A Colorado man pleaded guilty Thursday to a years-long fraudulent investment scheme that allowed people to shield millions of dollars in taxes from the Internal Revenue Service.

Timothy McPhee, of Estes Park, pleaded guilty to conspiracy to defraud the United States, tax evasion and wire fraud, the U.S. Department of Justice announced Friday in a news release.

Prosecutors say McPhee, from 2018 to 2023, promoted a fraudulent tax shelter to taxpayers across the country, comprised of a private family foundation and three trusts.

He then taught clients who purchased the tax shelter how to use the foundation and trusts to evade paying federal income taxes on nearly all their income, the government said.

Clients who used the tax shelter only paid taxes on about 2% of their income, prosecutors said.

The total loss to the government? About $45 million in unpaid taxes.

"In pleading guilty, McPhee acknowledged that he gave directions to clients that he knew directly contradicted IRS guidance and that he deliberately ignored warnings from accountants and attorneys that the tax shelter was fraudulent and illegal," the release states.

McPhee also used the tax shelter for his own personal gain. He concealed more than $5 million in income earned between 2016 and 2021, the DOJ said, meaning he avoided paying some $1.8 million in income taxes.

Additionally, prosecutors say McPhee operated a fraudulent investment scheme, promising 3% monthly payouts to investors. In reality, McPhee spent these investor funds on his own personal expenses and investments.

He's set to be sentenced on Oct. 23 and faces a maximum of five years in prison for the conspiracy charge, five years for tax evasion and up to 20 years for wire fraud.