A 47-year-old investment adviser who had turned himself in to authorities pleaded guilty on Thursday in U.S. District Court in Minneapolis to defrauding 13 investors of nearly $6 million.

Michael Drilling could be sentenced to up to five years in prison, according to his Minneapolis attorney, Allan Caplan, who said his client had both a drinking and gambling problem. He said Drilling, formerly from Prior Lake, spent the money on himself and lost it in investments and at casinos.

Some of Drilling’s victims lost their life savings, said Assistant U.S. Attorney Timothy Rank after the hearing.

“Investment fraud such as this case today ruins lives and destroys people’s trust in the securities industry,” U.S. Attorney Andy Luger said. “We are aggressively prosecuting these cases to protect investors and restore trust.”

Drilling, wearing a cowboy shirt and jeans, briefly described his scheme as he answered Rank’s questions during his appearance before Judge Ann Montgomery.

Rank described how Drilling posted his clients’ investments on a website, supposedly showing how their money was being invested and earning income. “That was false?” Rank asked Drilling.

“That was false,” Drilling responded.

The plea agreement stated that Drilling created phony accounts for each of his clients at eMoneyAdvisor.com, “which made it appear that their funds had been placed in real investment vehicles.”

Kenneth Kenevan, a CPA from Sauk Centre, Minn., who attended the hearing, said afterward that a friend of his “trusted [Drilling] to the tune of more than $2.8 million.” That man referred a friend to Drilling who lost $800,00, Kenevan said. “He also referred his mother-in-law, who is 93-years-old,” Kenevan said.

Legitimate to fraudulent

Caplan said that his client was a “perfectly legitimate” investment adviser for more than 20 years, but changed after his 2010 divorce.

“He had a serious drinking problem,” Caplan said. “He began soliciting money from clients for a period of three years,” spending it as well as trading it on the market and gambling it away. “He wasn’t living particularly high off the hog,” Caplan said.

“As with a lot of these people, as an exit strategy [he hoped] he will score in the market, pay all these people back and no one will be the wiser,” Caplan said. “By the end of 2013 it was apparent to Mr. Drilling that he was deep in the hole and could not possibly pay these people back.”

Caplan said Drilling was “not on any law enforcement radar.

“Mr. Drilling felt terrible about what he had done and through me, approached the government and turned himself in and accepted responsibility for what he had done.”

Drilling, who pleaded guilty to one count of securities fraud, was released on an unsecured bond of $25,000.

Caplan said Drilling is currently living in northern Minnesota. He also has a home in Sedona, Ariz., that could be worth several hundred thousand dollars. According to the plea agreement, he agreed to forfeit all property that is traceable to the securities fraud.

No sentencing date has been set.