Hotel Operator Pleads Guilty in $500 Million Ponzi Scheme

A hotel operator who prosecutors said defrauded more than 7,000 investors in a $500 million Ponzi scheme was sentenced in Chicago to five years in prison after pleading guilty to securities fraud. Michael E. Kelly, 63, who is critically ill with colon cancer, pleaded to a single charge yesterday before U.S. District Judge Ronald Guzman, who imposed the sentence today. Kelly has been in federal custody since his arrest in 2006. Kelly’s health was “a huge factor in arriving at a plea agreement between the parties,” his lawyer, Jeffrey B. Steinback, said in a telephone interview.
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