Man Pleads Guilty in $12-Million Fraud Case : Schemes: Prosecutors say most of the money gathered by Alan Keranen was used to pay interest to earlier investors and to support his lavish lifestyle.

A former high school football coach who operated a Ponzi scheme that bilked nearly $12 million from more than 200 unsuspecting investors pleaded guilty Thursday to two counts of mail fraud and two counts of submitting false tax returns to banks.

Alan Keranen, 42, formerly of Woodland Hills, admitted to U.S. District Judge William Matthew Byrne Jr. that he siphoned off money from the Woodland Hills-based California Anchor Group for his personal use, U.S. Dist. Atty. Anita Dymant said.

California Anchor, founded by Keranen in 1983, was intended to be a real estate investment company developing and selling apartment buildings in the San Fernando Valley.

Lured by promises of a 25% return on their money, investors refinanced their houses, cashed in their IRAs and spent their nest eggs to get in on the venture, according to prosecutors and victims.

But Dymant said most of the money went toward paying interest to earlier investors and to support Keranen’s lavish lifestyle.

She said Keranen paid for his sprawling Woodland Hills house, a condominium at a Utah ski resort and a residence for his mother with money that he took from the company.

Only a small fraction of the investors’ money was ever placed in real estate ventures, Dymant said.

Keranen had no difficulties recruiting investors because of his success in the Amway organization, a multilevel marketing company that sells cleaning products and other goods.

With his positive attitude, Keranen was a popular speaker on the lecture circuit, where he told of recovering from a devastating bus accident to build a fortune, according to victims.

He also sold motivational tapes with such titles as “You Too Can Be a Millionaire.”

Other Amway distributors interpreted his success as a sign of business acumen and were eager to get involved in his real estate development venture, prosecutors said.

But the pyramid scheme collapsed in May, 1987, two months after Keranen was asked to leave Amway for violating the company’s rules against involving too many other distributors in non-Amway business.

Once Keranen was forced to leave Amway, “word spread like wildfire,” Dymant said, and Keranen could not attract any new investors.

Keranen has since moved to Beaverton, Ore., and is running a water filtration marketing firm called Double Win International.

Nine civil lawsuits--with more than 100 plaintiffs--have also been filed against Keranen’s estate, now in bankruptcy.

Sentencing has not been set for Keranen, who faces a maximum of 14 years in state prison and up to $510,000 in fines.