Local Fraudster Gets 12 Years for Bilking Investors
A Minneapolis man was sentenced Friday to more than 12 years in prison for orchestrating four investment scams that together bilked at least $20 million from investors, according to the U.S. Attorney's office in Minnesota.
From 2003 through January of last year, 63-year-old Michael Joseph Krzyzaniak-who's also known as Michael Joseph Crosby-allegedly convinced investors to put money into business projects that turned out to be fraudulent.
Krzyzaniak was indicted in April and he pleaded guilty in June to one count of wire fraud and one count of income tax evasion. In his plea agreement, he admitted to telling investors that their money would be used to develop projects that had the necessary regulatory approval and were proceeding toward a successful conclusion, according to the attorney's office.
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.
According to the attorney's office, Krzyzaniak admittedly spent large portions of the investors' funds 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 about a federal investment fraud felony that he was convicted of in 1993; he had served six years in prison for his role in that scheme.
In addition, Krzyzaniak admitted that he did not file federal income tax returns or pay any income taxes from 2004 to 2007.
According to the Star Tribune, Krzyzaniak's attorney said his client will probably die in jail because he has heart problems.
“I'm ashamed to be standing in this courtroom,” Krzyzaniak reportedly said during his sentencing.