Raffaello Follieri, an Italian entrepreneur and onetime business partner of billionaire Ron Burkle, pleaded guilty to criminal charges Wednesday in a real-estate investment scheme designed to fund his lavish lifestyle.

Follieri, chairman and chief executive of Follieri Group LLC in New York, pleaded guilty to conspiracy to commit wire fraud, eight counts of wire fraud and five counts of money laundering at a hearing before U.S. District Judge John G. Koeltl in Manhattan.

Last year, an investment fund that is part of Burkle’s closely held Yucaipa Cos. sued Mr. Follieri in Delaware Chancery Court, accusing him of misappropriating at least $1.3 million from Yucaipa and using it to fund his lifestyle. The Delaware case has since settled and the money was paid back to Yucaipa.

His guilty plea marks a sharp fall for Mr. Follieri, who was a gossip-page fixture while dating his former girlfriend, actress Anne Hathaway, and who once hosted Republican presidential candidate John McCain in 2006 on a rented yacht off the coast of Montenegro.

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