A Lakeville man pleaded guilty in federal court Thursday to operating a multi-million dollar Ponzi scheme that investigators say defrauded 17 lenders in Minnesota and other states.
Corey N. Johnston, 40, pleaded guilty to one count of bank fraud and one count of filing a false income tax return in connection with the scheme. He was charged on August 6.
Prosecutors said that Johnston engineered a scheme that involved overselling participation in large commercial and personal loans.
A government investigation found that lenders lost over $79 million between 2005 and 2009.
Prosecutors said he then used proceeds from loan repayments to repay other loans and perpetuate the scheme. Johnston also allegedly diverted some of the fraud proceeds for his personal use and to family members.
He faces a potential maximum penalty of 30 years in prison on the bank fraud charge and three years on the charge of filing a false income tax return. A sentencing date has not yet been scheduled.
(The Associated Press contributed to this report.)