May.13, 2010, 12:06 PM, Source: The Grand Rapids Press

GRAND RAPIDS -- A Mason man has pleaded guilty to money laundering for an Internet-based commodities futures trading scheme.

Ty Klotz pleaded guilty this week in exchange for dismissal of other charges.

He told U.S. District Magistrate Judge Ellen Carmody he began telling area residents in 2004 that he was an expert in commodities trading and earned substantial returns. He established several other business, including Aurifex Investment, Aurifex Research LLC and Aurifex Commodities Research Co., and gave the appearance he was a licensed broker, U.S. Attorney Donald Davis said.

He said Klotz defrauded hundreds of investors by saying he averaged 20 percent returns per month, and assuring inventors their money was held in FDIC-insured institutions and insured by Lloyd's of London. He admitted he mailed monthly statements to investors that showed false investment returns. In response, many increased their investments.

At his plea hearing, he said he did not invest most of the deposits, but kept the money for himself. He bought Rolex watches, luxury vehicles, clothing and a house. He said he brought in $2 million, but more than $1 million has not been returned.

He faces up to 10 years in prison at his Aug. 16 sentencing.

Agencies involved in the investigation were the FBI, IRS criminal investigation unit, Mason police and Commodities Futures Trading Commission, Davis said.