Oregon: Man bilks investors of $18M

EUGENE, Ore. (AP) -- A 68-year-old man pleaded guilty Tuesday to mail fraud and money laundering in a swindle that cost investors more than $18 million. Many of Louis J. Borstelmann's victims are residents of Florence, Ore., the U.S. attorney's office said. The Thousand Oaks, Calif., man entered his plea in federal court, admitting he solicited about 100 people to invest in real estate through his company, Sunburst Associates Inc. Borstelmann falsely promised high rates of return and a security interest in property. In his plea, he admitted the alleged investments never existed and it was all a Ponzi scheme, in which he used new investor money to pay older investment obligations. He also admitted spending investor money on personal items like a home and a car. Court documents show Borstelmann wrote more than $100,000 worth of checks to his wife, his credit card company and for a loan that he owed. He has forfeited his 2005 Lexus and his condominium in Thousand Oaks; the condo will be sold unless he comes up with $100,000 to make up for the ill-gotten money put into the home, the plea agreement said. Borstelmann pleaded guilty to one count each of mail fraud and money laundering. Additional counts were dismissed in the plea deal. Jerry Medler, a retired University of Oregon professor whose wife lost $900,000 in the scam, told U.S. District Judge Michael Hogan on Tuesday that the affected Florence residents won't be able to donate to their churches or civic organizations in coming years, The Register-Guard reported. "My wife lost her retirement. Period. Zero," Medler told Hogan, adding that the swindle hurt the whole town. Sentencing is set for June 14. Despite a victim's urging that he be jailed, Borstelmann remains free until his sentencing. Published: Thu, Mar 31, 2011