A Phoenix man is suspected of taking more than $1 million from nine people investing money in his house-flipping operation and using it to pay for other investors in what Medford police called a "classic Ponzi scheme."

A Phoenix man is suspected of taking more than $1 million from nine people investing money in his house-flipping operation and using it to pay for other investors in what Medford police called a "classic Ponzi scheme."

Allen Leroy Kayser, 60, who lives in the 5300 block of South Pacific Highway, allegedly placed ads in several Oregon newspapers looking for investors starting in 2006, police said in a news release. In the ads, Kayser guaranteed investors returns of 15 to 17.5 percent. He said he would purchase foreclosed homes, remodel them and sell them.

When the venture proved to not be as profitable as he had hoped, he began to use money from new investors to pay to those who had invested earlier.

In 2008, Kayser started to put money toward another investment but didn't notify investors of his actions. Police didn't disclose details about Kayser's new venture, but said it too failed.

Kayser was arrested and lodged in the Jackson County Jail Wednesday on charges of racketeering, securities fraud, selling an unregistered security and aggravated theft. He is held in lieu of $500,000 bail.

An arraignment has been scheduled for later today.

The arrest concludes an 11-month investigation, Medford police said.

— Ryan Pfeil