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Ponzi schemer gets two years in prison, three on probation

A securities and insurance broker in Green Valley who admitted operating a Ponzi scheme has been sentenced to 24 months in federal prison followed by three years on probation, according to James McCormick a public information officer for the IRS.

Michael A. Dawes pleaded guilty in 2007 to mail fraud and money laundering.

He admitted getting about $4 million in loans from 80 investors between 1998 through 2006.

He promised them a rate of return of between 10 and 30 percent for investments he said he would make in an offshore account, according to documents in the case.

What he did was use money from new investors to pay off old investors, according to a plea agreement with the U.S. Attorney’s Office in Arizona.

“Dawes did not tell his clients the ‘investment opportunity’ was fictitious and did not exist,” the court documents state.

“By primarily using new investors’ funds to pay old investors, Dawes operated a fraudulent scheme,’ the plea agreement states.

The estimated loss to investors over the eight years of the scheme is $1.7 million.

Investors paid Dawes directly to make investments on their behalf.

The scheme began after Dawes lost money speculating in the options market, according to the plea agreement.

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