Sept. 21 (Bloomberg) -- A North Carolina man and a Texas man were arrested on federal charges that they defrauded investors of $80 million in a Ponzi scheme using purported investments in automatic teller machines.

Vance Moore II and Walter Netschi will appear in federal courts today in North Carolina and New York, respectively, after being arrested and accused of lying to investors from 2005 to January 2008.

“It was a classic Ponzi scheme,” Joseph Demarest, assistant director in charge of the Federal Bureau of Investigation in New York, said today in a statement. “The phantom revenue came from new investors. The scheme itself, until discovered, was one giant cash machine.”

According to a newly unsealed conspiracy and fraud investment, Moore, 55, and Netschi, 62, told investors that their money would be used to buy ATMs to be placed in retail locations around the country, and that fees from the machines would repay investors.

“In truth and fact, Moore and Netschi did not use the victims’ funds to purchase ATMs, but rather used the money to further the fraudulent scheme and to enrich themselves,” U.S. Attorney Preet Bharara in New York said in the statement.

Netschi will plead not guilty, said his lawyer, Michael Washor.

“We believe Walter Netschi was as must victimized as everyone else was” by Moore, Washor said.

Stuart Abrams, a lawyer for Moore, didn’t immediately return a call.

Missing ATM

According to the indictment, Moore lied to investors who noticed discrepancies in their phony account statement. When one investor couldn’t find an ATM he purportedly owned in Florida, Moore told him it had been moved, prosecutors said.

Each charge in the 10-count indictment carries a maximum prison penalty of 20 years in prison.

Moore is from Raleigh, North Carolina, and Netschi lives in McKinney, Texas, prosecutors said.

To contact the reporter on this story: David Glovin in New York federal court at dglovin@bloomberg.net.

Last Updated: September 21, 2009 12:07 EDT