Gregory N. McKnight, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20563 / May 8, 2008
SEC v. Gregory N. McKnight, et al, Case No. 08-11887 (E.D. Michigan, filed May 5, 2008)
The Securities and Exchange Commission announced that on May 5, 2008, the Honorable Judge Paul V. Gadola of the United Stated District Court for the Eastern District of Michigan issued an Asset Freeze Order against Gregory N. McKnight (McKnight) and Legisi Holdings, LLC (Legisi Holdings) as defendants, and against Legisi Marketing, Inc. (Legisi Marketing), Lido Consulting, LLC (Lido Consulting), Healthy Body Nutraceuticals (HBN), and Lindenwood Enterprises, LLC (Lindenwood) as relief defendants. The Asset Freeze Order froze all assets of McKnight, Legisi Holdings, Legisi Marketing, Lido Consulting, HBN, and Lindenwood. In addition, Judge Gadola issued an Order Appointing a Receiver over all assets of McKnight, Legisi Holdings, Legisi Marketing, Lido Consulting, HBN, and Lindenwood.
The SEC's complaint, filed May 5, 2008, alleged that McKnight and Legisi Holdings conducted a fraudulent, unregistered offering of securities in which, between December 2005 and at least November 2007, they raised approximately $72 million from more than 3,000 investors in all 50 states and several foreign countries through the Legisi website at www.legisi.com. According to the SEC's complaint, McKnight represented that he would invest the offering proceeds in foreign currencies, commodity futures, stocks and real estate and promised to pay interest of as much as 15 percent per month from the profits from his investments. The SEC's complaint further alleges that throughout the period of the offering, McKnight represented to investors that his investments were profitable and were generating the promised returns. The complaint charges that, contrary to these representations, McKnight invested only approximately $33 million of the offering proceeds and that, rather than earning profits, these investments resulted in millions of dollars in losses. The SEC's complaint further charges that Defendants used approximately $27.5 million of the offering proceeds to make payments of purported profits to prior investors and were, thus, operating a Ponzi scheme, and that McKnight used $2.2 million of investor funds to pay for his personal expenses and to make payments to his relatives, Jennifer McKnight, Danielle Burton, and Theresa Burton. The SEC's complaint charges that Defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.
In addition to the emergency relief already obtained, the Complaint seeks preliminary and permanent injunctions against McKnight and Legisi Holdings. The Complaint also seeks disgorgement of ill-gotten gains from the defendants and relief defendants and the imposition of civil penalties against McKnight and Legisi Holdings. A Hearing on whether a preliminary injunction should be issued against the Defendants is scheduled for May 19, 2008 at 2:00 p.m.
