LOS ANGELES—An Orange County man who operated a Ponzi scheme that bilked victims out of more than $15 million with false promises of large returns from investments in debt obligations and distressed real estate was sentenced today to 57 months in federal prison.

William Donnelly Yotty, 69, who lived in Lodi when he was operating the scheme, and was living in Monarch Beach when he was arrested in this case in May 2014, was sentenced this afternoon by United States District Judge Margaret M. Morrow.

“It is important that people who engage in business frauds face substantial sentences,” Judge Morrow said, noting that Yotty’s victims included the elderly, teachers and law enforcement officers, many of whom earned modest salaries or had lost their retirement savings.

The daughter of an elderly couple told the judge this afternoon that her parents lost $250,000 in the fraud, they were forced to move out of their home, and her 71-year-old father could not afford to retire.

Yotty, who has been held without bond since his arrest, pleaded guilty in August to mail fraud and wire fraud charges.

“Yotty raised over $17 million from more than 240 victim-investors based on false representations about—among other things—the safety of the investors’ principal and the guaranteed rate of return on promissory notes and other financial instruments, and the surefire success of investments in a real estate venture,” prosecutors wrote in a sentencing brief filed with the court.

When he pleaded guilty, Yotty admitted that he ran several Lodi-based companies that offered bogus investments in corporate debt obligations and in distressed real estate that he and his salespeople said could be “flipped” for substantial profit.

In the first scheme, Yotty solicited nearly $11 million from investors by offering purportedly safe and lucrative investments in convertible debentures, promissory notes and other financial instruments. Using companies he operated under names such as The Money People, Inc., Yotty solicited money from victims by guaranteeing annual interest rates as high as 25 percent and promising that victims would also recoup their entire initial investments. These claims were false. Yotty started using new investor money to make required payments to prior investors in the spring of 2007—less than a year after he started offering the investments. Yotty stopped making any payments to investors in the summer of 2009.

In the second investment scheme, which started in the summer of 2007 and was run through at least two programs—one of which he called Fortuno Millionaire Club—Yotty offered victims the opportunity to purchase foreclosed real estate at below-market prices, which would allow them to resell, or “flip,” the properties at two or three times their purchase price. At presentations, according to the sentencing memo, prospective investors were told “Our club member receives the down payment, the monthly payments from the new buyer, and all the proceeds from the sale of the Note! It’s a win…win…win!”

In fact, Yotty himself was flipping properties he purchased—many of which were in Flint, Michigan—to investors at substantial profits for himself. Because Yotty had already extracted any profit to be made from the properties, the investors were left with dilapidated real estate that they could not sell at all, let alone at the substantial profit that Yotty had promised.

As part of the scheme, Yotty concealed from the investors that the price they were paying for the properties was double or triple what Fortuno had paid, and that this inflated price would prevent the victims from realizing any profit of their own. As a further inducement to invest in Fortuno, Yotty and his salespeople also falsely promised victims that the properties were in livable condition and that Fortuno would manage the properties until the promised resale.

According to prosecutors, one victim, who was 79 when she invested in the Fortuno program, received a letter from the City of Flint that one of her two properties was condemned and going to be demolished, and the second property was in such bad shape that it could never be rented out or sold.

“This defendant stole not only his victims’ money, he stole their futures and their security,” said United States Attorney Eileen M. Decker. “This defendant’s fraud scheme has earned him a significant federal prison sentence which should stand as a warning to others that fraud does not pay.”

In addition to the prison term of nearly five years, Judge Morrow ordered Yotty to pay $15,018,822 in restitution to approximately 240 victims.

The investigation into Yotty’s Ponzi scheme was conducted by the Federal Bureau of Investigation, which received assistance from the California Department of Business Oversight, Enforcement Division.