MINNEAPOLIS—Earlier today in federal court, a 63-year-old Minneapolis man was sentenced for orchestrating four different investment scams that lured people into investing millions of dollars in ventures that were never finished. United States District Court Chief Judge Michael J. Davis sentenced Michael Joseph Krzyzaniak to 151 months in prison on one count of wire fraud and one count of income tax evasion.
As the sentencing hearing began, Chief Judge Davis advised Krzyzaniak that the U.S. Attorney’s Office has made it a priority to weed out those who have engaged in fraud. And while imposing sentence, the judge went on to call Krzyzaniak, who was previously convicted in the District of Minnesota for a similar crime, a “sociopath or something close to it.”
Krzyzaniak was indicted on April 12, 2011, and pleaded guilty on June 28, 2011. In his plea agreement, Krzyzaniak, also known as Michael Joseph Crosby, admitted that from 2003 through January of 2011, he conducted a scheme to defraud individuals in Minnesota and elsewhere by convincing them to invest money in prospective business projects, which, in fact, turned out to be fraudulent. In total, investors provided Krzyzaniak with between $20 and $50 million for investment.
After today’s sentence was imposed, U.S. Attorney B. Todd Jones said, “Krzayzaniak represents the worst in criminals in that he does not learn from or feel remorse for his wrong doing. Instead, he just continues to victimize those around him. As a result, he needs to be removed from our community, so he cannot defraud anyone else. And that’s exactly what Chief Judge Davis has done.”
In his position as the president or business officer for one or more business entities, Krzyzaniak contacted potential investors and induced them to contribute funds by making false statements about purported investment opportunities. The business projects he claimed to be developing included 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, Minnesota.
Krzyzaniak told investors their money would be invested in a particular project, and that they could expect a substantial investment return. He then indicated that each project was proceeding toward a successful conclusion, having secured appropriate approval from the government, regulatory agencies, and others. In addition, Krzyazniak claimed he had various financing sources available, if needed, as well as a number of celebrity endorsements. All of those representations were false.
Krzyzaniak admittedly spent large portions of the funds provided him to pay for personal expenses, fund his lavish lifestyle, and distribute lulling payments. In some instances, Krzyzaniak invested funds but only in an effort to prevent the fraud from being discovered. In addition, Krzyzaniak admitted that between 2004 and 2007, he failed to file federal income tax returns or pay income taxes, as required by law.
As indicated above, this was not Krzyzaniak’s first encounter with the federal criminal justice system. In 1993, he pleaded guilty to mail fraud in the District of Minnesota in connection to another investment scheme but fled before the case was resolved. He was ultimately apprehended in Florida and sentenced to 72 months in prison. He failed to disclose that information to any of his recent investors.
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