Investment advisor’s trial begins

Richmond Federal Courthouse

Richmond Federal Courthouse

A former UVA football player faced a federal jury in Richmond on Monday as the trial to determine his alleged role in defrauding investors out of millions got underway.

Merrill Robertson Jr. now faces a likely three week trial, which is expected to bring dozens of witnesses to the stand, including alleged victims and alleged co-conspirators.

Robertson was arrested in August 2016 and then indicted by a grand jury two months later on counts including mail fraud and bank fraud for a scam that allegedly lost more than $9 million for around 50 investors during a period of nearly seven years. He has since pleaded not guilty and has remained free on bond and on home confinement

The bulk of day 1 was consumed by jury selection, which whittled a pool of about 75 down to 16 jurors before Judge John Gibney Jr.

Opening statements began in the afternoon, with Robertson, dressed in a black suit, listening on as lead prosecutor Katherine Lee Martin from the U.S. Attorney’s Office presented the government’s narrative of the case.

“This case is about lies,” Martin said to the jury. “This case is about lies the defendant told to conceal how all of that money was spent.”

The government’s case claims Robertson and former business partner Sherman Carl Vaughn Jr., who has pleaded guilty to similar charges, raised money through their Midlothian-based company Cavalier Union Investments and used investor funds for their own personal expenses and to repay other investors.

Similar allegations of how the money was spent were detailed in a related civil suit brought by the SEC against Vaughn and Robertson. That suit has since been put on hold in lieu of the criminal case.

Robertson, who prior to his time at Cavalier Union worked for Merrill Lynch, allegedly lied to his former high school basketball coach upon bringing his money into the CUI fold, Martin said during her opening statement. She told a similar story of one of Robertson’s former football coaches at UVA.

Painting a different picture, Robertson’s attorney, Patrick Hanes of Williams Mullen, described his client as a victim of Vaughn’s misdeeds and a hardworking guy who did not set out to defraud anyone. Once approached by federal investigators, Robertson agreed to wear a wire to record conversations.

“Merrill Robertson pleaded not guilty for a single reason: During his time with Cavalier Union he did not intend to defraud anyone,” Hanes said. “He agreed to wear a wire in his meetings because he had nothing to hide. He poured everything he had for six years into this company.”

Hanes described Vaughn as a mentor and older brother figure to Robertson, bringing him into the business after a chance encounter at a Food Lion. He used terms to describe Vaughn’s relationship with Robertson as a “puppet master.”

“(Robertson) was consistently lied to and manipulated by Sherman Carl Vaughn,” Hanes said. “Make no mistake, Merrill is another victim of Carl Vaughn: in fact, he’s the first one.”

Robertson, who is expected to testify, has “lost his house, his livelihood and his reputation,” Hanes said.

One thing that wasn’t mentioned during opening statements was the term “Ponzi scheme,” which Robertson’s attorneys successfully argued should not be used during the trial. Judge Gibney agreed to prohibit those words from being uttered during opening remarks and limiting their use to only when they are tied directly to presentation of evidence.

However, the lead prosecutor’s opening statement did repeatedly say that new investors’ money was used to pay back previous investors.

Vaughn, who pleaded guilty in September 2016 to conspiracy to commit mail fraud and money laundering, is set to be sentenced Sept. 12. He’s included on the witness list for Robertson’s trial.

Also on the list to testify are four other alleged co-conspirators of Robertson’s. Each has already pleaded guilty and implicated Robertson in their pleas.

In February 2017, Missouri businessman Marlon Hardy pleaded guilty to counts of conspiracy to commit bank fraud and unlawful monetary transaction. Court records show those allegations related to efforts by Eaton, Robertson and others to obtain fraudulent loans from financial institutions. Hardy is set to be sentenced Sept. 12.

In May 2017, New Jersey resident Jason Eaton pleaded guilty on similar charges.

Most recently, in June, Northern Virginia businessman Frederick Davis II pleaded guilty to similar allegations, along with a count of conspiracy to defraud the government. His case names Hardy, Eaton and Robertson as co-conspirators.

Eaton’s sentencing is set for Sept. 11. No sentencing date has been set for Davis.

Richmond Federal Courthouse

Richmond Federal Courthouse

A former UVA football player faced a federal jury in Richmond on Monday as the trial to determine his alleged role in defrauding investors out of millions got underway.

Merrill Robertson Jr. now faces a likely three week trial, which is expected to bring dozens of witnesses to the stand, including alleged victims and alleged co-conspirators.

Robertson was arrested in August 2016 and then indicted by a grand jury two months later on counts including mail fraud and bank fraud for a scam that allegedly lost more than $9 million for around 50 investors during a period of nearly seven years. He has since pleaded not guilty and has remained free on bond and on home confinement

The bulk of day 1 was consumed by jury selection, which whittled a pool of about 75 down to 16 jurors before Judge John Gibney Jr.

Opening statements began in the afternoon, with Robertson, dressed in a black suit, listening on as lead prosecutor Katherine Lee Martin from the U.S. Attorney’s Office presented the government’s narrative of the case.

“This case is about lies,” Martin said to the jury. “This case is about lies the defendant told to conceal how all of that money was spent.”

The government’s case claims Robertson and former business partner Sherman Carl Vaughn Jr., who has pleaded guilty to similar charges, raised money through their Midlothian-based company Cavalier Union Investments and used investor funds for their own personal expenses and to repay other investors.

Similar allegations of how the money was spent were detailed in a related civil suit brought by the SEC against Vaughn and Robertson. That suit has since been put on hold in lieu of the criminal case.

Robertson, who prior to his time at Cavalier Union worked for Merrill Lynch, allegedly lied to his former high school basketball coach upon bringing his money into the CUI fold, Martin said during her opening statement. She told a similar story of one of Robertson’s former football coaches at UVA.

Painting a different picture, Robertson’s attorney, Patrick Hanes of Williams Mullen, described his client as a victim of Vaughn’s misdeeds and a hardworking guy who did not set out to defraud anyone. Once approached by federal investigators, Robertson agreed to wear a wire to record conversations.

“Merrill Robertson pleaded not guilty for a single reason: During his time with Cavalier Union he did not intend to defraud anyone,” Hanes said. “He agreed to wear a wire in his meetings because he had nothing to hide. He poured everything he had for six years into this company.”

Hanes described Vaughn as a mentor and older brother figure to Robertson, bringing him into the business after a chance encounter at a Food Lion. He used terms to describe Vaughn’s relationship with Robertson as a “puppet master.”

“(Robertson) was consistently lied to and manipulated by Sherman Carl Vaughn,” Hanes said. “Make no mistake, Merrill is another victim of Carl Vaughn: in fact, he’s the first one.”

Robertson, who is expected to testify, has “lost his house, his livelihood and his reputation,” Hanes said.

One thing that wasn’t mentioned during opening statements was the term “Ponzi scheme,” which Robertson’s attorneys successfully argued should not be used during the trial. Judge Gibney agreed to prohibit those words from being uttered during opening remarks and limiting their use to only when they are tied directly to presentation of evidence.

However, the lead prosecutor’s opening statement did repeatedly say that new investors’ money was used to pay back previous investors.

Vaughn, who pleaded guilty in September 2016 to conspiracy to commit mail fraud and money laundering, is set to be sentenced Sept. 12. He’s included on the witness list for Robertson’s trial.

Also on the list to testify are four other alleged co-conspirators of Robertson’s. Each has already pleaded guilty and implicated Robertson in their pleas.

In February 2017, Missouri businessman Marlon Hardy pleaded guilty to counts of conspiracy to commit bank fraud and unlawful monetary transaction. Court records show those allegations related to efforts by Eaton, Robertson and others to obtain fraudulent loans from financial institutions. Hardy is set to be sentenced Sept. 12.

In May 2017, New Jersey resident Jason Eaton pleaded guilty on similar charges.

Most recently, in June, Northern Virginia businessman Frederick Davis II pleaded guilty to similar allegations, along with a count of conspiracy to defraud the government. His case names Hardy, Eaton and Robertson as co-conspirators.

Eaton’s sentencing is set for Sept. 11. No sentencing date has been set for Davis.

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