NEWARK, N.J. (AP) _ A stockbroker admitted Friday that he cheated 180 investors from around the world of $40 million that they invested with his hedge funds over the past eight years.

Amid the longest-running bull market in history, John C. Natale used the money to place high-stakes bets that there would be a downturn, notably in technology stocks and their indexes.

The downturn never happened. To hide the mounting losses in his funds, Natale created false audits, tax documents and monthly statements to his investors showing strong returns, he admitted in Superior Court Friday. Natale, 44, pleaded guilty to three felony charges: securities fraud, theft, and misappropriation of property.

Natale had claimed that the funds,Cambridge Partners and Cambridge Partners II, were worth $50 million. In reality, only $3 million remains, Natale said.

Authorities first learned of the fraud when Natale contacted the state attorney general's office two weeks ago. A plea bargain was swiftly reached: Natale provided all his records, pledged to cooperate, and agreed to repay the investors as much as he could with the remaining money and his personal assets.

A court-appointed receiver has taken control of the funds, state Assistant Attorney General Kimberly McFadden Guadagno said. The receiver, James R. Zazzali, is to determine how much each investor lost or gained, and whether those who made money might be required to return a portion.

Zazzali is to return to investors whatever money the state can recover from Natale and the funds.

Natale remains free on $500,000 bail pending sentencing, set for May 19. Prosecutors are expected to recommend he be sentenced to no more than 10 years in prison.

Natale was not available for comment after entering the plea. His lawyer, Edward J. Plaza, declined to elaborate on why Natale turned himself in.

Hedge funds are typically high-risk investment funds for wealthy individuals and institutional investors who speculate on movements in the financial markets.

Many, like those managed and controlled by Natale, do not register with stock regulators, which is permitted as long as they do not advertise, state Deputy Attorney General Andrew L. Rossner said.