Sedona Man Nabbed by NCIS in Massive $178 Million Wire Fraud and Money Laundering Scheme

A Sedona man, Eric Leigh Karnezis, was arrested on September 5 by plainclothes agents from the Naval Criminal Investigative Service while walking his dog on Dry Creek Road. Following his arrest, he was indicted on federal wire fraud and money laundering charges by the U.S. Attorney’s Office for the District of Oregon.

The 34-year-old Karnezis was initially taken to the Sedona Police Station. Local officials, however, did not respond to inquiries regarding his detention made shortly after his arrest.

A federal superseding indictment, unsealed on September 9, indicates that Karnezis, along with Lynisha Wells, 47, Nikkia Bennett, 43, both from Chula Vista, California, and Fredrico Williams, 48, of San Diego, conspired to defraud the U.S. Small Business Administration out of at least $178 million in loans meant for small businesses during the COVID-19 pandemic.

The indictment charges the group with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. These crimes carry severe penalties, including up to 20 years in federal prison, three years of supervised release, and hefty fines.

From January 2021 to March 2022, Karnezis allegedly orchestrated a scheme involving recruiters, including Williams, to gather fraudulent business information. This information was reportedly used to submit bogus Paycheck Protection Program loan applications to the SBA. Document forgery was also part of the scheme, with the creation of false payroll and tax records to support their applications.

Investigators claim that Karnezis submitted at least 1,300 PPP applications, attempting to secure a total of $178 million, with around $105 million in loans issued as a result of these fraudulent activities.

During his initial court appearance on September 6, Karnezis entered a plea of not guilty. After a detention hearing on September 10, he was released under specific conditions pending his arraignment in the District of Oregon set for September 24.

Wells and Bennett had their arraignments earlier in August and were released on conditions awaiting a jury trial scheduled for February 11. Williams is due to be arraigned on September 20.

This investigation involved several agencies, including the NCIS, SBA Office of Inspector General, IRS Criminal Investigation, and the U.S. Treasury Inspector General for Tax Administration. The prosecution is being handled by Assistant U.S. Attorneys Meredith Bateman and Robert Trisotto.

In an episode of the “Think Unbroken” podcast titled “From Prison to Freedom after Trauma,” Karnezis shared insights about his troubled childhood, which included his parents’ arrest on drug charges. This upheaval led to him and his twin brother entering the foster care system, where they faced abuse and homelessness before resorting to crime.

After serving time for armed robbery, Karnezis claims to have turned his life around. He described himself as a successful entrepreneur and philanthropist who aims to inspire others through his life stories. He purchased a home in West Sedona and a vacant lot in 2023.

His memoir, “Golden Scissors: Tales of Resilience,” published on March 30, 2024, has also become a part of his effort to share his journey through podcasts and interviews.

In a follow-up statement on September 12, Sedona Communications Director Lauren Browne clarified that the Sedona Police Department had no involvement in the investigation of Karnezis and that federal agents were conducting their own operation at the time of his arrest.