Chesco man gets more than 11 years in prison for Ponzi scheme
A Chester County man who defrauded more than 250 investors of $3 million, and who spent some time on the run and collected pipe bombs and firearms, was sentenced Wednesday by a federal judge in Philadelphia to 11 years and eight months behind bars.
A Chester County man who defrauded more than 250 investors of $3 million, and who spent some time on the run and collected pipe bombs and firearms, was sentenced Wednesday by a federal judge in Philadelphia to 11 years and eight months behind bars.
U.S. District Judge Robert Kelly also ordered Istvan Merchenthaler, 45, of Downingtown, to pay $3.4 million in restitution; $400,000 for taxes owed; and $31,741 to a North Carolina state bureau for the cost of a bomb-squad robot destroyed during an investigation of a storage facility containing several improvised explosive devices.
In October 2014, Merchenthaler pleaded guilty in Philadelphia federal court to the fraud charges, and to possessing explosives and firearms.
In May 2006, Merchenthaler founded PhoneCard USA, a prepaid phone-card and cellphone distributor that prosecutors said was nothing more than a Ponzi scheme. He lured victims to invest in the company, then used their money to pay some of the older investors. But mostly, he used the money on himself.
His scheme largely ended in May 2012, when federal agents arrested him on fraud charges.
While free on bail, however, Merchenthaler continued to lure people to invest in his scheme, federal authorities said. Then, in October 2012, Merchenthaler removed his electronic-monitoring bracelet and took off in a Jeep Grand Cherokee stolen from a dealership in Glen Mills.
His luck ran out February 2013, when authorities found him in Maryland and began widening their investigation.
They searched storage units in Malvern and properties and storage units he and family members either rented or owned in Maryland and North Carolina. The searches yielded 17 firearms, including a 9mm Cobray M-11 semiautomatic machine pistol; 11,580 rounds of ammunition; 67 pipe bombs; and 567 cardboard tubes filled with explosive powder.
Assistant U.S. Attorney Vineet Gauri said after Wednesday's hearing that authorities had no information pointing to Merchenthaler's planning any kind of terroristic attack.
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