An investment fund manager from Tennessee drew a 14-year prison sentence Wednesday in a $33 million Ponzi scheme that cheated more than two dozen investors in the United States, Germany and Costa Rica.
An investment fund manager from Tennessee drew a 14-year prison sentence Wednesday in a $33 million Ponzi scheme that cheated more than two dozen investors in the United States, Germany and Costa Rica.
Paul Knight, one of four people convicted of conspiracy, fraud and money laundering charges, also was ordered to make restitution to victims of the two-year scam. At least $13.6 million has not been returned to investors defrauded between July 1999 to July 2001, prosecutors say.
Knight, 61, an unregistered broker in Kodak, Tenn., was accused of helping solicit money from 27 people by promoting a secret "high-yield investment program" involving the world's largest banks. The scheme falsely promised investors extraordinarily high rates of return — some as high as 30 percent a week.
Knight arrived in court Wednesday in a wheelchair. Doctors say he has diabetes, depression and other ailments.
He said he doesn't remember his trial and "very little about the case so there's very little I could say."
When he told the judge he has devoted his last 40 years to "teaching about the love and light of God," the judge said the claim seemed inconsistent.
"Something doesn't connect," U.S. District Judge Charles Siragusa said.
As much as $20 million was returned to investors who complained about their losses or threatened legal action, while others were lulled by false promises and threats of $5 million forfeitures into maintaining their investments and agreeing not to contact authorities, prosecutors say.
"Investors placed their trust in Mr. Knight to properly manage their assets and ... that did not remotely occur," Siragusa said.
Some victims lost their entire life savings, including a commercial landscaper in the Rochester suburb of Hilton who had to rebuild his business from scratch at age 67. Two resided in Germany and Costa Rica and others lived in New York, Florida, Mississippi, Oregon, Michigan, Oklahoma, California and Washington state.
The defense maintained Knight made less than $160,000 from the scheme in contrast to $4.9 million that authorities traced to Gail Eldridge of Marietta, Ga. The two were convicted in October 2008 along with John Montana of New York. Melvyn Lyttle of Aurora, Ill., was convicted in September.
Eldridge drew a 20-year sentence last month. Montana is to be sentenced Friday. Lyttle's sentencing next week has been postponed. Lyttle had argued that he was mentally and medically unfit to stand trial, but prison doctors said he was faking, Assistant U.S. Attorney Bradley Tyler said in an interview.
Knight faced up to 27 years in prison. Under his sentence Wednesday, he could be released in 2021 at age 73.
