Three men who allegedly bilked more than 25 Hawai'i residents out of $1 million by selling them fraudulent promissory notes have been arrested in Florida and will be extradited to Honolulu to face prosecution, the state attorney general's office said.

Robert Byrch, Richard Morris and Robert Mitchutka were indicted by an O'ahu grand jury May 25 for securities violations and theft.

Each stands accused of selling unregistered securities, selling securities as an unregistered person, engaging in prohibited securities practices, securities fraud and theft in the first degree.

If convicted, the men face up to 20 years in prison for the securities violations and up to 10 years for the thefts.

The 28 Hawai'i residents lost investments of between $10,000 and $100,000 according to the attorney general's office.

"Basically, they never got their money," said Dwight K. Nada-moto, the deputy attorney general prosecuting the case. "It's a lot more common than people like to realize."

Byrch was president of 21st Century Satellite Communications Inc., the Florida company that sold the notes, according to the attorney general's office.

Morris and Mitchutka sold the notes in Hawai'i with the help of a certified public accountant who was indicted on four counts of securities fraud here in 2003.

A promissory note is evidence of indebtedness, meaning investors buy the notes assuming they will get their principal back plus a percentage of interest after the note comes due.

According to the U.S. Securities and Exchange Commission, between 1997 and September 2000, Byrch's company sold promissory notes and purchase-leaseback agreements worth about $23 million to more than 700 investors across the country.

The company claimed to sell the notes to purchase satellite television equipment that the company would use to install, maintain, and service private satellite television systems for exclusive gated communities in northern and central Florida, the SEC said.

The company also claimed the investments were fully secured by the value of the equipment purchased with the investors' money but the investments were not fully secured, the SEC said. The company used $6.1 million of the investor money to pay undisclosed commissions to the sales agents who sold the securities, according to the SEC.

Reach Peter Boylan at pboylan@honoluluadvertiser.com.