A Swartz Creek, Mich., man has been sentenced to 15 years and eight months in prison for operating a $72 million Ponzi scheme that defrauded 3,000 people worldwide, the SEC announced Tuesday.
Gregory N. McKnight, 53, the owner of Legisi Holdings LLC and several other companies, was sentenced by U.S. District Court Judge Mark A. Goldsmith on Aug. 6. Goldsmith also sentenced McKnight to three years of supervised release and ordered him to pay $48.9 million in restitution to his victims, which is the amount investors lost, according to the U.S. Attorney for the Eastern District of Michigan.
Between 2005 and 2007, McKnight offered unregistered securities that were advertised as investments in foreign currencies, commodity futures, stocks and real estate that would yield 15 percent per month, according to the SEC. He raised $72 million, but only invested about $33 million of that money and lost millions of dollars on those investments, the complaint says.
With the rest of the money, he made payments to early investors and used some for his personal expenses and to pay relatives, the complaint says. The $48.9 million represents the total loss from his bad investments and personal expenditures.
McKnight pleaded guilty to one count of wire fraud for a scheme that victimized people in all 50 states and several foreign countries, according to the SEC. The court in an earlier action froze the assets of McKnight, Legisi Holdings and other companies he operated.
The criminal charge was filed by the U.S. Attorney for the Eastern District of Michigan and grew out of an SEC civil complaint about the Ponzi scheme. The SEC complaint resulted in McKnight being ordered to repay ill-gotten gains, prejudgment interest and civil penalties totaling $6.5 million dollars.