A Charlottesville man is accused of conducting a multi-million dollar Ponzi scheme. A federal court spokesperson said John Donnelly was arrested Wednesday morning after agents executed a search warrant at his home in Ivy.

Donnelly Accused of Ponzi Scheme

Posted: March 11, 2009 03:24 PM EDT

Updated: March 11, 2009 11:47 PM EDT

A Charlottesville man is accused of conducting a multi-million dollar Ponzi scheme. A federal court spokesperson said John Donnelly was arrested Wednesday morning after agents executed a search warrant at his home in Ivy.

According to the U.S. Securities and Exchange Commission, John Donnelly fraudulently obtained at least $11 million from as many as 31 investors since 1998.

SEC officials say Donnelly runs a number of companies including Tower Analysis, which is located on the 600 block of Water Street in Charlottesville. Donnelly allegedly scammed the companies by selling investment fund securities but never actually traded any securities and used new investor money to pay off the people that were already involved.

The feds also say Donnelly paid himself about $1 million in salary and fees during the last three years.

Jeff Johnson, who has lived across the street from Donnelly for three and a half years, said Donnelly is a family man who is always helpful. "He's a wonderful person. He goes overboard and tries to help everyone within the community," stated Johnson.

Donnelly's wife had no comment when asked about the allegations.

The SEC has frozen all assets under the control of Donnelly and his firms. Donnelly faces felony charges and will be in federal court Thursday morning for a status hearing.