Where on Earth is Darren Berg? 'Mini-Madoff' Ponzi-schemer escapes prison

Frederick Darren Berg is the mastermind of one of the biggest Ponzi schemes ever. The slick scam artist ripped off more than $100 million to fund his lavish lifestyle.

Now this "Wolf of Washington" is playing "Catch Me If You Can" with the feds -- but this guy is no Leonardo Di Caprio. Where the crafty conman is hiding is a mystery.

Darren Berg started his white-collar black-tie life of crime in college as a fraternity brother at the Pi Kappa Alpha house, the "Pikes," at the University of Oregon.

"He first showed up in Eugene and joined the fraternity in the fall and they immediately elected him treasurer," said Michael Stone, a CPA and former alumni advisor to the fraternity.

Stone remembers the smooth-talking Berg dazzled his fraternity brothers with his charisma and business savvy. Because at just 20 years old, the ambitious entrepreneur Berg already owned his own business, a charter bus company touting his own name: "Darren Berg Tours."

"The rest of the undergraduate chapter elected him president of the fraternity, at the same time that he continued to be treasurer of the fraternity," said Stone.

But while his fraternity brothers were guzzling beer, Berg was busy funneling Pike house money into his own bank account.

"I got a call from the assistant treasurer, who called to say that all of their checks were bouncing and that there was no money in the bank account, and they didn't understand how that could be because everybody had just paid a full quarter of room and board," said Mike Stone.

Stone was concerned, so he stopped by the Pike house to inspect the bank records that Berg kept tucked away in his room. And sure enough, the balance was zero.

"He came home at the time that I was looking at the financial records in his room and he kind of went ballistic, and I said 'I'm here to try to find out where all the money went since everybody says they paid the house bills, but there's no money in the bank account and it's bouncing checks.'"

Turns out Berg was taking checks written to the fraternity, endorsing them with his tour company stamp, and depositing them straight into his charter bus account.

"About $21,000 at the time," said Stone. "We ultimately got it all back. His bank, First Interstate Bank, took the hit for having dealt with a fraudulent depositor."

Stone called the cops and the district attorney about what he considered straight-up embezzlement. But Eugene Police never pressed charges.

"Darren's defense was that he had spent all of this money on behalf of the fraternity and he was merely reimbursing himself," said Stone. "The Lane County District Attorney and the Eugene Police Department felt that that was a good enough defense that they didn't need to investigate."

Berg escaped an indictment. And then, just like the rent money he stole, he simply disappeared.

"He was gone and out of town within seven days. And nobody knew where he went," said Mike Stone.

Stone never saw the frat fraudster again. But he did finally get a richly defensive earful.

In a scathing letter Stone received the week Berg disappeared, Berg wrote: "I have, at no time, ever 'embezzled' any funds from the Pi Kappa Alpha Fraternity. What an erroneous assumption. Unfortunately, I will be unable to participate in your 'Perry Mason' game. If for some reason, however, you should have any questions, I suggest you direct them to my attorney. He is paid good money to answer stupid questions."

"I wrote him a letter back saying, 'I called your attorney and your attorney says he's never heard of you. So I'm still waiting,'" said Stone. "That was classic Darren: puffing up, coming up with this grandiose response in rebuttal, that if you just peel back the veneer, there's nothing there."

Where did Darren Berg go? Nobody knew for sure -- until he resurfaced in Portland, Oregon and started up an advertising business, even bringing some of his former fraternity brothers on board.

"There was two members who worked for him," said Stone.

But Berg's new business venture ended up much like the old one: a scam. This time the U.S. Attorney indicted him on bank fraud charges, accusing Berg of stealing $19,000 from a Portland bank in a "check-kiting" scheme, where an individual writes a bad check on one account, and then covers it by writing a second bad check from another account.

Berg pleaded guilty, but ultimately dodged a bullet. The slick-talking Berg cooperated with cops, gave the money back, and convinced authorities to let him off the hook.

"He ended up making some arrangements where he paid restitution and left town," said Mike Stone. "But as far as I know, his fraternity brothers lost the money that they had loaned him in that business."

From there Berg takes his sketchy show on the road again, heading to Seattle, where, in a gleaming glass tower, he launched yet another new business venture.

"Darren Berg's mortgage company Meridian Funds was set up to collect money from investors and invest that money into mortgages," said Greg Lamm, Puget Sound Business Journal.

"Instead of using the money to buy mortgages and invest, he was living lavishly off the money and he was placating his investors, who were getting monthly dividend payments by attracting new investors."

That is the textbook definition of a Ponzi scheme. Darren Berg became a master at the game of attraction.

"Darren Berg was very convincing, and Darren Berg also always thought he was the smartest guy in the room," said Lamm.

But is he smart enough to outsmart the feds?

"He always thought he could stay one step ahead of everybody," said Lamm.

The answer is yes. And you won't believe how he did it.

Darren Berg owned two private jets and several multimillion-dollar homes, but the feds say Berg and his life were the same thing: one big fraud.

Berg offers his clients big returns on real estate investments, but he's actually running a multimillion-dollar scam.

"He really used the trappings of wealth as a big sales sales pitch to his investors," said Puget Sound Business Journal Digital Editor Greg Lamm.

In addition to using his client's cash to fund the high life, Berg also used it to launch a lifelong obsession dating back to his college days at the University of Oregon.

"Darren Berg was fascinated with buses," said Lamm. "His grandfather had been a bus driver, and he heard stories about his grandfather driving a bus and traveling around, and that really appealed to him and it stuck with him as an adult."

So Berg cooked up the idea to launch a luxury motor coach company with a fleet of buses catering to high-end clientele.

"They were leased out to sports teams, to politicians," said Lamm. "The governor of Washington was running for reelection and she chartered one of his buses for [the] campaign."

Like always, Berg was able to get away with his high-flying business schemes because his slick salesmanship lured fresh blood into his web of lies.

But also, like always, the golden boy ran off the with the gold when his bus company went south.

"The key to the Ponzi scheme was always having fresh investors bringing in new cash," said Lamm. "Early on, some of his funds were actually legitimate, but as the years went on, the Ponzi scheme became more prevalent and he became deeper and deeper in debt."

And right when the king of investor scams Bernie Madoff himself fell from his fraudulent throne, so did Darren Berg. His elaborate house of cards came crashing down.

"That just was the beginning of the end for Darren," said Lamm.

He was arrested for embezzling and stashing millions of dollars in exotic offshore accounts.

"When people started hearing about Ponzi schemes and a worry about a crumbling housing market, they approached him about getting their investments back, and Darren didn't have the money to pay them back, and so that set off a mad scramble for Darren," said Lamm.

For years Darren Berg had lived the sweet life. Now the 51-year-old was about to get his just desserts.

"Then they started suing him in court and they filed lawsuits against him, started seizing his property," said Greg Lamm.

So what did Berg do? He filed for bankruptcy and brokered a deal to help the bankers unravel his crimes -- or so they thought.

"The authorities allowed Darren Berg to participate with investigators," said Lamm. "The rationale was that it was a very complicated scheme, lots of accounts, lots of paperwork, and who better than Darren Berg to help them decipher it?"

But it was all smoke and mirrors.

"Darren presented himself as someone who would cooperate, so he was allowed to move from Seattle to take a consulting job in California," said Lamm.

It wasn't long before the feds discovered, like so many other people in Berg's life, they too were being played. Darren Berg was plotting his great escape by stashing money in secret bank accounts in Belize.

"He always thought he could stay one step ahead of everybody, ahead of his investors, ahead of the bankruptcy court, ahead of the FBI," said Lamm. "He just had this confidence that he could beat it, basically. Beat the rap."

But finally, Berg's time had run out.

"Darren Berg was charged with orchestrating Washington state's largest Ponzi scheme," said Greg Lamm.

Berg pleaded guilty and was sentenced to 18 years in a federal penitentiary for fleecing more than 800 investors, many of them elderly, out of $140 million in a con he ran for more than a decade.

"He did stand before the federal judge and say that he did these crimes intentionally. He didn't apologize. Darren Berg was not a person to apologize," said Lamm.

Berg spent the next six years doing time at various minimum-security federal prisons in California. But it was at the Atwater Satellite Work Camp where he performed his ultimate magic trick: He disappeared.

Berg was only housed at the Atwater Penitentiary minimum security facility for about a year, but it was enough time for him to realize the only obstacle standing between him and freedom was a fence. And just beyond the fence, an airport, where U.S. Marshals say it's likely Berg hopped a private jet and began his new life as an international fugitive.

"The penitentiary, it's in an open field, so there is different means of how he could have escaped, but we are exhausting all leads," said U.S. Deputy Marshal Michael Garcia.

So how is it possible that Berg could simply stroll out of a federal prison?

"It's definitely difficult to escape, you know, they do the counts, everybody is watched over, but it's still possible, obviously," said Garcia. "When the team showed up to do their initial investigation, the investigators at the facility, they had already done their own search, and obviously we picked up where they left off."

For now, Darren Berg's whereabouts are anybody's guess.

"I have little doubt that he probably is some place where it's warm and doesn't have an extradition treaty to the United States," said Mike Stone. "There's a number of those places in the Caribbean, they only exist to hide money."

"Where Darren Berg is right now is anybody's guess. I wouldn't be surprised if he was in Canada, Mexico, Central America," said Greg Lamm. "Nothing about where he is right now would surprise me."

Darren Berg is now 55. His mug is plastered on wanted posters all over. Tips have poured in from around the country. But as of now, the master manipulator is still on the run.

"He's intelligent and cunning to create a Ponzi scheme and take millions of dollars from hundreds of people. There's no stopping to what he's capable of," said Marshal Garcia.