A Phoenix man is facing 20 charges related to allegations he bilked more than $1 million out of nine Southern Oregon residents in what police called a classic Ponzi scheme.

A Phoenix man is facing 20 charges related to allegations he bilked more than $1 million out of nine Southern Oregon residents in what police called a classic Ponzi scheme.

Allen Leroy Kayser, 60, on Thursday pleaded not guilty before Jackson County Circuit Court Judge Lorenzo Mejia to nine counts each of securities fraud, selling an unregistered security, five counts of first-degree theft and two counts of racketeering.

Kayser, who lives in the 5300 block of South Pacific Highway, stole from nine people who had invested money in his house-flipping operation, said Detective Sgt. Brent Mak, of the Medford Police Department's Financial Investigation Section.

All of the alleged victims were from Southern Oregon, Mak said, adding Kayser's arrest concludes an 11-month investigation.

Starting in 2006, Kayser placed ads in several Oregon newspapers looking for investors, Mak said. In the ads, Kayser said he would purchase foreclosed homes, remodel them and sell them. He guaranteed investors returns of 15 to 17.5 percent, Mak added.

"That is a really high rate of return," Mak said.

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

"As with most Ponzi schemes, the first investors are paid," Mak said. "Then they tell their friends that they got their money, and that's how they get more investors."

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 also failed.

"After awhile it all falls apart," Mak said. "As with any investment there are no guarantees. But this is a good example of the old adage, 'If something sounds too good to be true, it is.' "

Mak cautioned that the public, and particularly the elderly, should fully understand where they are investing their money, and with whom.

"If you're answering an ad in the paper, you have to be really careful," he said. "Especially if you are trusting by nature. Bounce your investment ideas off a trusted family member or friend."

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 was being held in lieu of $500,000 bail.

Kayser's pretrial hearing has been slated for January 9.

Reach reporter Sanne Specht at 541-776-4497 or email sspecht@mailtribune.com.