Istvan Merchenthaler
PHILADELPHIA — A Downingtown man pleaded guilty Monday to four pending indictments charging him with wire fraud, possession of destructive devices, and related offenses according to U.S. Attorney Zane David Memeger.
Istvan Merchenthaler, 44, of Downingtown has been in federal custody since Feb. 16, 2013 since his arrest on charges that he had a stockpile of explosives and more than 400 improvised explosive devices, some of which were discovered in an East Whiteland storage locker last year.
After the plea, Merchenthaler faces as much as 230 years in prison and more than $5 million when he is expected to be sentenced in January of 2015.
Merchenthaler pleaded guilty to four counts of wire fraud, two counts of aggravated identity theft, four counts of money laundering, two counts of filing false tax returns, and two counts of interstate transportation of stolen goods, as charged by the federal grand jury in this District.
Specifically, from about May 2006 to February 2013, Merchenthaler claimed to be the founder of PhoneCard USA, a company that was purportedly a “premier distribution source” for prepaid phone cards and cell phones.
In reality, authorities say, Merchenthaler operated a “Ponzi” scheme, stealing over $2 million from over 200 investors and using much of these funds for his own benefit and to perpetuate his scheme. In his scheme, Merchenthaler falsely claimed that PhoneCard USA had “lucrative contracts” with major retail chain stores including Walmart, 7-Eleven, and BJ’s Wholesale Club. Further, Merchenthaler falsely claimed to have friendships with executives at Walmart and 7-Eleven and used their names in a fraudulent e-mail address and bogus contracts.
Merchenthaler also pleaded guilty to one count of possession of unregistered destructive devices and one count of being a fugitive in possession of a firearm and ammunition, as charged by the federal grand jury in this District. Specifically, while he was a fugitive from justice in this District, Merchenthaler possessed approximately 460 improvised explosive devices (“IEDs”), a firearm, and ammunition.
In addition, Merchenthaler also pleaded guilty to two counts of being a fugitive in possession of firearms and ammunition and one count of possession of an unregistered destructive device, as charged by the federal grand jury in the Eastern District of North Carolina. Specifically, while he was a fugitive from justice, Merchenthaler possessed approximately 39 IEDs, a firearm, and 580 rounds of ammunition in the Wilmington, North Carolina area.
Moreover, Merchenthaler pleaded guilty to one count of being a fugitive in possession of firearms and ammunition, one count of possession of an unregistered destructive device, and one count of possession of an illegally manufactured firearm, as charged by the federal grand jury in the District of Maryland. Specifically, while he was a fugitive from justice, Merchenthaler possessed approximately 135 IEDs, 15 firearms, and 11,000 rounds of ammunition in the Rising Sun, Maryland area.
At sentencing, Merchnthaler faces a mandatory minimum of two years in prison with a maximum possible statutory sentence of 230 years, a three year period of supervised release, a fine of up to $5.5 million fine, and a $2,200 special assessment. Restitution and forfeiture may also be ordered.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, the Philadelphia Police Bomb Disposal Unit, the Montgomery County Bomb Squad, the Montgomery County Sheriff’s Office, the East Whiteland Police Department, the East Whiteland Fire Department, the Malvern Fire Department, the Chester County District Attorney’s Office, the Maryland State Police, and the North Carolina State Bureau of Investigation.
All of the indictments have been consolidated before United States District Judge Robert F. Kelly. A sentencing hearing is expected to be scheduled for January 2015.
The case is being prosecuted by Assistant United States Attorney Vineet Gauri.
