SEC freezes assets of Michigan man for alleged Web fraud

Gregory McKnight sold unregistered securities, promising investors returns as high as 15 percent a month from his having invested the proceeds in foreign currencies, stocks and real estate, the Securities and Exchange Commission said Thursday in announcing the court order. It was issued on May 5 by U.S. District Judge Paul Gadola in Detroit against McKnight, Legisi Holdings LLC and several affiliate companies.

Attorneys for McKnight, who lives in Swartz Creek, Mich., couldn't be reached for comment Thursday evening.

The amount of the frozen assets, in the millions of dollars, wasn't specified.

The SEC said McKnight operated the fraudulent online scheme from December 2005 through November 2007, telling investors that profits were coming in, but he actually invested around $33 million -less than half the money he raised -on behalf of the customers. McKnight took big losses on the investments he did make, while $27.5 million of the investors' money was used to pay off earlier investors to make the Legisi program appear profitable and another $2.2 million was siphoned off for his personal expenses and payments to relatives, the agency said.

The SEC also is seeking unspecified civil penalties against McKnight and his company, and restitution of allegedly ill-gotten profits.

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