WASHINGTON (Reuters) - Federal prosecutors have accused three men of portraying themselves as investment professionals and using a phony portfolio of consumer debt to defraud hundreds of unwary investors out of tens of millions of dollars as part of a $364 million Ponzi scheme.

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, U.S., June 24, 2011. REUTERS/Jonathan Ernst/File Photo

Kevin Merrill of Maryland, 53, Jay Ledford of Texas and Nevada, 54, and Cameron Jezierski of Texas, 28, misused millions of dollars to maintain a lavish lifestyle, according to an indictment unsealed on Tuesday in a federal court in Baltimore.

The indictment charged the three with conspiracy, wire fraud, identity theft and money laundering. Lawyers for the defendants could not be identified as of Wednesday.

The indictment says that from 2013 onward, the men offered individuals, family offices and funds an opportunity to invest in consumer debt portfolios that they claimed generated profits by collecting debt payments or by selling the debt to third parties. Instead of deploying the investments as promised, the defendants made payments to earlier investors while funding their own lavish lifestyle, prosecutors said.

“The defendants lured investors and defrauded their victims with a web of lies, duping them into paying millions of dollars toward buying bundles of debt people owed on student loans and their credit card debt,” U.S. Attorney for the District of Maryland, Robert Hur, said at a news briefing on Wednesday.

“It’s been ten years since the 2008 financial crisis and it is easy to forget the financial system is one built on trust,” he added.

The defendants defrauded at least 400 victims in the Baltimore area, Virginia and in Texas, Gordon Johnson of the Federal Bureau of Investigation’s Baltimore Field Office told reporters at the same briefing.

Merrill and Ledford spent tens of millions of dollars on luxury cars, jewelry, houses, boats, private jets and gambling at casinos, according to the indictment.

The men operated an elaborate network of entities and shell companies, including Global Credit Recovery LLC, Delmarva Capital LLC and Rhino Capital Holdings LLC, to convince investors that they were receiving payments from third parties, the indictment said.

If convicted, the three men each face up to 20 years in prison.

The U.S. Securities and Exchange Commission (SEC) brought a parallel civil complaint against the men in the same court, alleging violations of federal securities laws.

The SEC has obtained a temporary restraining order freezing assets and has appointed a temporary receiver, according to a separate complaint.