.

Merchenthaler has not been charged in connection with the bombs, and the FBI would not confirm that the bombs were his.

Federal agents and bomb squads from Montgomery County and Philadelphia handled disposal of the explosives. They were taken to Valley Green Park on Route 29, placed in a hole, and detonated, said East Whiteland Police Chief Eugene Dooley.

The timing of the discovery coincided with an announcement by federal authorities earlier Thursday that Merchenthaler was being charged with additional crimes related to an alleged Ponzi scheme uncovered last year.

Merchenthaler claimed to be founder of PhoneCard USA, a prepaid phone-card and cellphone distributor, according to the U.S. Attorney's Office in Philadelphia.

He allegedly told investors that he had "lucrative contracts" with Walmart, 7-Eleven, and BJs Wholesale Club, and that they would see a generous return on their investments. He had no such contracts, according to federal officials.

He used investors' money for personal expenses, to pay family members, and to buy jewelry, firearms, and cars, according to officials.

On Oct. 15, while free on bail, Merchenthaler allegedly stole a 2012 Jeep Grand Cherokee in Maryland and drove it to Pennsylvania, according to the new charges.

The federal indictment says Merchenthaler, after stealing the car, sent an e-mail to a prosecutor:

" ... I am removing my monitoring device. . . . I am also responsible for taking a vehicle from David Dodge."

On Feb. 11, he stole a 2013 Dodge Charger in North Carolina and brought it to Pennsylvania, the indictment said.

According to the Harford County (Md.) Sheriff's Office, Merchenthaler was arrested Feb. 16 in connection with the car theft. He was released to the U.S. marshals after a bail hearing and brought to Philadelphia.

Merchenthaler, who is in federal custody, has been charged with two counts of identity theft, four counts of wire fraud, four counts of money laundering, two counts of filing false tax returns, and two counts of interstate transport of stolen property.

Reports in the Wilmington (N.C.) StarNews say Merchenthaler is connected to explosives discovered two weeks ago in a locker in a rented storage unit in Monkey Junction, N.C.

Lucius Outlaw, a public defender in Baltimore, said he represented Merchenthaler briefly in Maryland after Merchenthaler fled Philadelphia following a pretrial hearing. Outlaw said he did not know anything about new charges against Merchenthaler.

Merchenthaler, now of Coatesville, was born in Hungary, according to public records. His family moved to the United States in 1988. His father, Istvan J. Merchenthaler, is a professor of epidemiology and public health at the at the University of Maryland School of Medicine. The elder Merchenthaler had no comment. Attempts to reach other family members were unsuccessful.

The son filed for bankruptcy in 1999 and was represented by West Chester lawyer Robert Stauffer, who recalled that his client had a "gift for gab" but was unremarkable otherwise. Stauffer has had no contact with Merchenthaler for about 10 years, he said.

In April 2004, Merchenthaler was arrested in Sao Paulo, Brazil, on charges of drug trafficking. He had 20 kilograms of cocaine, according to court records. He was released in February 2005, according to court records.