A federal judge sentenced a California man to 9 years in federal prison for operating a Ponzi scheme that bilked investors out of more than $18 million. United States District Judge Michael R. Hogan sentenced Louis J. Borstelmann, 69, to 108 months in prison, three years of supervised release, and to pay nearly $19 million in restitution to investors defrauded by his scheme. Borstelmann, of Thousand Oaks, California, who had previously pled guilty in March 2011 to counts of mail fraud and money laundering, faced a potential maximum sentence of 30 years for both convictions.
Borstelmann founded Sunburst Associates, Inc. purporting to invest in real estate holdings. Investors were offered the ability to invest in real estate deeds of trust in return for the promise of high rates of return, along with a security interest in the property allegedly pledged as collateral for the investment. Investors were sent interest payments allegedly resulting from their profitable investments. Instead, Borstelmann later admitted that these investments were nonexistent, and instead new investor money was used to pay older investment obligations. Investor funds were also used for personal expenses, including the purchase of an automobile and a house.
Borstelmann had also faced charges in Ventura County, California. State prosecutors there have agreed to forgo prosecution provided Borstelmann received a federal prison sentence of at least nine years.