Sixty-four Hawai'i residents were victimized in a $10 million Ponzi scheme allegedly operated by a Florida man who was arrested by federal authorities yesterday in Tampa, federal and state officials announced.

Patrick H. Rakotonanahary, 34, was indicted by a federal grand jury here on 21 counts of wire fraud, U.S. Attorney Florence Nakakuni said at a news conference here.

Rakotonanahary headed a company called Cyber Market Group LLC that promised investment returns of 6 percent to 10 percent a week, Nakakuni said. It took in $10.2 million from 100 victims between December 2007 and May 2009, she said.

The 64 Hawai'i victims invested a total of $7.99 million, Nakakuni said.

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

None of the investment advisers was named or charged in the indictment.

Nakakuni and other officials said Rakotonanahary promised high rates of return on trading in foreign currencies.

Of the $10 million taken in, Rakotonanahary returned some $8.4 million to investors, saying the payments were earnings on the original investments, according to the regulators.

In fact, the money paid back to early investors actually came from later investors — a classic sign of the Ponzi-scheme fraud, named after a New England con man who swindled victims in 1920.

"It was an illusory investment scheme," Nakakuni said.

"Experience has taught us that many offers claiming to deliver returns far beyond what traditional investments are paying are not, in fact, what they claim to be," she said.

Rakotonanahary actually lost some $800,000 in foreign currency trading and "diverted" $1 million to himself, regulators charged.

Charlene Thornton, FBI special agent in charge of the Honolulu office, said the investigation began with a complaint to the FBI's Internet Criminal Complaints Center.

Tung Chun, of the state's securities enforcement branch, said her office began its own investigation based on a locally generated tip.

Stephen Obie, acting director of the CFTC, said his agency may seek triple monetary damages — $30 million — from Rakotonanahary in the civil complaint filed against him.

The officials said Rakotonanahary required minimum investments of $30,000, and several Hawai'i customers entrusted $100,000 apiece to him.

"This resulted in 64 Hawai'i families liquidating their retirement savings or the equity in their homes only to find themselves defrauded in this alleged Ponzi scheme," Thornton said.

The FBI began its investigation last June and dubbed it "Operation Unhappy Returns," Thornton said.

The case was investigated by the Honolulu office of the FBI, the U.S. Commodities Futures Trading Commission and the securities branch of the state Department of Commerce and Consumer Affairs.

If convicted, Rakotonanahary would face a maximum of 20 years in prison per criminal count and fines of $250,00 per offense.

Regulators also filed civil lawsuits against Rakotonanahary in state and federal court yesterday.

Rakotonanahary is expected to make his first appearance here in the federal criminal case within 30 days, Nakakuni said.