A federal jury has acquitted Manuel Gonzalez of three counts of wire fraud and three counts of money laundering in connection with a fraud scheme that stripped an Indianapolis physician of $1.7 million.

Gonzalez, 53, was one of three men prosecutors had accused of persuading Dr. Arthur Sumrall to invest money in their foundation and an ethanol-production business they said would fund it, but instead spent the money on personal luxuries.

Gonzalez was the only defendant who opted to take the case to trial, which began Monday in U.S. District Court for the Southern District of Indiana and ended Thursday evening with a not-guilty verdict on all counts.

Co-defendant Paul C. Bateman Jr., 58, a former Democratic city-county councilor, pleaded guilty last month to 13 counts of money laundering and wire fraud. A third co-defendant, ringleader Michael L. Russell, 54, agreed to a plea deal a week earlier on 20 counts of wire fraud and money laundering.

During the trial, Theodore J. Minch, a public defender representing Gonzalez, argued his client was only following orders from Russell and Bateman when he orchestrated bank withdrawals and cut checks on behalf of The Russell Foundation, the not-for-profit the ethanol business was supposed to support.

The organization spent large sums of money on cars for its employees, on office furnishings including big-screen televisions from Best Buy, and on "pre-operational bonuses" in the $10,000 to $20,000 range for its principals, Bateman testified during the trial. But there was no indication the foundation spent a dime on its stated mission of alleviating poverty.

In testimony that turned emotional at times, Bateman said he gradually came to realize what he had done was wrong and accepted a plea deal to make peace. In exchange for cooperation, the government agreed to recommend a prison sentence of 30 to 37 months for Bateman, who otherwise would have faced up to six years.

Bateman, Russell and Gonzalez still are facing a civil suit in Marion County brought by Dr. Sumrall, who is seeking unspecified damages.

Russell had asked Sumrall during a January 2007 medical appointment to make an investment in an entity later established as Indiana Ethanol Capital Investments LLC, the government alleged in an indictment. Russell, Bateman and Gonzalez attended several meetings with the doctor at a Denny's restaurant to further sell him on the investment.

Russell told the physician that the ethanol operation could reap an $18.5 million return on a $600,000 investment, and that he would be the last of 12 people to invest in it. In fact, the doctor was the only investor.

In a prepared release, U.S. Attorney Joe Hogsett said the government respected the jury's verdict.

"As a result of this prosecution, a community leader and a former elected official both face years in federal prison, and a criminal scheme to defraud was brought to trial," Hogsett said.