Michael Joseph Krzyzaniak, who was convicted of a federal investment fraud felony in 1993, pleaded guilty Tuesday to one count of wire fraud and one count of income tax evasion in relation to a recent scheme that bilked at least $20 million from investors.
According to the U.S. Attorney's office in Minnesota, Krzyzaniak, also known as Michael Crosby, admitted that from 2003 through January of 2011, he conducted a scheme to defraud individuals by convincing them to invest money in prospective business projects that turned out to be fraudulent.
Krzyzaniak, who was indicted in April, told investors that their money would be used to develop specific projects that had the necessary regulatory approval and were proceeding toward a successful conclusion.
Among the projects that investors thought they were investing in: Internet terminals at airports; golf courses in various states; a golf club resort in Desert Hot Springs, California; alternative energy projects in Hartsel Springs, Colorado; and a Nascar-type race track in Elko.
The attorney's office said that Krzyzaniak admitted to spending large portions of the funds provided to him to pay for personal expenses, fund his lavish lifestyle, and distribute "lulling" payments. In some instances, Krzyzaniak actually invested funds but only in an effort to prevent the fraud from being discovered.
In total, investors provided Krzyzaniak with between $20 million and $50 million for investment, the attorney's office reported.
Krzyzaniak told investors that he had various financing sources available to him and a number of celebrity endorsements-neither of which was true, according to the attorney's office. He also allegedly neglected to tell investors of his 1993 conviction.
In addition, Krzyzaniak admitted that he did not file federal income tax returns or pay any income taxes from 2004 to 2007. The total tax loss to the government due to these actions was between $400,000 and $1 million.
Krzyzaniak originally faced 14 counts of mail fraud, six counts of wire fraud, three counts of money laundering, three counts of income tax evasion, and four counts of failure to file income taxes.
According to his attorney Robert Sicoli, the remaining charges will be dismissed at sentencing, which has not yet been scheduled. Krzyzaniak faces a maximum sentence of 25 years in prison for the two charges to which he pleaded guilty.