David Reeves, 69, of Lavinia Way, East Preston, appeared at Chichester Crown Court on Friday, August 28, and pleaded guilty to seven counts of fraud by false representation.
Sussex Police said Reeves had been running an investment club with a group of friends since 2006 but in 2011 the scheme hit trouble as he moved from investing in US markets to spread betting.
A police spokesman added: “He concealed losses from his investors, deliberately providing them with false statements showing profits, using existing members’ funds to pay out some members who withdrew - known as a Ponzi scheme.”
Eventually in February 2014, he told the members that all the money had gone, and he told the police.
Detective Constable Jennie Hutchinson of Sussex Police said: “The total loss to all the members who contributed over eight years, was just over £2 million, but the loss to the seven members who came forward and made statements was £296,030.
“Reeves operated a mutually beneficial scheme for some years, but then made financial decisions, the impact of which he not only concealed from his members but positively claimed were working well.
“Finally, but only as all was collapsing around him, he felt pressured into coming to the police.
“No monies were recovered and he is now bankrupt.
“We will be applying through the CPS to the Court for a Serious Crime Prevention Order (SCPO) which, if granted, will take effect on Reeves’ release from prison.
“The SCPO will last for five years and will prohibit him from running any betting syndicate, restrict him to one bank account, one savings account and one credit card account, and require him to notify police of the full details of his accounts and any business interests he has.”
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