Federal authorities have charged a California man with running a real estate Ponzi scheme that allegedly left investors holding the bag to the tune of $20 million.

According to the U.S. Attorney’s Office for the Eastern District of California, Seth DePiano was apprehended Las Vegas and charged with mail fraud, wire fraud and money laundering.

Seth De Piano

Court documents allege that DePiano operated a Ponzi scheme that attracted real estate investors into giving more than $20 million to him and the businesses he controlled — The Rental Group, U.S. Funding and Home Services LLC, and Draymond Homes. If convicted of the charges, Depiano faces a maximum statutory penalty of 20 years in prison for the mail fraud and wire fraud charges, 10 years in prison for money laundering, and a $250,000 fine.

In general, a Ponzi scheme is a fraudulent investing scam that promises investors high rates of return with little risk. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.

According to a Housingwire report, the U.S. Attorney’s Office stated that Depiano, 36, of Clovis promised investors he’d use their money to buy and manage several rental apartments. Court documents showed that in many cases, Depiano allegedly falsely represented to the investors that the properties had high occupancy rates. He would use false documents and he often didn’t have the authority to purchase or sell the properties in question.

Court documents indicate that, in a number of instances, DePiano promoted the properties to investors with documents he crafted to show high-occupancy rates in the properties, helping him to lure new investors, according to the government.

In many instances, DePiano didn’t have the authority to purchase or sell properties and misled investors with fraudulent documents misrepresenting the properties’ ownership, the federal government said in court records.

Moreover, prosecutors noted that some of the properties DePiano offered to investors did not even exist. He paid his investors the supposed “rental income,” but the money was actually funds that other investors had given him for investment purposes.

The case against DePiano was filed following an FBI probe with assistance from the U.S. Attorney’s Office for the District of Nevada.

According to the Fresno Bee, DePiano operated a business that provided rides to intoxicated people. Named Sober Guys, it folded in 2013.

In 2013, he also was named by Business Street Online to its “Forty under 40” listing of young up-and-coming professionals. .