SEC freezes assets of $72 Million WEB FRAUD operation

LOSSES & LAWSUITS

WASHINGTON, DC - The US Securities and Exchange Commission (SEC) has obtained an emergency court order to freeze assets from an alleged internet fraud operation that had defrauded $72 million from around 3,000 investors in the US and at least 30 other countries. The SEC says it launched its action with the assistance of Michigan's Office of Financial and Insurance Regulation, the US Secret Service, and the Commodity Futures Trading Commission.

The court order alleges that Gregory McKnight and his firm Legisi Holdings sold unregistered securities between December 2005 and November 2007 through a website claiming to invest proceeds in commodity futures, stocks, shares, real estate and the foreign exchange market. The website promised to pay monthly interest of 15%. The SEC says McKnight invested only $33 million - less than half of the money raised - with resulting losses for investors. A further $30 million was dissipated through an illegal Ponzi scheme and $2.2 million alone spent by McKnight on personal expenditures and payments to relatives. A number of members of the defendant's family are also facing charges. The remaining assets have now been frozen under SEC control.