The feverish excitement created by the initial public offering of Google on Wall Street proved too much for some investors hoping to climb on board.

A business development manager for BT has pleaded guilty to a scheme in which he swindled wealthy New Yorkers out of almost $3m (£1.7m) by pretending he had access to shares in the planned flotation.

The defendant, Dutchman Shamoon Rafiq, spent up to $350,000 of the cash in a three-month spree in New York nightclubs, on strippers, expensive watches for friends and $100 tips to waiters and hotel staff, according to prosecutors. He could spend up to five years in prison.

Rafiq, who worked in New York, claimed in meetings with investors that he could get hold of "preferred stock", available only to Google founders and friends, for $12. He claimed to be a venture capitalist and a friend of the Google founders from their days at Stanford University.

At least five investors took the bait. They included a lawyer for a European telecommunications company, an investment banker, a senior brokerage executive and the chairman of a global telecommunications firm.

They wired Mr Rafiq $500,000 and agreed to invest a total of $2.8m. The scheme unravelled after the investment banker grew suspicious and demanded his money back. The Federal Bureau of Investigation arrested Rafiq in March.

Prosecutors are opposing Rafiq's request to serve his sentence in the Netherlands.

The Google flotation is the most eagerly anticipated event in the technology sector since the bursting of the internet bubble of the late 1990s. The internet search engine announced plans to join the stock market last month and is aiming to raise $2.7bn. It is likely to have a market value of about $20bn.

But the planned flotation has not been free of controversy. The founders, Sergey Brin and Larry Page have structured the IPO with two classes of shares giving themselves special voting privileges.

They are also bypassing the usual method of selling shares and holding a public auction of the stock.