With Help from OFIR, SEC Halts $72 Million International Internet Fraud Scheme
FOR IMMEDIATE RELEASE
May 13, 2008
Contact Jason Moon: 517-335-1700
LANSING – The U.S. Securities and Exchange Commission (SEC) recently announced that with the assistance of the Office of Financial and Insurance Regulation (OFIR), the federal agency obtained an emergency court order freezing the assets of Gregory N. McKnight of Swartz Creek, MI, an alleged perpetrator, of an Internet fraud scheme that reaped approximately $72 million from more than 3,000 investors in all 50 states and at least 30 foreign countries.
The SEC contends that between 2005 and 2007, McKnight and his company, Legisi Holdings LLC, sold unregistered securities through a Web site and promised he would invest the proceeds in foreign currencies, commodity futures, stocks, and real estate. He promised to pay interest as high as 15% per month out of the profits. McKnight invested approximately $33 million, less than half the money he raised, on behalf of investors. Those investments suffered substantial losses and nearly $30 million of the investors' funds were allegedly dissipated through an unlawful Ponzi scheme and unauthorized personal expenditures by McKnight. The SEC froze millions of dollars of remaining assets controlled by McKnight on behalf of the injured investors.
“OFIR’s examiners and investigators played an integral role in the SEC’s halting of $72 million in this alleged Internet fraud scheme,” said OFIR Commissioner Ken Ross. “Protecting consumers from scammers remains a top priority for OFIR.”
The SEC alleges that the defendants used approximately $27.5 million of the offering proceeds to make payments of purported profits to prior investors in a Ponzi scheme, and McKnight used $2.2 million of investor funds to pay for his personal expenses and to make payments to his relatives.
The SEC action also seeks recovery of the assets McKnight allegedly transferred to his relatives, including his daughter Jennifer McKnight, his niece Danielle Burton, and Danielle Burton's mother Theresa Burton, all of whom were named as relief defendants based on their receipt of investor funds.