Feds block payment to Meridian Mortgage owner

Objections from the Justice Department have derailed a proposal to pay Meridian Group owner Darren Berg $70,000 to help sift through the financial rubble of his mortgage investment funds' $200 million bankruptcy.

Bankruptcy trustee Mark Calvert told the court Thursday he withdrew the plan "at the request of Mr. Berg, who has advised the trustee that he no longer wishes to receive a consulting fee from these estates."

In a meeting with Meridian Mortgage creditors earlier in the week, Calvert said federal officials had "taken a firm position" against the proposed payment.

Berg is the focus of a federal grand jury for operating what became a massive Ponzi scheme, according to the trustee. Nine Meridian Mortgage funds that purportedly invested in real estate are in Chapter 11 bankruptcy.

Berg's personal assets — including homes and several luxury-coach transportation companies doing business as MTR Western — are in a separate Chapter 11 case.

Berg still stands to receive a $50,000 payment for cooperating in the personal bankruptcy. The trustee in that case, Diana Carey, said Friday the situation is different. Her agreement terminates Berg's employment at all Meridian companies and prevents him from competing with the companies or soliciting their employees or customers, so it's not simply a payment for assistance in unraveling the finances of his companies.

Unlike Calvert, "I have not received any concerns" from federal investigators, she said.

Both trustees have said they proposed paying Berg because his assistance would save time and money in uncovering all the bankruptcy assets and understanding their finances.

Reach Rami Grunbaum at rgrunbaum@seattletimes.com or 206-464-8541