Federal Court in Louisiana Sentences Tennessee Couple To Prison For Investment And Bankruptcy Fraud
A federal judge in Louisiana has sentenced a Tennessee couple to prison for running an investment fraud scheme tied to a startup business and then lying during bankruptcy proceedings to avoid paying their debts.
United States Attorney Kurt L. Wall announced that U.S. Chief Judge Shelly D. Dick sentenced Haskell “Trey” Knight, 61, and Emily (Ricciardelli) Knight, 41, both of Franklin, Tennessee, to federal prison for their roles in an investment and bankruptcy fraud scheme.
Haskell Knight received a 48-month prison sentence, and Emily Knight was sentenced to 41 months in prison. After serving their prison terms, both defendants must complete two years of supervised release. The court also ordered the Knights to pay restitution to their victims, although the exact amount was not detailed in the public statement.
False Promises About Startup Udoxa
According to facts presented in the cases, the Knights admitted as part of their guilty pleas, the couple defrauded four individuals out of $50,000 by making false and misleading claims about a startup company called Udoxa.
Prosecutors said the Knights told prospective investors that:
- A wealthy investor was backing Udoxa
- Formation capital, or early funding, was available
- The startup was strong and poised for success
These claims were not true. Relying on this false information, the four victims agreed to invest. They believed they would be repaid with interest and might later receive an option to gain an ownership stake in what they thought was a legitimate, growing company.
Instead, after receiving the $50,000, the Knights used most of the money to pay old business debts and cover personal expenses, rather than funding Udoxa as promised.
When the victims asked about their money, the Knights did not repay them. Instead, according to court documents, they created “elaborate excuses” to explain why funds were supposedly unavailable. These explanations included inventing:
- A fake employee
- Fake Internal Revenue Service (IRS) liens
The couple told victims that these imaginary IRS liens had tied up the money, further delaying repayment.
Bankruptcy Filing And False Statements Under Oath
Shortly after the fraud involving Udoxa, the Knights filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida. In Chapter 7 bankruptcy, a trustee reviews the debtor’s finances, liquidates certain assets, and distributes money to creditors. Honest disclosure is critical to that process.
In their bankruptcy paperwork, the Knights listed the Udoxa investors as unsecured creditors along with others. However, prosecutors said the couple failed to give truthful information about their income, assets, and liabilities.
As part of the required bankruptcy disclosures and during the creditors’ meeting—where debtors must answer questions under oath—the Knights:
- Failed to report significant income from network marketing businesses
- Failed to list liabilities from earlier business ventures
- Lied under oath at the creditors’ meeting by claiming they were unemployed, even though they were employed at the time
These misrepresentations obstructed the bankruptcy trustee’s ability to properly administer the case. Because of the false statements, creditors, including the Udoxa victims, received less money than they otherwise might have. Meanwhile, the Knights were able to walk away from approximately $578,147 in debts, according to the U.S. Attorney’s Office, while keeping significant funds they were not legally entitled to retain.
Enforcement Of Financial Crime In Louisiana
Although the Knights lived in Tennessee and filed for bankruptcy in Florida, the sentencing took place in the Middle District of Louisiana, underscoring the reach of federal jurisdiction in financial crime cases that cross state lines and affect victims in multiple locations.