A Petaluma real estate agent was arrested Tuesday on suspicion of stealing more than $20 million from dozens of investors in a Ponzi scheme.

Aldo Baccala, 71, was charged with 167 felony counts of grand theft, securities fraud and elder abuse and was being held on $2 million bail at the Sonoma County Jail, District Attorney Jill Ravitch said.

Baccala's arrest comes more than three years after Baccala reached a $21 million settlement with 75 investors who sued him for failing to return millions of dollars in investments in East Coast nursing homes and other properties.

"My goodness ... that is a surprise," said investor Barbara Moller, a retired Petaluma high school teacher alerted by phone Tuesday of Baccala's arrest. "We figured (the case) had disappeared and we would be resentful for the rest of our lives."

Moller and her husband Charles said they lost "hundreds of thousands" to Baccala.

"It's bittersweet," said Petaluma resident Lou Neve, who said his family lost $1 million to Baccala. "It's not going to bring the money back."

Many investors were elderly residents and longtime friends who recommended Baccala to each other.

The complaints led investigators from the District Attorney's and state Attorney General's offices to begin a probe of Baccala, his wife Karen Baccala and his business, Baccala Realty Inc., in January 2009.

Baccala raised millions of dollars from investors for nursing homes in North and South Carolina, a Nevada gas station and other properties, according to a 172-count felony complaint.

Baccala promised more than 12 percent annual returns for investments in projects, which were supposed to be secured by a first or second deed of trust on the property, Ravitch said. However the funds raised were not used as Baccala promised and none of the deeds of trust were recorded, Ravitch said.

Baccala's debts mounted after he lost about $8 million of investors' money in the stock market between 2003 and 2008. He began promising new investors annual returns of up to 27.5 percent to cover interest payments to earlier investors, Ravitch said.

Baccala sent letters to his investors in 2008 saying that he would no longer make promised monthly payments.

The Mollers' investments with Baccala were very successful until the market began to crash, said Charles Moller, 82, who ran a rock quarry before he retired.

"It became a little less and a little less and finally the axe fell," he said.

Neve, a florist, said Baccala had been a trusted friend but also someone who brought great hardship to many people by stealing their life savings.

Some investors lost their homes as a result of the deals.

Although bail was set at $2 million, Baccala cannot be released without a hearing to determine the source of his funds. He is expected to be arraigned Thursday.

Baccala's assets were liquidated after the 2009 civil lawsuit. Victims were told to expect about 20 percent of their money back, Neve said.

"We intend to seek justice for Sonoma County residents who suffered tragic losses in a fraudulent scheme," Ravitch said in a statement.

"This Ponzi scheme caused dozens of investors to lose the money they thought they would be securing and investing," Attorney General Kamala D. Harris said. "It is important to protect investors from being duped by false representations from criminal actors."

A Ponzi scheme lures investors with promises of unusually high returns. But instead of investing their money in a business that generates actual profits, organizers use the funds to pay off earlier investors. The operation implodes when it can no longer attract new investors.

County and state prosecutors will jointly prosecute the new case.

Victims in the case can find more information about the matter at the District Attorney's website, http://da.sonoma-county.org.