Swartz Creek Man Convicted in $72 Million Ponzi Scheme
Flint, Michigan - On February 16, 2012, Gregory McKnight, of Swartz Creek, Michigan, pleaded guilty to wire fraud for his lead role in orchestrating a massive Ponzi scheme, announced United States Attorney Barbara L. McQuade.
United States Attorney McQuade was joined in the announcement by Special Agent in Charge Jeffrey Frost, United States Secret Service.
McKnight, 52, entered the guilty plea in United Stated District Court before Judge Mark A. Goldsmith.
According to the evidence presented at the plea hearing, from 2005 through 2007, McKnight solicited investments from members of the public on promises of exorbitant rates of investment return, upwards of 15% per month. McKnight offered investments over the internet at a publicly available website, www.legisi.com. During the course of the scheme, McKnight obtained more than $72,000,000 from over 3,000 investors worldwide. Contrary to what he represented to investors, McKnight's investments were not profitable, and in the manner of a classic Ponzi scheme, he used new investor funds to pay periodic redemption requests of other investors. McKnight's scheme resulted in a loss to investors of over $49,000,000.
"Financial fraud, including investment schemes like this one, erodes public trust in financial markets and leads to economic downturn," McQuade said. "We are holding accountable criminals who use sophisticated methods to commit a very basic crime -- stealing."
"Fraudulent schemes such as this have evolved significantly over the last several years" said Jeffrey Frost, Special Agent in Charge of the U.S. Secret Service Detroit Field Office. "Cooperation and collaboration between law enforcement at the local, state and federal level has allowed us to focus our resources and respond quickly to uncover criminal activity such as this type of financial fraud."
Sentencing is scheduled for June 19, 2012 at 1:30 p.m. before United States District Judge Mark A. Goldsmith. If convicted of wire fraud, McKnight faces a maximum penalty of 20 years imprisonment and a fine of up to $250,000.
This case is being prosecuted on behalf of the United States by Assistant U.S. Attorney A. Tare Wigod and investigated by Special Agent Aaron Knudson of the Secret Service.
