Newport man accused of gambling investors’ money sentenced to prison and $4.8 million restitution
A Newport Beach man accused of gambling millions of dollars belonging to investors in his dental equipment company pleaded guilty Tuesday to wire fraud and was sentenced to more than five years in federal prison, according to U.S. District Court documents.
William Keith Knox, 55, was sentenced to 63 months behind bars and ordered to pay $4.815 million in restitution.
All other fines were waived because “the defendant does not have the ability to pay a fine in addition to restitution,” according to the documents.
Knox originally faced six felony counts of wire fraud, to which he pleaded not guilty. He was instead charged with one count after a plea agreement in February 2015 that stated prosecutors would drop all but one count in exchange for his admission of guilt, his attorney, Stephanie Ames, said Wednesday.
According to a federal grand-jury indictment in 2013, Knox raised $3.5 million from three investors on the pretext that the money would fund his business, Osseous Technologies of America.
Prosecutors believe Knox had more victims who were not included in the criminal charges, Assistant U.S. Attorney Daniel Anh said after a court hearing in February 2015.
As early as 2010, Knox began asking investors for hundreds of thousands of dollars at a time, according to the indictment.
He would then withdraw the money from a company bank account and purchase a cashier’s check that he would deposit in a gambling account at a Las Vegas casino such as Bellagio or The Venetian.
Federal prosecutors also accused Knox of eliciting investments by faking documents to make it seem like his company was on the verge of a lucrative deal or about to be acquired for millions of dollars.
Knox was arrested in November 2013 after the FBI recorded what it said was his admission of the scheme to one of the victims.
According to court documents, Knox said on the recording that he considered suicide when the con began to unravel and that he had been committed to a mental facility for a time “because he told a therapist that he had thoughts about killing himself and his family.”
He was recommended in court Tuesday to have the Federal Bureau of Prisons conduct a mental health evaluation on him and provide all necessary treatment.
Ames said the case is a “perfect example of how addiction can destroy someone’s life.”
“He has a wonderful, loving family and had a very successful business, but unfortunately, his addiction took hold and resulted in a lot of victims and hurting his family,” she said. “They are working on rebuilding, and I believe they will be able to.”
Erick Haynie, a Portland, Ore., lawyer who represented two of the victims, said the hearing Tuesday was very “tense and emotional.”
“There was just a stillness in the room,” he said. “The judge’s ruling … sends a strong message that our society will not tolerate white-collar crime. It also marks a big first step toward healing for a lot of people.”