LOS ANGELES (CBSLA.com) — A self-proclaimed real estate investor and consultant pleaded guilty in a downtown Los Angeles courtroom Monday to two felony fraud charges in connection with a home-flipping scheme that defrauded hundreds of investors.
William Yotty of Dana Point pleaded guilty to federal mail fraud and wire fraud. In one of his schemes, he persuaded about 240 people to make real estate investments through a Lodi company that he ran, Fortuno Inc. Those people gave Yotty money to purchase foreclosed homes that Yotty claimed he could resell at higher prices.
A glossy brochure distributed by the company claimed to show people “how to take $400 and turn it into $25,000 in the next 30 days.”
However, investors who filed suit against Yotty said that’s not how things worked out.
Instead, Yotty often purchased the foreclosed homes himself then sold them to his investors at inflated prices; any profits he made from those transactions, he kept. Many of the properties passed on to investors were damaged or unlivable and could not be resold.
Yotty also operated another financial fraud involving investments, including CDs and promissory notes. All told, Yotty’s victims lost $14 million.
The real estate scheme sent some victims, who were present for Monday’s hearing, into debt.
“I took out a personal loan in Germany, which now I have to pay off for the next 30 years,” said one of the victims, Markus Loeffler.
As part of his guilty plea, Yotty agreed to pay his victims restitution, although some are skeptical they will ever see the money.
“It would be nice, but I’m not holding my breath,” one victim said.
Yotty is due back in court for sentencing Nov. 23. He faces as many as 40 years in prison.