A once-prominent Grass Valley real estate broker and three of his associates are facing felony charges for their alleged roles in an expansive Ponzi scheme that cost investors, some of them elderly, millions of dollars.

Philip Lester, the former head of the Gold Country Lenders real estate firm who has since lost his lending license, and his sister and chief financial officer, Susan Laferte, each face 66 charges of securities fraud, elder abuse and conspiracy, according to the state attorney general's office.

Also implicated in the alleged scheme were Lester's wife, Ellen Lester, who is an attorney and business partner, and their business associate Jonathan Blinder. Ellen Lester faces two felony counts of conspiracy and securities fraud; Blinder, four felony counts of securities fraud.

The attorney general's office alleges that over eight years the suspects used new investor funds – gained with the promise of investment in real estate projects – to make payments to earlier investors or for projects in which Philip Lester had a financial interest. In several cases, investors were never paid back, some losing their life savings.

"These defendants exploited their personal relationships with these victims and emptied their bank accounts," Attorney General Kamala Harris said in a written statement. "Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement."

Philip and Ellen Lester, both 65, turned themselves in to authorities in Nevada County on Thursday. Laferte and Blinder, both 58, also were arrested Thursday in Nevada County.

Philip Lester and Laferte are each being held in lieu of $600,000 bail. They – along with Ellen Lester, who is being held in lieu of $50,000 bail – are scheduled to be arraigned Monday.

Blinder was released from jail after posting bail and is scheduled to be arraigned Oct. 23.

All four have requested public defenders, according to the attorney general's office.

The attorney general's Mortgage Fraud Strike Force will prosecute the case in Nevada County, where Gold Country Lenders had amassed prominence doing "hard-money" lending.

The practice – legal when done correctly, but decried by critics as predatory and easily susceptible to fraud – involves brokers pooling investor money for borrowers who can't qualify for traditional loans. The terms of the loans often involve steep rates and fees, often double the cost of conventional loans.

The practice, and Lester's alleged fraud, was the subject of a series of Bee stories starting in 2011. Less than a year earlier, the attorney general's office had launched its investigation in response to complaints from several of Gold Country's investors.

In response to those stories, the Legislature passed Senate Bill 978 last month to protect investors and borrowers of "hard money." If signed by Gov. Jerry Brown, the bill by Sen. Juan Vargas, D-San Diego, would augment laws that govern corporations and real estate transactions.

According to the attorney general's request for an arrest warrant, Philip Lester became a broker in 2001 and grew more ambitious, tackling real estate development projects by bundling money from investors rather than seeking traditional bank loans.

Laferte helped him solicit money for projects, then used that money to pay investors on other projects, Special Agent Debra Gard wrote in the request for the warrants.

Philip Lester would tell investors their money would be for a specific project, but did not disclose when he had an interest in the project, Gard wrote. He often promised security in the form of first or second deeds of trust on property owned by the entity in which the lender thought the investment was being made.

"More often than not," Gard wrote, "the promises of security were an outright lie – in most instances the promised security was not provided and the properties that were supposed to act as security were encumbered with loans in favor of others."

Eventually, Lester's financial obligations became "unsustainable, and his empire was spiraling out of control and becoming a vast Ponzi scheme," Gard wrote.

By 2009, Gold Country Lenders was writing letters to investors telling them there was no money to make interest payments on existing loans, according to Gard's warrant request. Within the next two years, letters to some investors said their projects were a "total loss and there was no expectation the investors would receive a return of their principal," Gard wrote.

By then, Philip Lester and his firm owed investors more than $2.3 million.

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