A Waukegan man was sentenced to six years in prison Thursday for his role in a homebuilding scam that cheated investors out of more than $760,000.
Richard Osty, 72, also was ordered to pay back his victims in full after pleading guilty to a felony theft charge in DuPage County court.
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Prosecutors said the former securities broker took money from 15 investors in exchange for modular "green" homes he never intended to build.
He promised the deal would bring 10.25 percent returns but instead spent the money on karate classes and medical bills, among other personal expenses, Assistant State's Attorney Diane Michalak said in court.
One married couple spent about $310,000 for two lots and the construction of two homes but received nothing. A group of three other investors was left with "a vacant plot of land in the Englewood area of Chicago," Michalak said.
Osty, who was banned from selling securities in Illinois in 1989, told victims their investments would make use of a neighborhood-revitalization program in some areas of Chicago where lots were being sold for $1. He falsely claimed to be working with homebuyer assistance groups and builders of environmentally-friendly modular homes, prosecutors said.
Osty and his partner, Ronald Moore, were indicted in April 2012 after Wheaton police launched an investigation based on an investor complaint.
Moore, 58, of Wheaton, pleaded guilty Thursday to attempt securities fraud, a misdemeanor, in exchange for 24 months of conditional discharge.
He also agreed to pay about $35,000 in restitution for his role in the scam, which prosecutors said entailed soliciting initial, $1,500 commitments.
Both men had been set to go to trial next month. DuPage County Judge Kathryn Creswell accepted their plea agreements.