A Sedona resident, Eric Leigh Karnezis, 34, was arrested by plainclothes agents from the Naval Criminal Investigative Service while walking his dog on Dry Creek Road on Thursday, September 5. He was indicted on federal wire fraud and money laundering charges by the U.S. Attorney’s Office for the District of Oregon on Monday, September 9.
Following his arrest, Karnezis was taken to the Sedona Police Station. However, inquiries to Sedona police and city officials went unanswered hours after his detainment.
The indictment, unsealed on Monday, includes 23 counts against Karnezis, as well as Lynisha Wells, 47, and Nikkia Bennett, 43, both from Chula Vista, California, and Fredrico Williams, 48, from San Diego. They are accused of conspiring to defraud the U.S. Small Business Administration (SBA) out of at least $178 million in small business loans during the COVID-19 pandemic.
The charges involve conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, with penalties that could lead to 20 years in federal prison, three years of supervised release, and fines up to $250,000 or twice the gross gains or losses from the offenses.
From January 2021 to March 2022, Karnezis allegedly orchestrated a scheme utilizing recruiters like Williams to collect false business information from clients, including Wells and Bennett. This information was then used to submit fraudulent Paycheck Protection Program (PPP) loan applications to the SBA. To facilitate this deception, Karnezis and his associates allegedly generated fictitious documents, including fabricated payroll and tax records.
Karnezis is believed to have submitted at least 1,300 PPP applications, collectively seeking over $178 million from the SBA, of which approximately $105 million in loans were funded through these fraudulent applications.
On Friday, September 6, Karnezis pleaded not guilty during his initial court appearance in the District of Arizona. At a detention hearing on September 10, he was released under certain conditions, pending arraignment in Oregon on September 24.
Bennett and Wells were arraigned in Oregon on August 23 and 29, respectively, and both have been released under conditions as they await a jury trial set for February 11. Williams is scheduled for arraignment in Oregon on September 20.
The case is being investigated by the NCIS, SBA Office of Inspector General, IRS Criminal Investigation, and U.S. Treasury Inspector General for Tax Administration. Prosecution is led by Assistant U.S. Attorneys Meredith Bateman and Robert Trisotto from the District of Oregon.
In an episode titled “From Prison to Freedom after Trauma” on the “Think Unbroken” podcast, hosted by Michael Anthony, Karnezis revealed that he and his twin brother entered the foster care system after their parents were arrested on drug charges during their middle school years. They reportedly experienced abuse and homelessness, which led them to turn to drugs, robbery, and alcohol. Karnezis had previously faced arrest for armed robbery.
After serving time, Karnezis described on his website his transformation into a successful entrepreneur, thrill-seeker, and philanthropist, committed to giving back to the community. He aims to inspire others through his memoirs and podcasts, encouraging them to persevere through life’s challenges.
In 2023, Karnezis purchased a home in West Sedona along with a vacant property. He also released a memoir titled “Golden Scissors: Tales of Resilience” on March 30, 2024, and has been active in conducting podcasts and interviews to promote it.