A Kāne'ohe con man who stole nearly $3 million from local investors lost $2 million of the loot to an even bigger swindler, according to federal court papers.

Albert J.K. Perkins IV, due to be sentenced Monday in federal court for interstate transportation of stolen money, invested his ill-gotten profits in what federal and state authorities say was a massive Ponzi scheme operated by Florida resident Patrick H. Rakotonanahary.

"Albert is the biggest victim of Patrick," said Perkins' lawyer, Todd Eddins.

FBI Special Agent Thomas Simon, who investigated both cases, said "victim" is not the right word to describe Perkins.

"He was a very early investor in (Rakotonanahary's company) Cyber Market Group and he did very well," Simon said.

Federal and state law enforcement officials allege that Cyber Market Group LLC was an elaborate Ponzi scheme, a form of financial fraud that pays early investors high rates of return with money obtained from later investors.

Rakotonanahary, 34, pleaded not guilty Monday in Honolulu federal court to 21 counts of wire fraud. His defense attorney, Rustam Barbee, could not be reached for comment yesterday.

Exactly how much money Perkins received back from Rakotonanahary isn't clear, but very little of it was returned to his own victims, according to court papers.

Perkins admitted that he persuaded a local family to place $2.97 million in a phony investment scheme in 2008.

As part of a plea agreement with federal authorities, he must repay his victims $2.5 million.

Perkins had promised his victims interest rate returns of nearly 19 percent on their investment, according to a criminal complaint filed against him.

The money was supposed to be placed in a certificate of deposit, but instead Perkins wired it to a Cyber Market Group bank account in Virginia, the complaint said.

Rakotonanahary promised his investors returns on foreign currency trading of between 6 percent and 10 percent per week and took in $10.2 million from 100 victims between December 2007 and May 2009, according to Hawai'i U.S. Attorney Florence Nakakuni.

Assistant U.S. Attorney Larry Tong said almost two-thirds of the alleged victims came from Hawai'i, investing a total of $7.99 million.

Of the $10.2 million taken in, Rakotonanahary returned some $8.4 million to investors, saying the payments were earnings on the original investments, according to regulators.

Rakotonanahary visited Hawai'i twice to promote his investments and enlisted seven "investment advisers" here who referred clients to Cyber Market, the indictment alleges.

Those advisers were identified in the indictment only by their initials, and one is listed as "A.P.," an apparent reference to Perkins.

Perkins used two companies he owned, Asset Management Advisors Inc. and CNRG Corp., in his investment scheme, according to court papers.

His victims were members of an unidentified family who wanted to liquidate $2.9 million in real estate holdings "to pay anticipated medical and nursing home costs of a family member," the government charges.