The Associated Press

Posted: 03/29/2011 11:44:33 PM PDT

Updated: 03/29/2011 11:44:34 PM PDT

http://www.mercurynews.com/news/ci_17731671?nclick_check=1

EUGENE, Ore.—A 68-year-old man pleaded guilty Tuesday to mail fraud and money laundering in a swindle that cost investors more than $18 million. Many of Louis J. Borstelmann's victims are residents of Florence, Ore., the U.S. attorney's office said.

The Thousand Oaks, Calif., man entered his plea in federal court, admitting he solicited about 100 people to invest in real estate through his company, Sunburst Associates Inc.

Borstelmann falsely promised high rates of return and a security interest in property. In his plea, he admitted the alleged investments never existed and it was all a Ponzi scheme, in which he used new investor money to pay older investment obligations. He also admitted spending investor money on personal items like a home and a car.

Court documents show Borstelmann wrote more than $100,000 worth of checks to his wife, his credit card company and for a loan that he owed.

He has forfeited his 2005 Lexus and his condominium in Thousand Oaks; the condo will be sold unless he comes up with $100,000 to make up for the ill-gotten money put into the home, the plea agreement said.

Borstelmann pleaded guilty to one count each of mail fraud and money laundering. Additional counts were dismissed in the plea deal.

Jerry Medler, a retired University of Oregon professor whose wife lost $900,000 in the scam, told U.S. District Judge Michael Hogan on Tuesday that the affected Florence residents won't be able to donate to their churches or civic organizations in coming years, The Register-Guard reported.

"My wife lost her retirement. Period. Zero," Medler told Hogan, adding that the swindle hurt the whole town.

The judge said he'll review the dollar loss, the number of victims and the sophistication of the operation before imposing sentence.

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

The maximum penalty for mail fraud is 20 years and a $250,000 fine while money laundering is punishable by a maximum 10 years and a $250,000 fine.

Sentencing is set for June 14. Despite a victim's urging that he be jailed, Borstelmann remains free until his sentencing.

After entering his plea, Borstelmann stood behind a glass courtroom door and waited until about a half-dozen of his former investors filed out of a second courtroom door, the newspaper reported. Only then did he emerge. He declined comment.