The escape of Frederick Darren Berg, Washington state’s “Mini Madoff,” from a federal minimum-security prison camp in California last week surprised no one who has ever had dealings with him.
“I’m sure he’s been planning this for years,” said Mark Calvert, who spent years unraveling Berg’s crimes as the court-appointed bankruptcy trustee for Berg’s Meridian investment groups.
Calvert, who tracked more than $150 million in investments stolen by Berg to prop up his monstrous Ponzi scheme, said “at least a couple million” remained unaccounted for, and he presumes Berg squirreled some or all of it away, anticipating his escape.
“Think ‘The Shawshank Redemption,’ “ said Calvert, referring to the 1994 hit movie in which a wrongly convicted man adapts to brutal prison life while secretly chipping away at a wall behind a poster of actress Rita Hayworth, then Raquel Welch, in his cell. After 19 years, he escapes and flees to a beach in Mexico.
“The only difference is Berg just walked away,” Calvert said. “He did not have to cut a hole in a wall or crawl through a 600-yard sewer pipe.
“I find it disturbing that a person with his history, his sentence and his age, that he would be placed in a facility where he could simply leave.”
Calvert is not alone. Craig Edwards, appointed by Calvert to represent the nearly 700 investors who lost almost $150 million through Berg’s scam, said investors were “extremely disappointed” that he was placed in a minimum-security facility, given the impact of his crimes and his propensity for deceit.
Escaped prison farm
The federal Bureau of Prisons has declined to offer any details of Berg’s escape except to say that he left the 128-bed minimum-security federal prison farm adjacent to the maximum-security federal penitentiary in Atwater, California, on Dec. 6.
The maximum-security Atwater prison holds 1,200 male inmates considered among the most dangerous in the federal prison system.
The bureau has also declined to discuss how and why Berg was housed in minimum security, given the extent of his crimes and the length of his sentence, the amount of restitution he owes and his relatively young age.
From what I was told, they’re pretty sure he had help and that he was well out of the area...
Merced County Sheriff Vernon Warnke
Berg had served roughly seven years (he received two years credit for time in custody before trial) of an 18-year prison sentenced imposed in 2012 by U.S. District Judge Richard Jones after pleading guilty to wire fraud, bankruptcy fraud and money laundering.
Berg turned 55 and owes roughly $140 million in restitution.
Merced County Sheriff Vernon Warnke said he was notified of Berg’s escape about 4:10 p.m. Dec. 6 – about 40 minutes after the afternoon head count at the camp. According to an inmate manual, the 3:30 p.m. head count is the only one in which inmates are required to be counted standing by their beds.
‘Pretty sure he had help’
“From what I was told, they’re pretty sure he had help and that he was well out of the area” by the time he was discovered missing, the sheriff said.
The maximum-security prison, he said, is enclosed in a double fence with guard towers, electronic sensors and other security devices, according to Bureau of Prisons information. The adjacent camp is not enclosed, Warnke said.
The U.S. Marshals Service has assigned a deputy to the case, said Deputy U.S. Marshal Michael Martinez in Fresno. The service is asking residents and Berg’s friends and family in California, Oregon and Washington to be on the lookout.
Calvert, the trustee, said he’s going to be hard to find.
Berg, he said, has traveled extensively and likely escaped to a country with no extradition treaty with the United States.
Berg, he said, is “a very, very smart, very clever man” who proved his skills as a liar and con man by successfully pulling off a decadelong Ponzi scheme under the noses of auditors and regulators while stealing money from friends and clients.
His thefts earned him the nickname “Mini Madoff,” a nod to the similarity of his crimes to those of Bernie Madoff, the New York master con man responsible for nearly $150 billion in losses in 2008.
Total claims against Berg in the case topped $154 million and involved nearly 700 individual creditors. The trustee was able to recover about $40 million – the rest was lost to Berg’s scheme and lavish lifestyle, which included two yachts, two private jets, a propensity for Porsche sports cars and several mansions, including a waterfront home on Mercer Island.
Mr. Berg is not a person that can be trusted. He has been perfecting the art of lying and manipulating for many, many years.
Assistant U.S. Attorney Norm Barbosa
He turned himself in “palms up” to the FBI and federal prosecutors in 2010, claiming he wanted to come clean. But, prosecutors said, he was actually trying to get in front of the impending collapse of his decadelong fraud.
From that point forward, according to court documents, just about all Berg did was lie, mislead and misdirect – and try to sneak out of the country.
Berg was charged in 2010 by federal prosecutors after the discovery that he had taken steps to set up an offshore trust in the Central American country of Belize, and had hidden $400,000 to open it with. The U.S. Attorney’s Office asked the court to order him into custody, pending trial.
Berg argued that being locked up made it more difficult for him to help the bankruptcy trustee recover assets for the creditors.
At a Dec. 1, 2010, hearing, Assistant U.S. Attorney Norm Barbosa laid out the government’s concerns in the starkest terms.
“Mr. Berg is not a person that can be trusted,” the prosecutor said. “He has been perfecting the art of lying and manipulating for many, many years.”
Barbosa, who is still a federal prosecutor, declined to comment on the escape, except to remind a reporter that it is the Bureau of Prisons, not the U.S. Attorney’s Office, that determines an inmate’s security risk and housing.