Gerald Sunnie received cheques worth tens of thousands of pounds from three pensioners.
He then forwarded the money to "individuals across Europe" while keeping a share of the cash.
He was convicted of a £33,000 money laundering charge under the Proceeds of Crime Act.
Dundee Sheriff Court heard that Sunnie initially became involved after being "deluded" into thinking that he had won a £200,000 American lottery prize that had not turned up.
Sunnie started taking in cheques that he was told were to cover "European tax liabilities" on his winnings, passing the money on after taking his portion of it.
The 58-year-old's bank accounts were closed down due to "fraudulent activity" and he was twice told by Trading Standards officers that he was helping to facilitate an international fraud.
But he started up his activity again in August 2013, taking in dozens of cheques from three elderly victims over the course of the next year.
He told his trial that a man from the fraudsters he was passing the money to had called him two weeks earlier saying his £200,000 winnings were still on the way, and that he still expected a cheque to come through his door.
Sunnie's lawyer Gary McIlravey admitted that his client was "deluded".
Depute fiscal Muhammad Sadiq, prosecuting, said: "It's clear he may have been a victim at first, but he did then benefit by processing payments on numerous occasions after being told it was a scam."
Sheriff Simon Collins QC convicted Sunnie of money laundering, saying a large number of vulnerable people had been defrauded out of a large sum of money.
The sheriff added: "By any standard the arrangement he entered, even from the outset, was obviously a scam.
"He was told it was a scam and that he was taking part in a fraud and his bank accounts were closed.
"He processed nearly £52,000 but claimed not to have made even inquiries of those involved in these arrangements. This stretches credulity."
He said Sunnie's role had been "key" to the scam, that his motivation was "clearly personal gain" and that he had shown "little or no remorse".
A "deluded" money launderer who helped run a lottery scam that targeted elderly victims has been jailed for six months.