A 69-year-old Dana Point man will likely die in federal prison if he is sentenced to the maximum 40 years for admittedly running two Ponzi schemes that soaked about 240 investors for $14 million.
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William Donnelly Yotty, who pleaded guilty Monday to federal mail fraud and wire fraud charges, currently resides in Dana Point's pricey Monarch Beach neighborhood, but he ran his scams through his various Lodi-based corporations, according to the U.S. Attorney's Office.
Under a plea deal, Yotty admitted he promised investors in his 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 of the scam that generated a cool $10 million.
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.
More than $6 million was raised in the real estate flipping scheme, and between the two scams about 240 investors lost more than $14 million, an FBI investigation uncovered.
Yotty, who has been held without bond since he was arrested in May 2014, is scheduled to be sentenced by U.S. District Judge Margaret M. Morrow on Nov. 23.
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OC Weekly Editor-in-Chief Matt Coker has been engaging, enraging and entertaining readers of newspapers, magazines and websites for decades. He spent the first 13 years of his career in journalism at daily newspapers before “graduating” to OC Weekly in 1995 as the alternative newsweekly’s first calendar editor.