Ponzi scheme suspect linked to pipe bombs to remain in custody

The suspect in a $2 million Ponzi scheme linked to pipe bombs found in a Malvern storage locker will remain in custody.

A new indictment against 42-year-old Istvan Merchenthaler of Chester County was filed in federal court in Philadelphia last week on the same day 60 pipe bombs were found in a Lancaster Avenue storage locker he rented.

Istvan Merchenthaler has been linked to pipe bombs and a Ponzi scheme.

At a detention hearing this morning, Judge Robert F. Kelly ordered Merchenthaler to remain in jail, citing bail violations "and other factors."

The pipe bombs weren't mentioned during the brief hearing, and authorities have not confirmed that the bombs, which were made from 12-inch-long sections of PVC piping, belonged to Merchenthaler.

In the Philadelphia case, Merchenthaler is accused of stealing more than $2 million from 200 investors in a Ponzi scheme in which he claimed to be the founder of a prepaid phone-card and cell phone distributor. He allegedly told investors that he had "lucrative contracts" with companies like Walmart and 7-Eleven and that the investors would see "generous returns" on their investment.

Instead, according to federal prosecutors, he used the investors' money for personal expenses, to pay family members and to buy jewelry, guns and vehicles.

While free on bail, he allegedly stole cars in Maryland and North Carolina and brought them to Pennsylvania, court documents say.

He faces charges of wire fraud, aggravated identity theft, money laundering, filing a false tax return and transportation of stolen goods.

Appearing in court in an olive green prison jumpsuit, Merchenthaler entered a not guilty plea to the new indictment.

Contact Emily Babay at 215-854-2153 or ebabay@philly.com. Follow @emilybabay on Twitter.

Contact the Breaking News Desk at 215-854-2443; BreakingNewsDesk@philly.com. Follow @phillynews on Twitter.