Louis J. Borstelmann, 68, Thousand Oaks, California, pleaded guilty to mail fraud and money laundering in connection with a Ponzi scheme that reached Florence, Oregon.

The defendant admitted to soliciting approximately 100 individuals, a majority of whom are residents of Florence, Oregon, to invest in real estate through his company, Sunburst Associates, Inc., a California corporation, bilking them out of more than $18 million.

The defendant claimed to offer hard-money loans through his company that were secured by real estate deeds of trust. To entice individuals to invest, the defendant falsely promised high rates of return and a security interest in the property allegedly pledged to secure the investment. Additionally, the defendant sent investors fraudulent investment materials, including the supposed deeds of trust.

As part of his plea, the defendant admitted that the alleged investments never existed and that it was all a Ponzi scheme-he used new investor money to pay existing investment obligations. The defendant further admitted to spending investor money on personal items, including a car and a home.

"The citizens that are defrauded in schemes like this are quite often left financially and emotionally devastated," said Marcus Williams, Special Agent in Charge of the Seattle Field Office of Internal Revenue Service - Criminal Investigation. "The talents of investigators from IRS-Criminal Investigation, the FBI, and the state of Oregon were utilized in this case to ensure this man was held accountable for his actions."

"This scheme targeted vulnerable families who put their money and trust behind a man who promised them a bright future," said Arthur Balizan, Special Agent in Charge of the FBI in Oregon. "They now face a future of hardship because of these lies."

Sentencing is set for June 14, 2011, at 10 a.m. before U.S. District Judge Michael R. Hogan. The maximum penalty for mail fraud is 20 years in prison and a $250,000 fine, and the maximum penalty for money laundering is 10 years in prison and a $250,000 fine.

This case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigation, and the Oregon Division of Finance and Corporate Securities. The case is being prosecuted by Assistant U.S. Attorney Scott E. Bradford.