A Sedona man who was arrested while walking his dog on Dry Creek Road on Thursday, Sept. 5, by plainclothes agents with the Naval Criminal Investigative Service was indicted on Monday, Sept. 9, on federal wire fraud and money laundering charges filed by the U.S. Attorney’s Office for the District of Oregon.

Eric Leigh Karnezis, 34, was taken to the Sedona Police Station, but Sedona police and multiple city of Sedona officials did not respond to inquiries made hours after his arrest on Sept. 5 attempting to confirm his detention [see Editor’s note at the end of the story].

A 23-count federal superseding indictment unsealed on Monday charges Karnezis; Lynisha Wells, 47, and Nikkia Bennett, 43, both of Chula Vista, Calif.; and Fredrico Williams, 48, of San Diego, for conspiring with one another and others to devise and carry out a scheme to defraud the U.S. Small Business Administration of at least $178 million in small businesses loans during the COVID-19 pandemic.

The charges include conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering, crimes punishable by up to 20 years in federal prison, three years’ supervised release and fines of up to $250,000 or twice the gross gains or losses resulting from the offense.

According to the indictment, from January 2021 through at least March 2022, Karnezis allegedly carried out a scheme that used recruiters, including Williams, to gather fraudulent business information from customers, including Wells and Bennett, before using that information to submit fraudulent Paycheck Protection Program loan applications to the SBA. To facilitate the scheme, Karnezis and his co-conspirators allegedly created fictitious documents to support their fraudulent loan applications, including false payroll information and tax documents.

Karnezis allegedly submitted or caused to be submitted at least 1,300 PPP applications, which together attempted to obtain at least $178 million from SBA. Approximately $105 million in loans were funded as a result of these fraudulent applications.

On Friday, Sept. 6, Karnezis pleaded not guilty at his initial appearance in District of Arizona federal court. In a detention hearing held Sept. 10, Karnezis was released on conditions pending his arraignment in the District of Oregon on Tuesday, Sept. 24.

Bennett and Wells were arraigned in the District of Oregon on Aug. 23 and 29, respectively. Both were released on conditions pending a three-day jury trial scheduled to begin on Feb. 11. Williams will be arraigned in Oregon on Friday, Sept. 20.

This case was investigated by the NCIS, the SBA Office of Inspector General, IRS Criminal Investigation and the U.S. Treasury Inspector General for Tax Administration. The cases are being prosecuted by Meredith Bateman and Robert Trisotto, Assistant U.S. Attorneys for the District of Oregon.

According to an interview episode titled “From Prison to Freedom after Trauma” on the “Think Unbroken” podcast, hosted by Michael Anthony, Karnezis said his parents were arrested on drug charges when he was in middle school, leading to him and his twin brother entering the foster care system, where they reportedly suffered from abuse and homelessness, turning to drugs, robbery and alcohol. Karnezis was later arrested for armed robbery.

After getting out of the prison system, Karnezis stated on his website that he became a “successful entrepreneur, a passionate thrill-seeker, committed philanthropist who uses his success to give back to the community. Sharing his life experiences through memoirs and podcasts, hoping to inspire others to persevere through challenges and find purpose in their lives.”

Karnezis bought a West Sedona home and a vacant home parcel in 2023.

He published a memoir, “Golden Scissors: Tales of Resilience,” on March 30, 2024, for which he has been conducting podcasts and interviews.

United States of America v. Eric Karnezis, Fredrico Williams, Lynisha Wells and Nikkia Bennett indictment

Editor’s Note

On the afternoon of Thursday, Sept. 12, seven days after Karnezis’ Thursday, Sept. 5, arrest and after the Friday, Sept. 13, edition of the Sedona Red Rock News print edition went to press, city of Sedona Communications Director Lauren Browne stated, “NCIS and IRS agents took Mr. Karnezis into custody in Sedona as part of their own investigation. The Sedona Police Department had no involvement in the investigation itself and does not have any ongoing investigations related to Mr. Karnezis. Once Mr. Karnezis was in custody, the agents used an interview room at the Sedona Police Department. After the interview, they transported him to a jail on federal charges. No further action was taken by the Sedona Police Department.”