Two Men Plead Guilty in Ponzi Scheme

Two California men who raised $152 million in a Ponzi scheme and then became victims themselves in an unrelated banknote scam face prison after pleading guilty to criminal charges, federal prosecutors said.

Ernest F. Cossey faces 57 to 71 months in prison after pleading guilty to one count of conspiracy to commit mail fraud and one count of filing a false tax return, said the office of the U.S. attorney for the Southern District of California in San Diego. Gary Williams faces 18 to 24 months in prison after pleading guilty to one count of preparing a false tax return for Cossey.

Cossey and Williams told investors that their money would be invested in distressed real estate, prosecutors said. But the men used more than $28 million to buy racehorses and invest in a “prime bank” scheme that turned out to be a bogus investment, the Securities and Exchange Commission said.