When William Donnelly Yotty pleaded guilty in August to running two Ponzi schemes that soaked about 240 investors nationwide for nearly $15 million, we opined the Monarch Beach resident would likely die in federal prison. After all, the 69-year-old was looking at up to 40 years behind bars at that time. However, Yotty was only sentenced Tuesday to 57 months in federal lockup, so since 75 is the new 55, he could have a long life ahead on the outside.
A federal prosecutor found U.S. District Judge Margaret M. Morrow's sentence “significant.” So did the Los Angeles-based jurist.
“It is important that people who engage in business frauds face substantial sentences,” said Her Honor, whose sentence breaks down to about a year behind bars for every $3 million Yotty stole.
Oh yeah, Morrow also ordered Yotty to repay $15,018,822 to his victims, who included the elderly, teachers and law enforcement officers, many of whom earned modest salaries or had lost their retirement savings, the judge noted.
Morrow heard Tuesday afternoon from the daughter of an elderly couple who lost $250,000 in the fraud. They were forced to move out of their home, and the 71-year-old husband could not afford to retire.
Yotty previously admitted he promised investors in his Lodi-based firms Global Capital Associates, Infostar Systems, Pacific Financial Solutions and The Money People 25 percent returns through debt consolidations, claiming the companies issuing the debt promised to pay the interest that would be returned when notes matured.
“In fact, as defendant then well knew, the returns were not guaranteed and the investors' principal was not secure because the only way defendant could fund the 'interest' payments he promised to investors was with other investors' money,” Yotty admitted in his plea agreement.
In a second scam through Yotty's company Fortuno, investors were offered 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. In fact, Yotty himself was flipping the properties to the investors at substantial profits for himself, concealing the fact that they were paying double or triple what Fortuno acquired them for.
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.
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 U.S. 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.”
Yotty had been held without bond since his arrest.