A Detroit-area man accused of a $200 million investment scam pleaded guilty Friday, admitting he lied to people for a decade when he promised that he was putting their cash into telecommunication deals with hotels across the country.
Edward May, 74, appeared in federal court a few weeks before trial and pleaded guilty to all 59 counts of fraud in the indictment.
He said most money was recycled to earlier investors, a classic Ponzi scheme, but a "substantial amount" was spent on gambling. Starting in 1997, May created false documents to show that he had contracts with hotels in California, Nevada, New Jersey, New York and elsewhere.
"I dreamed up an idea for obtaining money. I had a lot of people who liked the idea. Apparently, it worked," he told a judge.
May said he promised people that in just 20 months they would earn enough interest to cover their initial investment.
"It was pretty huge," he said of the returns. Some investors "probably got 12 times" their money back.
U.S. District Judge Arthur Tarnow jokingly asked: "Is there still time to invest?"
Investors' losses topped $35 million by 2007 when the U.S. Securities and Exchange Commission filed a civil lawsuit.
Under sentencing guidelines, May, a Lake Orion resident, likely faces 15 years to 20 years in prison. The judge could order consecutive punishments for each count of fraud but it's not common.
Defense attorney David Lee declined to let The Associated Press try to talk to May after the court hearing.
May told the judge that he didn't act alone. No one else has been charged, although the SEC has a lawsuit pending against Frank Bluestein, alleging he solicited 30 percent of the money given to May and received $3.8 million in compensation. He has denied wrongdoing.
Detroit-area attorney David Findling has been assigned the task of suing investors who turned a profit, even if they didn't know that May was committing crimes. He said about $3 million has been recovered so far. The goal is to share money with investors who were in the red when the scheme collapsed.
"It was called 'mailbox money," Findling said, referring to the steady checks that arrived in the mail. Investors "diverted their ordinary skepticism by the regularity of the payments, their greed, their desire for profit."
Some investors sat in the gallery during May's guilty plea.
"I wanted to see him go down," said Kerry Budry, 53, of Armada, who lost money.
Budry acknowledged the returns promised by May probably were too good to be true but said, "It was happening. Times were good back then."