Mr Sutton, 40, who scored 63 goals for the club between 2000 and 2006, put £50,000 in a spread-betting currency scheme. His wife Samantha also put money in but the deal was a "sham" by Simon Grinter, Plymouth Crown Court was told.
Grinter, 56, is accused of lying to clients by saying he was making profits when in fact he was making huge losses. He was handed about £7.8 million by investors over four years but lost about £3m, the court heard.
Prosecutors said he spent more than £500,000 on credit card bills and personal expenses over the period.
In a statement, Mr Sutton said: "During the investment period I was led to believe that I was making a profit on the investment, however I now realise that I was not."
Mr Sutton said the scheme was recommended by his financial advisor. Grinter denies the charges. The trial continues.