A Kaua'i man who allegedly operated a multimillion dollar investment scam used investor money to purchase a condo and two motorcycles, the Securities and Exchange Commission said.

In a lawsuit filed in U.S. District Court yesterday, the SEC accused David Ruskjer of misappropriating millions of dollars from investors nationwide after promising monthly returns of 5 percent to 5.5 percent.

Most of the money was never invested. Instead, Ruskjer used money from new investors to pay off old investors, the SEC alleged.

"While Ruskjer claimed that he would use investor funds to trade call options and had a history of generating 5 percent to 5.5 percent returns, he in fact operated a Ponzi scheme," the SEC said.

Ruskjer could not be reached for comment.

The SEC said that Ruskjer raised a total of $16 million between 2004 and 2008 from 140 investors nationwide through the sale of unregistered promissory notes.

The notes were not loans, which are legal. According to the SEC, Ruskjer told investors both verbally and in writing that he would use the money to trade in risky put and call options.

But only $7.9 million of the $16 million he raised ever went into a brokerage account for trading, the SEC said.

Of the money that was traded, Ruskjer lost about $2.6 million, the SEC said.

"Rather than making an average profit of 5 percent to 5.5 percent ... Ruskjer sustained an average monthly loss of 5.8 percent," the SEC said.