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Sentencing for Knox in property flipping scheme delayed

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URBANA - Gary Knox of Decatur and Frank "Kelly" Ciota of Riverton must wait until Feb. 20 to receive their sentences from U.S. District Judge Michael McCuskey who heard the remainder of the testimony Monday in their sentencing hearing.

Knox, 61, and Ciota, 46, pleaded guilty in April 2006 to charges of bank fraud, wire fraud, mail fraud and money laundering in a real estate flipping scheme that bilked millions of dollars from property owners in Springfield and Decatur.

Their sentencing hearing began Dec. 18, was continued to Monday and now is scheduled to conclude Feb. 20 in U.S. District Court, Urbana.

Dennis Wiese Jr., 39, of Belleville also pleaded guilty in the case to providing inflated property appraisals that allowed Knox and Ciota to carry out their scheme. His sentencing hearing was separated from the other two defendants and is scheduled for May 2.

McCuskey said on Feb. 20 he will hear arguments from attorneys for the government and defendants concerning defense objections to various portions of the U.S. attorney's sentencing memorandum, give both defendants opportunities to be heard in their own right and then pass sentence.

The arguments are an effort by defense lawyers to reduce the number of points under the federal sentencing law with which their clients will be credited, while Assistant U.S. Attorney Timothy Bass will seek to add points to the total.

Once determined, the number of points set a range of months for prison terms that McCuskey will consider in handing down the defendants' sentences. For example, Knox faces between 262 to 327 months in prison if his objections are overruled.

Most of Monday's hearing focused on Ciota in an effort to win sympathy from the judge for his family's plight if he goes to prison, which is likely. His wife, Cathy, testified about their 12-year-old twin sons who have cerebral palsy and require an extensive amount of personal assistance daily from herself and her husband.

"Kelly going to prison would be devastating in every way," she said, adding there is no one else in their family who is fully capable of assisting with the boys.

Knox did not present any witnesses at the hearing. One of his attorneys, Steven Beckett, only asked McCuskey take notice of prior testimony that occurred in the case in 2006.

The flipping scheme involved Knox and Ciota finding people willing to sell their residential properties, giving many of them a $5,000 "incentive payment" to induce a sale. Buyers were solicited to purchase the properties sight unseen basing the purchase price on Wiese's bogus appraisals. Buyers often had their down payments returned as a kickback to get them to buy.

Buyers' losses from the real estate scheme totaled $5,479,848 of which Knox and his cohorts received $4,298,799 that federal investigators have been able to trace. What became of much of that nearly $4.3 million is unknown.

Ron Ingram can be reached at ringram@herald-review.com or 421-7973.

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