Judge Paul Watson QC sentenced Sean Henderson to three-and-a-half years in prison for one count of conspiracy to commit fraud and another of tax evasion.
Sheffield Crown Court heard how Henderson, along with his co-accused and Irish business partner Stephen Keegan, persuaded two people to invest their life-savings and pension contributions to a value of approximately â‚¬1,050,000 or Â£916,000 in an investment they were told had 'complete security'.
Both of the investors were friends of Keegan's, the court heard.
Judge Watson told Henderson, aged 51: "It does not matter who came up with the notion.
"You made false representations to potential investors in order to try and persuade them that by parting with their money they would have complete security and the potential for financial gain."
The investors were told their money would be placed into an account that would not be touched, and that they were likely to receive a significant return on the amount provided.
However, their money was used for more speculative ventures including a gold scheme in Ghana, and neither party has ever recovered a single penny.
The court heard how Henderson and Keegan, who owned business Crystal Power together, carried out the offences in 2009 and 2010 while they were under 'pressure' to come up with a cash injection for their property development known as 'Gin Pit Village' in Manchester.
Henderson also failed to pay more than Â£26,000 owed in VAT in 2008, the court heard.
He was found guilty of the two offences during trials held at Sheffield Crown Court in 2016 and 2017. He was also acquitted of seven other counts, relating to his financial dealings.
Keegan, 46, of Sheppards Field, Wimborne, Dorset, pleaded guilty and was jailed for three years and nine months during a hearing held last year.
Defending, Nicholas James, told the court that Henderson, of Thoresby Road, Grimsby was a dedicated 'family man' whose offending amounted to 'aberrations' and was not a way of funding a lavish lifestyle.
22-year-old Ella Henderson came 6th in the X Factor in 2012, and subsequently signed a record deal with Simon Cowell.