(CNN) -- Federal prosecutors have charged a Florida man who lured University of Miami employees to help him pull off a multimillion-dollar Ponzi scheme that cost investors more than $20 million, the U.S. Attorney's office announced Thursday.
UM business school graduate Andres Pimstein confessed to operating the scheme, police say.
Andres Pimstein, 48, faces 12 counts of wire fraud in connection with the scheme, prosecutors said in a written statement.
He is scheduled to make an initial appearance before a federal judge in Miami on November 12.
According to lawsuits filed by an angry investor and a former business partner, Pimstein -- a University of Miami business school graduate -- recruited university employees and used school facilities to further the scheme.
The lawsuits accuse Pimstein of using detailed flow charts and fake invoices to persuade would-be participants, telling them his firm would be selling perfumes and electronics to a South American department-store chain with which he had no actual business.
The university told CNN that no school funds were involved, and it was cooperating with investigators.
If convicted, Pimstein faces up to 20 years in prison and a $250,000 fine, prosecutors said.
Don't Miss
Ponzi schemes work by paying early investors from the principal paid in by later investors, rather than from actual profits. Pimstein's operation collapsed in early 2008, when he was no longer able to pay investors their promised returns of 18 to 36 percent, prosecutors said.
Pimstein refused comment when CNN first reported the story in August, and efforts to contact his attorneys Thursday were unsuccessful.
Miami-Dade County police said Pimstein admitted to the scheme in a taped interview, which the department turned over to the FBI.
All About University of Miami
