Corey N. Johnston, a 40-year-old man from Lakeville, pleaded guilty Thursday to charges related to his operation of a Ponzi scheme-through which he defrauded at least 17 lenders of more than $79 million.

Johnston pleaded guilty to one count of bank fraud and one count of filing a false income tax return, according to the Minnesota U.S. Attorney's Office.

Johnston was charged last month for his role in the fraud scheme.

According to the Attorney's Office, Johnston admitted in his plea agreement to “overselling participations” in large commercial and personal loans that he arranged between third parties and a company he owned called First United Funding.

Loan participation, which is a common practice in the banking industry, involves a bank paying a lender for all or a portion of a loan, therefore assuming the risk of the loan and receiving payments from the borrower.

Johnston admitted to selling more than 100 percent participation in at least 10 different loans-meaning that he sold loan participation to banks after having already sold the same portions to other lenders.

In one case, First United Funding allegedly made a loan for $7 million for White Out Way Investments. Johnston then sold 100 percent participation in the loan to Western National Bank and in turn received $7 million.

Then, by overselling the loan to five other banks, he solicited and received an additional $16.7 million for the $7 million loan.

Johnston used a portion of the proceeds from his fraud scheme to repay other loans and to perpetuate the scheme. He also falsely reported his income on his federal tax returns for 2005-ultimately underpaying his taxes by approximately $508,905.

Johnston faces a maximum of 30 years in prison for the bank fraud charge and three years for filing a false income tax return. U.S. District Court Judge David S. Doty will determine Johnston's sentence at a yet-to-be-scheduled hearing.