A pyramid fraudster who wired $5.8 million to a Bank of Bermuda account was sentenced to more than 17 years in federal prison this week.

A federal jury in the court of the Southern District of California convicted William McCray of mail and wire fraud, perjury, money laundering and tax fraud in November 2003 after the FBI, the IRS and other agencies uncovered an apparent Ponzi scheme run out of La Jolla, California.

During his 2003 trial, prosecutors said McCray and account manager and salesperson Paul Yates defrauded investors of $30 million by promising fantastic returns with no risk if they invested in International Forex and Earthwise International. The pair promoted the companies in the 1990s as achieving annual returns of 54-79 percent investing in ?managed currency accounts? when in fact clients received money from later investors in a classic pyramid scheme.

The pair also assured investors that the funds were insured and being held in trust in a Bank of New York account, the court heard that at least $5.8 million of the funds was wired to an account at the Bank of Bermuda.

McCray filed an application for a new trial with the court this week and in it he claimed that the all of the $5.8 million sent to Bermuda was returned in its entirety to pay off investors.

Prosecutors responded, however, that the defence?s own witness investigator Jim Nielsen testified that he could only trace $4.3 million back to IFL?s accounts in the US. That leaves $1.5 million unaccounted for. Evidence had also been presented in trial to show that the Bank of Bermuda funds were used to pay for foreign currency trading and trading fees. There is no documentation to show that each of the withdrawals went to investors rather than for other purposes.

McCray, 48, apologised for the losses that investors suffered but did not admit wrongdoing during the sentencing this week.

?His position all along has been that he did his best with a business that was not in a good condition when he took it over,? his lawyer Knut Johnson told US media.

The scheme took in $30 million, but while investors got some money back they lost more than $11 million, prosecutors said.

US District Court Judge Napoleon A. Jones ordered McCray to pay $547,283 in back taxes to the IRS and give up $5.8 million seized by the government as well as a 1998 Porsche Boxster he bought during the scheme.

Prosecutors said McCray committed two other currency-trading frauds after he was indicted and released on bail in 2000. He will serve his 17-year prison term concurrent to a ten-year term that he received for his involvement in a similar scheme to defraud investors using an entity called Fundamental Trading Analysis.

The other case involved an Australian company and has not resulted in an indictment. Japanese investors lost about $15 million after investing about $49 million in an affiliated company, prosecutors said.

Mr. Yates was sentenced last year to more than 6 years in prison.